This article is from the Australian Property Journal archive
HUNDREDS of Porter Davis customers who lost their deposits when the builder went under, without their homes being built and without insurance being taken out, will get their money back as part of a $15 million bailout package from the Victorian government.
Porter Davis was found to have not taken out domestic building insurance with the state’s Victorian Managed Insurance Authority, in breach of its obligations, for 560 families.
Builders must obtain insurance for all residential builds valued at over $16,000.
Customers who paid a 5% deposit will get their money back, Victorian Premier Daniel Andrews announced yesterday. Payouts will average about $25,000.
“This one-off scheme is about making sure that hard-earned money of Porter Davis customers is refunded as quickly as possible and we’ll keep investigating the actions of Porter Davis to ensure this can’t happen again,” Premier Andrews said.
Porter Davis collapsed three weeks ago with 1,500 homes under construction in Victoria and 200 in Queensland. More than 400 staff were made redundant.
The scheme does not cover properties on which building had started. Liquidators Grant Thornton are in the process of looking for other builders to finish those homes, and have already appointed Nostra Property Group to finish building 375 Victorian townhouses.
A website for the scheme will be established within the next 48 hours to allow customers to register.
“For some reason, quite shamefully, Porter Davis have not forwarded that insurance premium and secured that insurance for those families,” Andrews said.
“People have worked hard, saved up their money, they’ve gone to the bank, they’ve got all their approvals. This is years in the making for a lot of people, and it’s the biggest purchase in their life. They’ve done the right thing and then they’re not covered when they ought to have been because of the completely inappropriate actions of a business.
“So, what we’re doing is essentially giving these people insurance, as if they’d had a policy because they didn’t do anything wrong.”
The Victorian government said authorities are investigating the actions of Porter Davis leading up to the company’s collapse, “to establish exactly what happened and guide potential future reforms to protect consumers”.
“The Victorian Building Authority is also investigating Porter Davis Homes for potential breaches of the law.”
Documents obtained by The Age under Freedom of Information laws this week show then-Housing Minister Danny Pearson received a briefing from state bureaucrats on 11th July last year about potential insolvencies in the residential construction sector and “options to de-risk consumers”, but no legislative changes to reduce the risks faced by home builders nor customers were introduced.
“This situation should not have occurred in the first place and is nothing more than the insurance home buyers should have had if the Andrews government had done its job properly,” Victorian opposition homeownership spokeswoman Jess Wilson told the Australian Financial Review yesterday.
“Bailouts after the fact won’t fix the underlying issue.”
