Victorian Owners Corporation Reforms: Significant Changes on the Horizon July 6, 2026

The Victorian Government has released its response to the independent review of the Owners Corporations Act 2006, signalling what may become the most significant reform of Victoria’s owners corporation framework since the substantial legislative amendments introduced in 2021.

The Expert Panel’s review made 51 recommendations directed towards improving governance, transparency, professionalism and consumer protections across the sector. The Government has accepted a significant majority of those recommendations either in full, in part or in principle, indicating a clear policy direction towards increased accountability, regulation and oversight of owners corporations and those responsible for managing them.

A Changing Regulatory Landscape

The Government’s response reflects the growing importance of owners corporations within Victoria’s housing landscape. As apartment, townhouse and mixed use developments continue to increase, owners corporations are responsible for managing increasingly complex communities, substantial financial assets and critical shared infrastructure. The review identified a need for stronger governance frameworks, greater transparency, improved consumer protections and more effective regulatory oversight to ensure the sector remains fit for purpose. While many of the recommendations remain subject to further consultation and legislative implementation, the Government’s response provides a clear indication of the future direction of owners corporation regulation in Victoria.

Professionalisation of the Sector

A recurring theme throughout the review is the professionalisation of the owners corporation industry. The Government has indicated support for a range of measures aimed at improving the regulation and accountability of owners corporation managers, including recommendations relating to professional standards, education requirements, conflicts of interest and transparency regarding commissions and other financial benefits.

The review also contemplates expanded regulatory oversight and enforcement powers, reflecting concerns that the existing framework does not always provide adequate protection for lot owners or sufficient accountability for those responsible for managing owners corporations. Although many of these reforms remain subject to further development, they signal a broader move towards increased regulation and greater accountability across the sector.

Priority Reforms

While broader reforms continue to be considered, the Government has identified three recommendations that will be progressed as a priority.

(1) Financial Hardship Framework

The first relates to the introduction of a formal financial hardship framework for lot owners experiencing genuine difficulty paying owners corporation fees and charges.

At present, there is limited legislative guidance regarding how financial hardship should be managed, resulting in inconsistent practices across the sector. Some owners corporations adopt flexible payment arrangements while others proceed directly to debt recovery action. The proposed framework is intended to provide a more consistent and transparent process through which eligible lot owners may seek payment arrangements.

If implemented, owners corporations and managers may need to review their existing debt recovery procedures and adopt formal processes for assessing hardship applications and administering repayment plans.

(2) Legal Proceedings and Enforcement

The Government has also announced amendments intended to clarify the resolution required for owners corporations to commence certain non-monetary legal proceedings.

Recent court and tribunal decisions have been interpreted as requiring a special resolution before many forms of non-monetary proceedings can be commenced, including proceedings relating to breaches of owners corporation rules. In practice, this has created difficulties for many owners corporations, particularly within larger developments where obtaining a special resolution can be time consuming and difficult.

The proposed amendment would allow owners corporations to commence such proceedings by ordinary resolution. The reform is intended to reduce procedural barriers, improve the enforcement of owners corporation rules and enable owners corporations to respond more effectively to ongoing compliance issues.

(3) Amendments to the Subdivision Act

A further priority reform relates to the operation of the Subdivision Act 1988.

The Government has announced amendments intended to clarify the operation of provisions dealing with subdivision amendments and to address concerns identified during the review process. In particular, the reform is intended to ensure that a single owner holding a majority lot entitlement cannot frustrate subdivision amendments supported by all other affected owners.

The proposed amendments are expected to provide greater certainty for developers, owners corporations and lot owners involved in staged developments, mixed-use developments and other complex subdivision arrangements.

What the Reforms Mean for Owners Corporations

Although many of the recommendations remain subject to consultation and legislative implementation, owners corporations, committees, managers and developers should begin considering how future reforms may affect existing governance and operational practices.

Particular attention should be given to governance structures, compliance procedures, debt recovery processes, manager appointment arrangements, conflict management practices and subdivision structures. Organisations operating within the sector should also remain alert to further developments regarding manager regulation, disclosure obligations and regulatory oversight.

Looking Ahead

The three reforms currently earmarked for legislative implementation represent only part of a broader reform agenda. The Government’s response indicates an intention to strengthen governance standards, improve transparency and accountability, enhance professional standards and provide more effective mechanisms for dispute resolution and enforcement.

Although the timing and final form of many reforms remain uncertain, the Government’s response signals a significant shift towards greater accountability and consumer protection across the owners corporation sector. Participants in the sector should expect further legislative and regulatory developments over the coming years as the Government progresses implementation of the review’s recommendations.

For further information regarding owners corporation governance, dispute resolution, subdivision matters or compliance obligations, please contact the Property Team at marshalls+dent+wilmoth lawyers.