About 25% of older Victorian residential properties have building work that was completed without the required permit — a kitchen extension, an enclosed verandah, an unpermitted second-storey addition, a finished garage converted to a granny flat. The work often looks fine, the property has been sold and resold over decades, and the issue only emerges when a buyer’s building inspector or solicitor digs into the council records.
Buying a property with unpermitted works is a real risk. Council has the power to issue building orders, including demolition orders. Insurance can be voided. Re-selling becomes harder. This guide covers the detection, the resolution paths (retrospective approval, demolition, accept-and-disclose), and the contract protections every buyer should consider.
What counts as unpermitted work?
Under the Building Act 1993(Vic) and the Building Regulations 2018, most building work requires a building permit before it’s undertaken. The major categories:
- New dwelling construction
- Additions, extensions, second storeys
- Garage and carport construction
- Decking over 800mm high
- Pools, spas, retaining walls over 1m
- Demolition
- Structural alterations (load-bearing walls)
- Plumbing and drainage that affects the building structure
Some smaller works are permit-exempt (a 9m² garden shed, a deck under 10m² and 800mm, internal cosmetic work without structural change). The exemptions are narrow — most home improvement work requires a permit.
Detection — how to find unpermitted works
- Council building permit search.Order a Property Information Statement (PIS) from the council. It lists all permits issued for the property. Compare against what’s actually built.
- Aerial imagery comparison. Use NearMap, Metromap, or Google Earth historical imagery to see when structures appeared. Cross-check against permit dates.
- Independent building inspection.A pre-purchase building inspector may identify works that don’t match original construction, signalling later additions.
- Section 32 disclosures.The vendor must disclose any notices, orders or directions affecting the property. Look for “building order” or “building notice” in the title search.
- Visual inspection of property documents. Compare the original house design with what’s present. Mismatches in materials, ceiling heights, or window styles often indicate later additions.
The four resolution paths
| Option | What it means | Cost | Risk |
|---|---|---|---|
| Retrospective building permit | Apply for permit covering existing work | $5k–$25k | Modification or demolition if non-compliant |
| Building permit + rectification | Bring work up to code, then permit | $15k–$80k | Discovery of further non-compliance |
| Demolition | Remove unpermitted structure | $8k–$40k | Loss of property feature you wanted |
| Accept and disclose at resale | Live with risk, disclose to buyer | Future price discount | Council enforcement during ownership |
Council enforcement — what can happen
Once council becomes aware of unpermitted works, several enforcement options exist under the Building Act 1993:
- Building order to comply (s111). Requires the owner to bring the work into compliance within a specified time.
- Building order to demolish (s111). Requires removal of the structure.
- Infringement notice. Up to $1,800 for individual breaches.
- Prosecution. Maximum $19,800 for an individual, $98,800 for a body corporate, plus daily continuing breach fines.
Council typically only acts when something prompts a complaint (neighbour dispute, planning permit application, fire safety inspection). But once flagged, the obligation transfers to the current owner regardless of who built the unpermitted work.
Insurance implications
Most home insurance policies have exclusions for damage caused by or affecting unpermitted structures. Specific risks:
- Fire damage to or originating in unpermitted work — often excluded
- Storm or flood damage to unpermitted structures — often excluded
- Public liability if someone is injured in the unpermitted area — often excluded
- Building insurance for the whole property — may be void if material non-disclosure
Some insurers will cover unpermitted works if disclosed and after a structural assessment, sometimes at a premium loading. The key is disclosure.
Special conditions for properties with unpermitted works
- Vendor obtains retrospective permit before settlement. Vendor bears the cost, with a long-stop date for completion.
- Price reduction reflecting rectification cost. Buyer accepts the work and discounts the price by the cost to bring it to compliance.
- Vendor demolishes unpermitted structure before settlement. Vendor bears demolition cost.
- Right to rescind. If a building order is issued before settlement, the buyer can rescind and recover the deposit.
Walk-away triggers
- Active building order or notice on the property
- Unpermitted structural work (load-bearing walls, foundations) where compliance cost is uncertain
- Council records show prior compliance disputes
- Vendor unwilling to disclose construction history
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.