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‘$30k out of pocket’: 3000 homeowners hit amid construction collapses

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But experts warn 2022 is only going to get worse with rising material costs due to Covid-19, labour shortages and regulatory pressures set to send more builders to the wall. The collapse of Brisbane-based Privium Homes in November was followed last week by the failure of Sunshine Coast-based BA Murphy Constructions. Combined, the failure of both companies has impacted almost 3000 homeowners across the country and left creditors owing sums approaching $100m.Hervey Bay couple Nikki and Dan Jacobson are $30,000 out of pocket after Privium downed tools on their block in November leaving a pile of timber on their acreage property.The couple signed a contract in January with Privium after being introduced to the builder by their mortgage broker.Ms Jacobson said that despite initial optimism about Privium, which traded under the name Impact Homes, the couple became increasingly alarmed by the delays in building work. Ms Jacobson said the couple is now trying to line up a new builder but will probably have to live in a caravan on site while their home is being built.“We will be substantially out of pocket but we will eventually get our home,” said Mr Jacobson, who added the Queensland Building and Constuction Commission had been helpful in processing insurance claims. “There are people worse off than us.”Grant Thornton partner Cameron Crighton said that although there was plenty of work for builders, rising costs had placed many construction firms under the hammer. “The pipeline for projects is the strongest it has been for a while but the problem has been delays in getting materials and labour,” said Mr Crighton. “Given the outlook, it is likely to get worse before it gets better.” Mr Crighton said a major issue for Queensland contractors next year would be the expansion of controversial project bank accounts to include commercial projects. The project bank account scheme requires builders to place funds in a trust account to pay subbies.He said that requirement would put additional pressure on the cash flows of builders, especially if they have multiple projects under way at the same time.Master Builders Queensland deputy chief executive Paul Bidwell said there would be more collapses on the way as builders continued to face hefty hikes in building materials. “There are a lot of nervous builders out there and the first quarter of next year will be telling,” said Mr Bidwell. “These supply chain issues could even run into 2023.” He said some builders were choosing to complete projects they have on their books and then permanently shut their doors. He said a majority of building materials such as timber had to be imported but faced extensive cost increases.The Association of Professional Builders estimates that more than half of Queensland’s $48bn building sector is insolvent with some firms losing up to $40,000 on each job. The collapse of Privium Group and BA Murphy, two of the largest home builders in the state, could presage more liquidations across the sector in the months to come.“Privium is just the tip of the iceberg,” says association co-founder Russ Stephens. “Once one of these big builders goes under more usually follow.”Mr Stephens said builders were on razor thin margins before the pandemic but are now losing money due to rising material and labour costs. “Builders now are losing between $20,000 and $40,000 on each job,” he said.Property technology group Dye and Durham said people could take simple steps to protect themselves from becoming a victim of a building firm going under. Dye and Durham managing director Peter Maloney said those steps could include financial background checks, evidence of court actions and proceedings, bankruptcy information and evidence of collections or commercial default notices. “Everyone’s situation is different so always work with your legal and financial advisers when undertaking background checks,” said Mr Maloney.“Given the financial instability in many industries, insolvency is a real risk and business and individuals need to take practical steps to protect their financial interests.”TOP BUILDING INSOLVENCIES OF 2021PRIVIUM (IN LIQUIDATION, NOVEMBER)One of the country’s top residential builders Brisbane-based Privium has estimated losses of $80m with about 2000 home owners affected across the country. The company was founded in the 1990s by a former Tasmanian carpenter Rob Harder.BA MURPHY CONSTRUCTIONS (IN LIQUIDATION DECEMBER)The Sunshine Coast firm, operated by third-generation builder Ben Murphy, has left behind debts of about $3m and impacted about 290 customers.PLANBUILD (IN LIQUIDATION APRIL)The award-winning builder collapsed with total debts of $3.7m and more than 80 unfinished homes around the city. The Queensland Building and Construction Commission (QBCC) said it had received a total of 88 claims from customers of Kedron-based PlanBuild under its Queensland Home Warranty Scheme.FUTURE PROPERTY SOLUTION GROUP (IN LIQUIDATION JULY)The Brisbane construction firm specialising in roofing repairs went to the wall owing about $1m. The firm launched in 2015.GW CIVIL CONTRACTING (IN LIQUIDATION MARCH)The civil construction company owed creditors $3.1m after Covid-19 delayed projects and it lost its JobKeeper eligibility. The company faced competitive pressure from larger companies that squeezed margins and projects became less profitable.TACOMA PLUMBING AND DRAINAGE (IN ADMINISTRATION DECEMBER)The major trade subcontractor collapsed after rising labour and material costs due to Covid-19 savaged its bottom line. The Pinkenba-based firm established in 1996 had worked for some of the state’s biggest building companies including Hutchinsons, Lendlease and McNab.The firm was working on the Ambrose project at Milton for Hutchinson Builders, Silk One at Woolloongabba for Tomkins and six other sites around south-east Queensland.JWM CONTRACTING (IN LIQUIDATION DECEMBER)The major Queensland civil construction company that had worked on the Wellcamp Airport and Kingsford Smith Drive upgrade owed creditors almost $4m. Administrators were appointed after the firm racked up millions of dollars in trading losses in the past two years.



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