Reforms proposed to improve consumer protection for homeowners

When David Daff signed a contract with Western Australian builder Inspired Homes, he was told the process of finishing his home would only take two years.

Instead, she had to wait nearly five months and move three times before her home was completed, paying an estimated $100,000 more in rent and living expenses.

David Daff has run into problems with WA builder Inspired Homes. Holly Thompson

The state government has announced legislation that will give WA’s construction authority greater powers to cease trading for construction companies when they are in financial distress.

“Unfortunately, we saw obvious signs that the builder was in financial trouble – having handymen on site for long periods of time, constantly lying throughout the process when we would have seen progress, and eventually the builder going bankrupt,” Daff said.

“We actually did not receive support from any regulator or institution during this process.

“We tried our commissioner, our local parliamentary office, through the Planning Commission, everyone had to sit on one side of the business.

“It was definitely the hardest time of my life.”

Daff said he hoped the new legislation would mean other landlords would not have to go through the same situation.

“Unfortunately, we were in that perfect three-year timing where the builder was able to exercise financial diligence in the early or middle stages of my construction process. So we got trapped, stuck for three years,” he said.

“If we could apply a simple financial viability test, kindergarten math would probably show they couldn’t finish this structure.”

Amended legislation to go before WA parliament will improve consumer protection by giving the building commissioner and Building Services Board the power to intervene earlier.

The new powers will also allow the commissioner to better scrutinize the financial capacity of builders and prevent businesses continuing to trade in insolvency.

If registered building contractors cannot prove they meet the financial requirements, the regulator will be able to take action by either imposing conditions on the builder’s registration or, if necessary, canceling their registration.

In this case, the homeowner will be able to benefit from home indemnity insurance and secure a new builder.

As a further measure to improve the situation, a discussion paper and survey have been opened for consumers and industry to have their say on proposed reforms and improvements to the laws governing home building contracts.

Trade Minister Tony Buti said the legislation aims to boost confidence in the housebuilding industry and protect consumers.

“As we have learned from some famous and infamous cases over the last few years, regulators’ ability to regulate and hold home builders accountable is very limited,” he said.

“The legislation we introduced today will give the building authority greater authority to request financial information from the builder.

“As we speak today, the building commissioner’s (regulator’s) only ability is at renewal time… when the building permit comes up for renewal, which is usually every three years.”

Daff said the situation he and his family are going through has been “financially devastating.”

“I was able to successfully sue Inspired Homes for $65,000, and that was only halfway through, with another six months until bankruptcy was declared,” he said.

“The only other aspect I would like to see (in relation to reforms) was a recommendation our group made to the minister at the time, which was the milestone payments – what financial commitments were they making versus what homeowners were actually receiving in assets?

“Hopefully this is something that can happen from now on.”