Dear members,
The Home Builders Action Group [HBAG] had a very good meeting this morning with the Building and Energy Division of the Department of Mines, Industry Regulation and Safety at which we were able to canvas the changes to the Home Building Contracts Act that we believe are urgently needed.
Building and Energy was represented by:
- Saj Abdoolkhan, Executive Director Building and Energy
- Peter Stewart, Director Policy and Legislation
- Dan Kearney, General Manager Policy and Legislation
The discussion centred on the Home Building Contracts Act; was wide ranging and positive with the government representatives acknowledging the matters we drew to their attention and their concern about them.
Specifically, HBAG was able to highlight the following sections of the act which require urgent review:
• Part 9 (1) (a) – 45 days for Building Permit from Contract Signing date
• Part 10 – 6.5% maximum deposit. Due to the increased level of regulation, time and cost that Builders need to cover prior to works commencing on site the 6.5% Deposit is no longer sufficient and HBAG believes 10% deposit is appropriate
• Part 12 – PC or PS item – This has not been possible to comply with during the past 3 years due to spiralling Price Increases
• Part 13 – Price Increases – There is no provisions for Price Increases once works have commenced on site. There needs to be flexibility to protect Builders and home buyers when unforeseen and unprecedented circumstances arise
• Part 19 – Breach of Contract – There must be a way of clients terminating a Contract when the Builder fails in their responsibility. Prior to and during construction.
• Part 3A – Housing Indemnity Insurance should be discretionary for Contracts above $500,000.
• Division 3A – 25GB – Indemnity Insurance to be reviewed
• Time Extensions – There needs to be a way to notify client that the Builder is advising them of time extensions due to unforeseen delays. The past 3 years has been fraught with delays outside of the Builders control.
HBAG believes the burgeoning housing crisis is likely to become an increasingly important issue in the next 12 months. Here are links to recent media reports in which HBAG highlights the problem:
This is a link to the ABC Afternoon Programme. The HBAG interview starts at the 40-minute mark of the programme accessed by clicking i9n DRIVE.
https://www.abc.net.au/listen/programs/perth-drive
And this link is a recording of the ABC Television programme televised on Tuesday in the 7pm news.
Unless urgent policy action is taken at a Government level, the unprecedented financial challenges confronting small and medium sized building companies will inevitably result in further defaults. And for every small to sized builder unable to carry on, up to 50 home buyers – West Australian families – are affected. The knock on effect of building collapses includes unfinished homes, home buyers confronting big price rises, spiralling rents, and increased homelessness.
At Treasury’s request, HBAG will meet this week to discuss appropriate policies to mitigate the worst effects of industry problems and, at the arrangement of the Hon. Sue Ellery MLC, it will meet with the Building and Energy Division of the Department of Mines, Industry Regulation and Safety to discuss the Home Building Contracts Act. HBAG will also meet with the Opposition Housing Spokesperson, the Hon. Steve Martin MLC.
To restate HBAG’s position: HBAG is strictly non-party political; will work with all parties believing there are solutions, and that it is not just a matter of more Government spending so much as a question of spending money already committed more wisely.
HBAG believes:
- The Home Building Contracts Act is not fit for purpose in the present environment and must be urgently changed;
- The SME Recovery Loan Scheme https://treasury.gov.au/coronavirus/sme-recovery-loan-scheme\ should be reinstated as quickly as possible;
- Further Government stimulus must be directed through the builders and the trades to keep the industry afloat;
- Trade Training has to be addressed and reshaped to produce skilled workers quicker;
- An intelligent industry assistance package should address:
- The funding crisis resulting from 2 years of losses and that means No and Low interest loans
- Assistance for legacy and loss-making contracts resulting from the shortcomings of the Act;
- Indemnity schemes that work and don’t leave builders and homeowners high and dry; and
- The need for a much closer working relationship between the industry and government.
As an example, the federal government’s plan to build another 1.2 million homes is absolutely unrealistic. In this state, the builders can’t afford to finish the homes they have started and there’s no capacity to take on more orders.
The Home Builders Action Group [HBAG] seeks your support for its efforts in the months leading up to the next election and is available to provide any further information you require when considering the housing issue.
Best wishes
Yours sincerely
Jason Janssen
CHAIRMAN
Home Builders Action Group
0412 373 404