Builder goes bust owing $880k

A builder has managed to get all his clients into their homes before he went bust owing creditors about $880,000 as Australia’s housing crisis continues to worsen.

The Victorian company miraculously finished building the last of its client’s residential homes but had no new builds on its books to cover loan repayments.

The company, Geelong Building Solutions appointed liquidator Worrells to settle its outstanding debts on August 21.

The Victorian residential builder owes hundreds of thousands of dollars to Shift Financial ($300,000), National Australia Bank ($250,000) and Prospa Advance ($143,000).

Geelong Building Solutions director Aaron Anstis told News Corp the business started experiencing financial difficulties during the pandemic.

“Around the end of 2020 and into 2021 with Covid and the fixed price contracts and costs skyrocketing, we got into some financial difficulty and then borrowed money to try and get us through that period of time,” he said.

“It just got to the point where with the economic downturn and not as much construction happening, we just didn’t have the new builds to continue with cash flow and an income to repay the debts for the banks.”

He said the company had managed to get the last of its clients’ homes completed but had no new builds to cover loan repayments.

“There was a very minimal amount that was outstanding to suppliers and no money outstanding to trades at the end,” he said.

“It was really only in the last four to six weeks, that’s when I had to look at liquidation or administration.

“I do take some pride in the fact that I was able to get all of my clients into their homes even though that’s been a detriment to my own personal wealth.”

According to ASIC, almost 3000 construction companies went broke in the last financial year, which was an increase of 28 per cent from the previous year.

The construction industry has continued to experience high rates of insolvency since the pandemic as the sector grapples with supply and labour shortages and high costs.

Master Builders Australia (MBA) released new industry forecasts this week which showed Australia had moved further away from reaching its National Housing Accord target of 1.2 million new homes.

The forecast showed the nation’s housing shortfall had increased from 112,000 to 166,000 homes.

MBA chief executive officer Denita Wawn said the downgrade was off the back of a prolonged battle to curb inflation, persistently high interest rates and continued constraints on the supply side of the residential building market.

“We are expecting the market to gradually recover over the next few years as the macroeconomic conditions improve, but more work is needed to address the housing shortfall,” she said.

“Federal, state and territory governments have acknowledged the challenges around planning, workforce and productivity, but we aren’t seeing enough flow through on the ground.

“Productivity in the industry has fallen 18 per cent over the last decade. It’s clear that state governments need to expedite the rollout of planning reforms to reduce the high costs and time it takes to build.

“Workforce shortages continue to be the biggest challenge for the industry across all sectors.”