This article is from the Australian Property Journal archive
HOMEBUYERS who paid deposits to collapsed builder Porter Davis without construction starting on their dream home may have lost their hard-earned savings, liquidators told a webinar full of distressed customers yesterday.
Porter Davis appointed Grant Thornton as liquidators on Friday, halting work on 1,700 Porter homes – 1,500 in Victoria, the rest in Queensland – and with 410 staff being made redundant.
Grant Thornton liquidator Said Johani said at the online meeting yesterday morning – which hit capacity at 500 people, leaving many shut out – that some who had paid a deposit, but not had works begin, were left uninsured.
“There are a number of customers who have fallen into that gap between paying (the) deposit and work not yet starting on their site because they’re awaiting their permit who may not have insurance cover,” Johani said.
“Unfortunately once the deposit has been paid those funds go into general working capital for the business, and it’s not possible for those funds to be refunded.”
Grant Thornton is working with the Victorian Managed Insurance Authority and the Queensland Building and Construction Commission for alternative solutions, he added.
The Sydney Morning Herald reported that Porter Davis lopped $50,000 off the price of its signature Grange-style houses early in February, while other homes in its range were discounted by between $20,000 and $40,000, in a desperate attempt to attract customers while possibly not expecting they would fulfil the contract. Victorian Premier Dan Andrews yesterday called the reports of potential “baiting” “troubling”, but clarified the claims were not verified.
Jahani confirmed there is “very strong interest” from building companies keen to take over Porter Davis’ contracts, and that clarity on the outcome of the sales process could be expected in the next week.
He told customers attending the webinar that, “Given the size and scale and complexity of this liquidation, you will need to bear with us, and you will need to be patient because we don’t have all the answers for you quite yet”.
“By the same token, I also want to say how incredibly frustrating it must be for customers. We do understand how emotionally charged and how difficult it is for a lot of you to be facing this situation where your builder has gone into liquidation, and you’re in a position where you don’t know what to do.”
Johani said there were a number of “well-documented industry issues” that led to the collapse, including rising input prices, rising cost of trades, and lack of availability of trades, combined with contracts being signed months or years earlier that meant the cost to build a home has increased.
Grant Thornton kept on 60 Porter Davis staff to assist with the on-sale of contracts. Those made redundant are expected to have their entitlements paid out under the government’s Fair Entitlements Guarantee.
