Victoria's building watchdog will be replaced after it failed to stop shoddy builders.
A report into the Victorian Building Authority, commissioned by its chief executive Anna Cronin, has laid bare a series of weak responses to homeowner complaints.
Seven complex cases dating back to 2014 were independently examined by building industry regulation expert Bronwyn Weir.
In one example, a family was slapped with a bill for an extra $2 million two years after signing a contract.
The contract was terminated after they paid the additional money and they had to pay an extra $2.6m to fix defects and finish construction.
Another family is yet to move into their home five years after complaining to the regulator.
The report makes 20 recommendations, including giving a new watchdog powers to force builders to rectify work after homeowners move in.
Planning Minister Sonya Kilkenny says Victoria's new building regulator, the Building and Plumbing Commission, won't be hamstrung by the same restriction.
The new watchdog will be able to stop the sale of apartments without first fixing serious defects. (Joel Carrett/AAP PHOTOS)
"New types of powers will give the regulator the power to direct builders to fix substandard work, both before owners move in and after they move in and beyond," she told reporters in Brunswick on Thursday.
"The new watchdog will also have powers to stop the sale of apartments without first fixing any serious defects."
Ms Cronin apologised to those who had been let down by the regulator's failings.
"We can and will do better," she said.
"We are learning from these past mistakes and already putting in place changes to become a more effective and trusted regulator."
Ms Kilkenny would not be drawn on whether affected customers should be offered compensation.