Rising toll: Latest builders to go bust

A group of construction companies all registered to the same address in NSW is among the latest builders to go bust, with the industry still battling the effects of inflation, rising costs and trade shortages.

The liquidator said the collapse of Adroit Constructions, Maximus Builders, Maxim Builders and Maxus Builders put 25 projects at risk.

The number of builders in liquidation in 2024 is a record, with almost 3000 building companies collapsing in the last financial year. According to the Australian Securities and Investments Commission (ASIC), almost 3000 construction companies went into administration – more than double the amount recorded in the 2022 financial year.

 

 

Master Builders Association chief executive Denita Wawn attributed the rise to several factors, including labour shortages, the soaring cost of materials – making fixed price contracts particularly unprofitable – planning and licensing delays and “unfeasible lending practices”.

Another to join the sorry list of latest builders to go bust is Adelaide Designer Homes, which went into liquidation in August. One of the 20 homeowners left with incomplete builds told the ABC that the South Australian company was the seventh builder that owed him money to have collapsed in the past 15 years.

One of Western Australia’s biggest residential builders Collier Homes, which had been operating for more than 60 years, went under in April, with Home Builders Action Group chairman Jason Janssen claiming it could have been avoided if the government’s interest-free loan scheme had kicked in earlier.

“In the last eight weeks, we’ve had seven or eight builders go into administration or liquidation in WA alone ... it’s happening (at) a rapid pace and I believe this is just the tip of the iceberg,” Mr Janssen said.

What protection do I have if my builder collapses?

With the alarming number of builders in liquidation in 2024, it pays for anyone building, or planning to build, their own home to check what protection they have against insolvency. In many cases, builders are required to take out insurance to protect their clients.

For example, in New South Wales, customers are protected through home building compensation (HBC) cover, which builders must take out for residential building projects over $20,000, including the construction of new homes, renovations and extensions. South Australia offers similar protection for any domestic work that costs more than $12,000 under its building indemnity insurance scheme.

In the Northern Territory, residential building protection is provided through a fidelity fund certificate, which covers homeowners against costs incurred if their current builder goes bankrupt, dies or disappears, or has their registration cancelled. In Queensland, builders must provide home warranty insurance for residential construction projects valued over $3300.

Victorian builders are required to obtain domestic building insurance for all residential building projects valued at more than $16,000, while Western Australian builders must provide home indemnity insurance for all residential building projects valued over $20,000. Homeowners in Tasmania are encouraged to seek appropriate insurance to protect themselves against potential risks, while the Australian Capital Territory is amending the Building Act that helps protect consumers.

 

 

Regardless of where you live, it is important to get a good understanding of what happens when a builder goes into liquidation. There are thousands of homes built around Australia without major issues every year but it is always better to read the fine print in case your builder ends up on the casualty list.

What if the builder has been taking my money while insolvent?

If your builder looks like it might become the latest builder to go bust, you might be tempted to cancel the contract and hire a new builder to take over. While this is a natural move, it is important to note that the Corporations Act 2001 prohibits contract termination solely due to the builder's insolvency.

Different laws apply in each state and territory, and builders might still be able to ask for money even if they have financial issues. It is best to seek legal advice before taking any action.

If you have an agreement involving your builder and a bank or financial company, the builder's financial problems might also affect that agreement. Ask a legal expert if you need permission from the bank or financial company before taking action against the builder.

 

 

Where can I get help?

If the company contracted to create your dream home joins the string of builders in liquidation in 2024, it can be difficult to know where to turn. Stress levels understandably increase with each passing day of uncertainty.

If you are not getting the answers you deserve from your builder or the insurer that is supposed to be covering your losses, lodge a complaint with us and let Handle My Complaint help you get back on solid ground.