Renter Jim Rose has been left waiting for his new home, after being told if he signed up for a new build in July last year he could move in by December.
His new neighbors in Berwick moved in early this year but he does not expect to get the keys until June. He keeps following up with his builder but has been left without answers.
“It’s just a pain building a house right now,” Rose said. “I understand it’s COVIID – I think it’s too much.
“I have to pay rent and also I am paying the mortgage at the same time.”
Although he managed to avoid timber shortages, he did not escape the labor force challenges that have occupied the building industry, and was at one point told that the site supervisor for his project had moved on.
One frustration is that he knows there is nothing special about his new house that would take extra time to build.
“It’s not really enjoyable building a house at the moment,” he said.
“I felt defeated because it has been nearly 11 months, it is too much financial stress.”
Rose’s mortgage broker, Red Maple Finance director Nariman Amalsadiwala, has had new-build clients delayed since the pandemic hit, which he said can leave them renting longer than expected.
He said typically a new build customer starts paying interest on the land component of their loan first, then the full loan repayments start when construction finishes. But building delays can leave clients paying both rent and mortgage repayments for longer.
Amid the rising cost of materials, Victoria’s “red tape” commissioner Anna Cronin had suggested inserting “escalation clauses” in contracts worth less than $ 500,000 for builders in the domestic sector, but the state government rejected the proposal.
Justice Connect, which runs a state government-funded domestic building legal service, has experienced a 24 percent increase in people engaging with the service in the past six months.
The legal service’s chief executive, Chris Povey, said 80 per cent of matters involved defective works which did not meet contract or building standards.
“It’s incredibly confronting and distressing for people that have the major asset in their lives at risk,” Povey said.
“I’m going to be interested to see in the coming period if we start to see more claims when the builder has disappeared or become bankrupt, or kind of just failed to deliver altogether. I suspect we’re going to see a change in what’s coming through. ”
Builders Collective national president Phil Dwyer said both builders and consumers faced a difficult situation as material costs increased and supply chains were delayed.
“There’s no winners in any of this,” Dwyer said. “For both consumer and builder at the moment, it’s going to cost whether they like it or not.”
He insisted negotiations would lead to better outcomes for both parties. “We have further to go with these cost escalations,” Dwyer said, “It’s going to continue for another six months.”
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