This article is from the Australian Property Journal archive
THE South Australian government will fund the delivery of internal roadworks at O’Halloran Hill unfinished by collapsed builder Felmeri Homes, which left 20 families unable to use insurance settlements to finish their houses.
The state government underwrites mandatory builders indemnity insurance, which protects homebuyers against financial losses if a builder dies, disappears, or becomes insolvent. That insurance is now available to many of Felmeri’s customers who have homes under construction.
However, customers at the O’Hallorans Hill development were unable to use insurance settlements because the incomplete internal roadworks left a trench down the middle of the roadway, meaning other builders could not safely access the homes.
The state government has announced it will fix the internal road at cost estimated to be in excess of $1 million.
The Department for Infrastructure and Transport will arrange for a contractor to complete preliminary works inside the development to ensure that builders can then finish work on the homes.
While the government will fund those works upfront, it is currently examining cost recovery options from the developer and associated entities.
The development was originally approved in 2015 by the City of Marion as the planning and development authority. Subsequent approvals were provided by council in 2019 and 2020.
The state government said it is examining mechanisms to prevent future instances where a council allows subdivision to occur prior to the construction of necessary infrastructure without requiring financial security.
“This is a very unfortunate and unique set of circumstances, that demands a unique response from government,” South Australian premier Peter Malinauskas said.
“These families have been left in a dire situation through no fault of their own.
“Quite frankly – I’m surprised a developer was given approval to build on these blocks without completing the roadway, or providing financial security to do so.
“We’re examining options to make sure this doesn’t happen again.”
Thirty-year-old company Felmeri entered voluntary administration in May. As its debt pile surpassed $20 million, an unnamed national construction firm reportedly came close to agreeing to a rescue package before advising it would not be party to a deed of company arrangement.
Minister for Consumer and Business Affairs, Andrea Michaels said the government has been monitoring the collapse of Felmeri closely over the past few months and “we will continue to investigate, and prosecute, if there are grounds to do so”.
Erin Thompson, Member for Davenport, said, “After being let down by this developer time and again, these families have been desperately seeking help.
“It’s disappointing that it has got to this. But I am pleased that our state government can step in and ensure these families are not left homeless.”
