Development Loans in Melbourne: What Changes in Victoria
Development loans in Melbourne and Victoria: how planning permits, off-the-plan rules, state charges and Home Warranty insurance decide when lenders fund.
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Development Loans Melbourne · Planning Permits · Home Warranty
A Melbourne lender can approve your file and still hold back the first drawdown. In Victoria the money moves only once the planning permit, a matching building permit, compliant presale contracts and the builder's Home Warranty cover are all on file.
Quick Answer
A development loan for a Melbourne or regional Victorian project works like development finance anywhere in Australia, but Victoria adds its own gates: the planning permit, off-the-plan rules for presales, state taxes and charges, and new home warranty insurance for domestic building contracts. Lenders draw once those gates and the development approval are in place, so the timetable runs on permits as much as on credit.
Also called: development finance Melbourne, construction finance Melbourne, property development loans Victoria. Same lending; construction finance is the builder's word, development finance the developer's.
Can you get a development loan for a Melbourne or regional Victorian project?
You can get a development loan for a Melbourne or regional Victorian project, and the core test is the same as anywhere in Australia: a lender funds the land and the build in stages against the finished value, your equity and a credible exit. What changes in Victoria is the order in which documents must exist before money moves, and that order is what this insight is about.
The lending itself is development finance, and our property development finance guide covers how staged funding, end value and cost tests work. Duplexes, townhouse runs and small apartment projects sit in the small-scale development finance band, where non-bank lenders often have more appetite than major banks, varies by lender. Regional Victorian sites are funded too, though valuers and lenders usually want evidence of local demand first, which our regional property finance guide explains.
Where this commonly lands is a file with the equity in place but one Victorian document missing. A builder who needs cash before the first draw has a different problem, covered in our post on the Melbourne pre-start cashflow gap.
How do Victorian planning permits shape when a lender will fund?
In Victoria the planning permit comes before the building permit, and a lender will not release construction funds until both are in place and agree with each other. A building permit cannot be issued unless the planning permit exists, and it must match the permit's conditions and endorsed plans, according to the Victorian Government's guide to planning permits. That makes the planning permit the first document a credit team asks for, and the development approval the whole valuation rests on.
Permits also expire on set time limits if the development has not started or finished in time. From the underwriter's seat, a permit close to expiry is a valuation problem as much as a legal one, because the as if complete value assumes the permitted scheme can still be built. Expect the lender to compare the permit's expiry with the build program and ask how an extension would be handled.
Victoria's Development Facilitation Program fast-tracks some eligible housing projects, with the Minister deciding the application and no appeal to the tribunal. It can shorten the approval stage, but it does not change what a lender needs before drawing: endorsed plans and a matching building permit. If you are buying a site before the permit is granted, that is a different loan, covered in our guide to site finance before approval.
Which Victorian taxes and charges hit a small development?
Land tax, windfall gains tax, the Growth Areas Infrastructure Contribution, development or infrastructure contributions and stamp duty on the site can all hit a small Victorian development, and each lands at a different point in the feasibility. A lender treats every one of them as a project cost, so a charge you did not budget for comes straight out of your margin.
| Tax or charge | What triggers it | When it hits the feasibility | Who to ask |
|---|---|---|---|
| Stamp duty on the site | Buying the land | At settlement of the site purchase, before any construction funding | Your accountant or conveyancer |
| Land tax | Owning taxable land at the annual assessment date | Every year you hold the site, through approvals and the build | Your accountant |
| Windfall gains tax | A planning scheme amendment that rezones the land and lifts its value past a threshold | At rezoning; payment can be deferred, with interest, until a later event such as sale or development | Your accountant |
| Growth Areas Infrastructure Contribution | Land in Melbourne's growth areas, triggered by events such as a dutiable transfer, a subdivision statement of compliance or certain building permits | At the trigger event; a certificate shows whether the land carries a liability | Your accountant or conveyancer |
| Development or infrastructure contributions | Development contributions plans and infrastructure contributions plans that levy developers for local infrastructure; infrastructure contributions extend to Train and Tram Zone Activity Centres for permit applications lodged from 1 January 2027 (pilot) and 1 July 2027 (expanded) | Usually set through the permit, with timing set by the plan and the council | Your town planner or the council |
Sources: State Revenue Office Victoria, windfall gains tax page (updated 8 December 2025) and Growth Areas Infrastructure Contribution pages (updated 26 August and 8 September 2026); Victorian Government, infrastructure contributions page (updated 28 August 2026). Read 12 October 2026. Amounts and rates are not shown; they change and depend on the land.
Two of these catch small developers more than the others. A Growth Areas Infrastructure Contribution can attach to land on the city's fringe without the buyer noticing, which is why anyone can order a certificate before contracts are signed. Windfall gains tax only applies where a rezoning lifts the land's value, but it can sit on the title of a site you buy after that rezoning, so ask at due diligence. The right person for your numbers is your accountant.
Once every charge is in the feasibility, you can check eligibility before the permit lands.
How do Victorian off-the-plan rules affect the presales a lender counts?
Victorian off-the-plan rules shape presales in two ways a lender reads closely: a deposit of no more than a tenth of the price under the Sale of Land Act, and a sunset clause under which the contract can be rescinded only with the buyer's consent or a Supreme Court order. Both change how much weight a lender puts on each contract.
The deposit cap means a buyer has a limited amount at stake, so the lender looks harder at who the buyers are and whether the contracts are arm's length and unconditional. The sunset rule protects buyers from a developer ending contracts to resell at a higher price, which also means a developer cannot easily walk away if the build runs long. If the program slips past the sunset date, buyers may be able to end their contracts, and the presales the facility was sized on fall away.
In practice the lender compares each sunset date with a realistic plan registration date and wants a margin between them. Our guides on qualifying presales and on a sunset clause approaching cover how presales are counted and what happens when time runs short. The wording of your off-the-plan contracts is a question for your solicitor before the first contract goes out.
What does Victoria's new home warranty insurance mean for a development loan?
Victoria's Home Warranty, issued by the Building and Plumbing Commission, replaces Domestic Building Insurance for domestic building contracts signed on or after 1 July 2026, so a lender funding a Victorian residential build now asks which scheme the contract falls under. The Commission has been Victoria's building regulator since 1 July 2025.
Home Warranty for contracts signed from 1 July 2026 covers homes up to three storeys where the contract value is over a threshold, which at the time of writing is $20,000. It is first resort cover, the registered builder pays the premium and the homeowner receives a Notice of Cover. Domestic Building Insurance continues for contracts signed before 1 July 2026, so a project with contracts on both sides of that date can carry both schemes at once.
Sources: Victorian Government, Better domestic building insurance; Consumer Affairs Victoria, Domestic building insurance and insolvency. Both read 12 October 2026.
For a development loan, this changes the evidence the lender asks for before the first construction drawdown. The contract date decides the scheme, and the lender wants the matching proof of cover on file. Any older guidance that tells a Victorian builder to buy Domestic Building Insurance for a new contract is now out of date.
The change also reaches owner-builders: an owner-builder who sells within six and a half years of completion needs cover, at the time of writing. How lenders treat owner-builder projects is covered in our owner-builder construction loans guide.
What do lenders check on the builder and the contract in Victoria?
Lenders check that the builder is registered with the Building and Plumbing Commission, has the capacity to take on your job, and is working to a fixed price contract that a quantity surveyor has tested. What lenders actually look at first is whether the builder can finish, because an unfinished build is worth far less than the land and the money already spent.
- Registration. The builder must be registered with the Commission for the class of work; the lender checks the register, not the builder's letterhead.
- Capacity. From 1 July 2026 the Commission can set minimum financial requirements for builders, which can limit how much work a builder takes on at once. A builder near its limit may not be able to take on your contract, which can stall the whole project.
- Fixed price contract. Lenders prefer a fixed price contract with a clear payment schedule; our guide on the building contract a lender accepts sets out what passes.
- Quantity surveyor's report. A quantity surveyor tests the budget at the start and signs off each stage before money moves.
- Current cost assumptions. National Construction Code 2025 changes feed into Victorian build costs, covered in our post on NCC 2025 and Victorian builder finance.
The documents most Victorian lenders ask for are listed in our construction loan pack, which is worth working through before the application goes in.
How does a Melbourne development loan run, step by step?
A Melbourne development loan runs in eight steps, from site and feasibility through permits, presales and insurance to staged drawdowns and the exit. The full run takes weeks to months depending on permits, indicative and varies by project, and most of that time sits before the first drawdown rather than after it.
- Site and feasibility. Buy or control the site, check for Growth Areas Infrastructure Contribution and windfall gains tax, and run a feasibility that includes every Victorian charge.
- Planning permit. Obtain the permit and endorsed plans, and note the expiry dates.
- Presale contracts. Sell off the plan within the deposit cap, with sunset dates set beyond a realistic plan registration date.
- Builder, contract and Home Warranty. Appoint a registered builder with capacity, sign a fixed price contract and confirm the cover that matches the contract date.
- Building permit. Obtain the building permit, matching the planning permit's conditions and endorsed plans.
- Quantity surveyor's report and valuation. The lender orders an independent cost review and an as if complete valuation, then issues the formal approval.
- Staged drawdowns. Each drawdown is released against completed work once the quantity surveyor confirms the stage.
- Completion and exit. Settled sales repay the facility, or unsold stock is refinanced, as planned before the loan started.
Victoria's rules differ from other states at steps 2 to 5. Our comparison of construction rules by state shows how, and a broker can put a Victorian project to several lender types at once. More builder and developer guides sit in the Construction Hub.
A development loan in Victoria is tested the same way as anywhere else, but it is released in Victoria's order: planning permit, presales, Home Warranty, building permit, then staged drawdowns. Budget every state charge into the feasibility, set sunset dates you can beat, and confirm your builder's registration and capacity before the lender asks.
Key takeaway: line up the permit, the presale contracts and the builder's insurance before you apply, because that is when a Victorian lender will draw.Frequently Asked Questions
A development loan in Melbourne is available from major banks, non-bank lenders and private funders, and the right fit depends on the project's size, presales and your equity more than on the city. Smaller projects with fewer presales often sit better with non-bank lenders, varies by lender. A broker can put one file to several lender types, which is how our development finance service works.
Construction finance in Melbourne works as it does elsewhere: the lender releases funds in stages, each one after a quantity surveyor confirms the work. What changes in Victoria is the paperwork before the first drawdown, including a planning permit, a matching building permit, a registered builder and Home Warranty cover for contracts signed from 1 July 2026. Our property development finance guide covers the mechanics.
Property development finance in Melbourne differs from other states in its rules rather than its lending model. Victoria has its own planning permit system, off-the-plan deposit and sunset clause rules, windfall gains tax, growth area contributions and, since 1 July 2026, its own Home Warranty insurance. Our post on construction rules by state compares them.
A lender does need a planning permit before it funds construction on a Melbourne development, and it also wants the building permit that must match it. Some lenders will fund a site purchase before the permit on tighter terms, varies by lender, which our guide to site finance before approval explains. The construction facility itself waits for development approval.
Off the plan sales with a sunset clause can count as presales in Victoria, provided the contracts are arm's length, enforceable and carry a sunset date the project can realistically beat. Because a developer can end such a contract only with the buyer's consent or a Supreme Court order, a sunset date set too close to completion is a risk the lender weighs. Our guide to qualifying presales sets out what lenders count.
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