Victoria’s construction industry has warned builders have reached their limit and new legislation will lead to some hanging up their toolbelt when they are most needed.
Victoria’s construction industry has warned legislation intended to give new home buyers up to 10 years of protection from bad builds “will backfire” and spark a builder exodus.
Earlier this week the state government introduced legislation to the parliament for a renewed construction sector watchdog, the Building and Plumbing Commission, including giving them the power to direct builders to rectify dodgy work for up to 10 years after construction is finished.
Building industry groups and one of the state’s biggest homebuilders have lauded the intent of the planned law changes, but slammed the potential outcomes.
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Housing Industry Association Victorian executive director Keith Ryan warned a growing core of builders around the state had now had enough and would end up hanging up their tool belts — particularly given the legislation at present appeared to allow for orders to be made over any type of complaint, without the need to justify the intervention.
“Most good builders will already go and try to resolve any alleged defects, but this will allow for them to be forced to fix problems for 10 years, that may not be their fault,” Mr Ryan said.
“There is wear and tear, and you will have situations, particularly in more custom builds, where clients will have their own trades doing work.”
The result, he said, was that the legislation “will backfire”.
There are warnings Victorian home builders could be turned off the job by new legislation.
“We will see a number of builders, particularly smaller builders, leaving the industry, as they are feeling burnt out and this will add to that feeling,” Mr Ryan said.
“Homes won’t be getting built if there’s no one around to build them.
“And it’s hard to imagine how it would not lead to costs for building in Victoria going up.”
Simonds Homes chief executive David McKeown said while anything that boosted confidence and could “drive out the cowboys” was a positive, there were risks that it would lead to fewer builders operating in the state and potentially could see raised costs being passed on to buyers.
“As a large volume builder, we think we are less impacted than some of the smaller players who won’t be able to afford to fund or fight 10-year-old claims, particularly where the builder may not be at fault,” Mr McKeown said.
“So it could actually help the bigger players and force further consolitation that, whilst beneficial to us, isn’t necessarily for the best for the community.
“And we don’t want to be discouraging people out of the industry when people need more homes.”
Consumers will be able to better access defect resolution under the new legislation.
Master Builders Victoria chief executive Michaela Lihou said while they understood the need to protect consumers, the legislation “takes a potential sledgehammer to the rights of builders”.
“Piling more legislation on decent builders is just another way of pushing them out of the industry,” Ms Lihou said.
The new legislation was celebrated by Victorian Premier Jacinta Allan as well as Consumer Affairs minister Nick Staikos earlier in the week as a way to boost confidence among buyers who could be confident their new homes would stand the test of time, and benefit from easier dispute resolution.
However, Mr Ryan added that the loss of builders in responce could be a bigger risk for the state’s building future than the government was aware of.
He said that while the Victorian Building Authority had estimated close to 20,000 builders held licenses across the state, the number who were still actively building was likely half that size — and could be as low as 7000.
Home builders have been under strain since Covid put limits on trades able to work on sites at one time, through to today as many continue to struggle with the impacts of a surge in material and tradie costs that blew past agreed contract prices for builds.
While the volume builders vastly increased the number of homes that could be built around the state, more specialised builds relied on smaller operators — with the likelihood that many of them could only build three or four homes a year.
Applied to that 7000 builders, that could effectively put a 28,000 home cap on custom builds in the state in an average 12 month period.
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