A group of aggrieved residents whose homes are riddled with defects have launched a class action lawsuit against the Victorian Building Authority (VBA).

The 36 homeowners from the Rangeview Estate in Diamond Creek, Melbourne, have reported a series of major flaws at their properties and say the VBA failed in its duty as regulator.

Builders Collective of Australia National President Phil Dwyer told insuranceNEWS.com.au the case is aimed as much at the “useless” state-run builders’ warranty insurance scheme as it is the VBA.

The Victorian arrangement is a “scheme of last resort”, meaning homeowners can only claim should the builder die, go bankrupt or disappear.

Otherwise, residents’ only option is to take legal action themselves, which can cost more than they stand to gain.

“We are trying to bring the situation to a head,” Mr Dwyer said. “We have had nothing but spin and tokenism for years, and it’s a shameful set of circumstances.

“We hope the Government is not going to enjoy this class action and we might get this mess cleared up once and for all.”

Mr Dwyer is calling for a first-resort scheme like the one in Queensland.

Rangeview property owner Steve Balfour told insuranceNEWS.com.au some residents have been able to make builders’ warranty claims.

But he says the cap, $200,000 at the time and now increased to $300,000, is too low.

“I’m still more than $20,000 out of pocket and losing out on rent every month,” Mr Balfour said. “The VBA is an absolute basket case, the whole system is wrong.”

The VBA says it cannot comment directly on the Rangeview Estate or the class action because “these issues will now be determined by the court”.

However, it maintains it has “carried out [its] statutory responsibilities”.