The construction industry’s problems continue with a Victorian builder revealing that he has cleared his debts of at least $600,000.
The builder, Waterford Homes, had a number of homes under construction, according to appointed liquidator Ben te Wierik of BTW Advisory.
It comes as Australia’s construction industry is going through a crisis, with around a dozen companies liquidating so far this year amid rising building materials costs, an ongoing supply chain crunch and fixed contracts, which have put many businesses out of business.
Te Verek said he was still disclosing how many homeowners would be affected after his appointment on Tuesday, but said he had so far found 60 creditors who could be in debt to the builder.
“There are about 60 creditors in total including the ATO, and it could be higher, but there are clearly large and small creditors. It was clear that some of those were homeowners, who would be making claims under the construction guarantee insurance.
“Currently, over $600,000 in claims have been found from trades and ATO debts but it is likely to increase as further claims are filed.”
Do you have a similar story? keep in touch | [email protected]
He said it was “no secret” that builders large and small alike were currently facing “challenges” and he suspected Waterford Homes were facing similar circumstances.
“Both commercial and residential developers have a lot of work to do with fixed-price contracts, increasing input costs, supply chain stress and even material shortages and leading to the fact that it’s hard to get a deal, all of this leads to delays that lead to inflow – on cash flow.
“This makes it very challenging for any business but especially those in the construction industry with shrinking profit margins.
“It’s a very stressful time for homeowners and family members who owe money.”
Mr. T. Werick said he would investigate why the company and its assets failed, as well as whether any transactions could be recovered as part of the liquidation.
The construction industry has had a series of collapses this year.
Two major Australian construction firms, including Gold Coast-based Condev and industry giant Probuild, have already been liquidated this year.
Smaller companies such as Hotondo Homes Hobart and Perth, Home Innovation Builders and New Sensation Homes, as well as Sydney-based Next have also collapsed, leaving homeowners in limbo and unfinished homes.
At the end of last month, two Queensland companies just days away, Pivotal Homes and Solido Builders, collapsed.
An industry insider told news.com.au earlier this year that half of Australian builders are on the verge of collapse due to their business bankruptcy, and could see thousands of homes affected in the coming months.
One involves a Victorian construction company that may be on the verge of collapse after it has accumulated millions of debts and stopped construction for months.
Snowdon Developments Pty Ltd has 15 creditors chasing it for debts totaling $2.5 million asking the Victorian High Court to impose a liquidation order to force the company to liquidate “on the basis of insolvency”.
There are 10,000 to 12,000 residential construction companies in Australia undertaking new homes or major renovation projects, a figure estimated by the APB.
A construction insider, who works for one of the largest builders in New South Wales, previously warned that the situation in the industry was “going to get worse” after a series of crashes in the sector, with home building prices varying between $40,000 and $100,000.
There is a hidden crisis as a result of the construction industry’s problems, said Scott Mason, general manager of commercial and real estate services at Equifax.
“Rising costs, disruption to supply chains, and periodic shutdowns have led to the non-profit boom, with many construction companies committing to projects that are no longer financially viable thanks to significant increases in the price of building materials,” he said.
“While big names such as Probuild and Condev have recently collapsed in the news, what often does not make the headlines is the impact of these events on the small businesses that make up the bulk of Australia’s construction companies.
“According to Equifax data, managers in building and construction services are 30 percent more likely to have mortgage arrears than the average consumer, while building construction owners are 80 percent more likely, and those in building services are more likely 100 percent more likely to have mortgage arrears.”
He said the shocking statistics show the far-reaching effects of bankruptcy.
“The effects of streaming on the entire ecosystem of suppliers and the people behind this business often disappear,” he added.
A healthy construction industry is vital to a strong economy and continued growth, with the sector employing nearly 9 per cent of Australian workers and 7.5 per cent of Australian gross domestic product, according to creditorWatch.