When Matt Stahl heard rumours about the financial stability of Australia's largest building company Metricon this week, his heart sank.
The landscaper had saved since he was a teenager to pay a $17,500 deposit to build his first home on a 981-square-metre block in the quaint township of Campbells Creek.
His block is about a 10-minute drive through billabong-dotted historical goldfields from Castlemaine in central Victoria.
Permit approval and preliminary work were ahead of schedule and construction was due to break ground in early June, but talk about Metricon being under pressure left Mr Stahl feeling like the roof was caving in on his dream.
Some of the rumours were sparked by the death of Metricon chief executive and founder Mario Biasin on Monday, and prompted the company to meet with Victorian government representatives.
Amid industry-wide challenges in construction and speculation amplified by media coverage, the company's acting chief executive Peter Langfelder called a press conference to put the rumours to bed.
"We're in a really strong, viable position, we've got the support of our banks, we've got headroom available," he said.
But away from the spotlight cast on Australia's biggest home builder, pressures on the industry exacerbated by the COVID pandemic have been well-documented.
Amid issues such as rising costs, supply constraints and soaring sub-contractor fees, some big firms have already gone under, such as Probuild and Privium.
Master Builders Victoria's Michaela Lihou said yesterday some businesses were being forced to "walk away from the industry".
"We've got insolvencies going on. We're trying our best to protect the industry," she said.
So what should you do if you're not so lucky, and your dream of building a home becomes a nightmare?
Firstly, wade through rumour and establish facts
Since the Metricon speculation hit the headlines, the national not-for-profit legal program Justice Connect has seen a 140 per cent increase in traffic to its online guide for what to do in case of builder insolvency.
If you think your builder is having financial troubles, you should check your building contract or permits to confirm the correct name of your builder or the registered name of the company.
The Australian Bankrupty Register can be used to check whether a sole trader or a building partnership has collapsed, while the ASIC register will tell you if a company has been deregistered.
Insurance covering insolvency is built into contracts
If your fears are confirmed, your next immediate step is to access the details of the Domestic Building Insurance that is included in your building contract.
Every state and territory, except Tasmania, requires building companies to have insurance for defective or incomplete work due to insolvency.
The building contract will list all the insurance information you need, including the policy number, to make a claim.
In some states, this will be done through statutory authority while others require you to contact insurance companies directly.
Here are the best contacts for each part of Australia:
- Queensland — Queensland Building and Construction Commission
- New South Wales — iCare Home Building Compensation Fund
- ACT — Planning ACT
- South Australia — South Australian Government Financing Authority
- Western Australia — Department of Mines, Industry Regulation and Safety
- Northern Territory — Fidelity Fund
- Victoria — Victorian Managed Insurance Authority
- Tasmania — Consumer, Building and Occupational Services
Your state authority will also need copies of your builder's invoices, receipts or bank statements as proof of payments, and a list of incomplete work you are claiming.
If you cannot find details of the insurer, or it appears that your builder may not have insurance, you should still contact your state authority for help.
The authority will assess your claim and send out a building consultant to visit your property and inspect what work is needed.
You may be asked get quotes from a new builder of your choice, or the authority may do that on your behalf and will then decide what it will pay out to complete the work.
If the insurance route doesn't work out, a tribunal may be the next step
Justice Connect chief executive Chris Povey says if you don't agree with the assessments by the authority or the insurer, the next step is to go to a tribunal.
"That's just more stress and anxiety," he said.
"I mean, you're dealing with people's biggest investment."
Going to the tribunal can be time consuming and very costly.
Groups like Justice Connect offer help for what it calls "the missing middle" — those who can't afford to pay for a lawyer but earn too much to qualify for pro bono representation or legal aid.
"Legal help is out of reach for most Australians so it's really not ideal that people end up before a tribunal," Mr Povey said.
"We're in the middle of pretty much a housing crisis.
"The law needs to be as accessible as possible. It's good that there is insurance coverage but there still is a need for people to have support through the process."
So after all that, who will finish my home?
Mr Povey says he has concerns about how people will secure a new builder during the labour and construction supplies squeeze.
"Realistically speaking, what is the likelihood that they're going to have somebody pick up a half done job?," he asked.
"And what is the cost of that going to be?
"I don't like people's chances changing horses halfway through and we're going to have to think deeply about that in the weeks and months to come as more builders come under pressure."
Editor's note (23/05/2022): This story originally listed Hotondo Homes as being among the construction firms to have gone into administration. Tasmanian Constructions Pty Ltd, trading as Hotondo Homes in Hobart, has gone into administration, not Hotondo Homes.
