Laws to crack down on dodgy builders could be expanded to include milestone payments and cap price rises, in a bid to prevent a repeat of Perth's Niche Living and Inspired Homes scandals.
Legislation introduced to State Parliament on Wednesday will give the Building Commissioner more power to intervene sooner and suspend, or cancel, a builder's registration if projects stall due to financial stress.
David Daff's five-year nightmare with Inspired Homes, ironically, inspired the overhaul. The troubled builder entered voluntary administration a year ago, with 87 unfinished properties and close to $10 million owed to creditors. Mr Daff estimates he lost $100,000, but was only able to sue for $65,000.
"We were trapped," he said. "Kindergarten mathematics would have shown that they weren't able to finish that house. Myself and all of the other homeowners that were building through Inspired Homes simply just had to wait and put our lives on hold."
The new laws will empower the Building Services Board to demand bank statements to prove whether a builder is solvent, and suspend them if they're not or if they don't comply within seven days.
"What it absolutely will mean in the future, and I absolutely hope, is that no other home owners need to go through the same situation that we had to go through and suffer," Mr Daff said.
The legislation has stopped short of including a requirement for milestone payments, wanted by Mr Daff, but it's an option that will be considered as part of a broader review. A discussion paper was launched today, with a six-week window for the industry and the public to comment. It also proposes stricter rules around when price rises are allowed, new financial thresholds for remedy orders for building defects, and an accreditation scheme for building inspectors.
"Why not pull the trigger on that, or indeed, pull the trigger on any of these things? It's because we recognize that there needs to be a balance," Parliamentary Secretary Dan Caddy said. "None of this is government policy, yet, this is simply a discussion paper with some proposed reforms."
Minister for Commerce Tony Buti said the new laws aim to strike a better balance between consumer protection and maintaining market confidence. "We've had a real problem where there may be a suspicion that a builder is trading in a situation where they're nearly insolvent or about to go insolvent," he said. "At the moment, there's very little that could be done. But under this legislation, you have the ability of the building commissioner to ask for financial statements, and you have the ability of the board to propose conditions on that license, to impose a temporary suspension of that license and, in some cases, bring a cancellation on that registration, which then triggers the ability of the homeowner to then obtain insurance."
Building Commissioner Phil Payne was confident the legislation has enough teeth, but said struggling builders won't automatically be named and shamed. He said the vast majority of builders do the right thing. "There's about 6000 registered builders, contractors in Western Australia, and we deal with around about 20 per year," Mr Payne said. "The last thing we wanted to do is to give public concern that forces builders into a position where they might not be financial."
