Customers of the latest failed Victorian builder are pleading for the lifeline offered to people caught up in the Porter Davis collapse to be revived.
More than 60 families who paid deposits to Montego Homes have been left without domestic building insurance, but the earlier state government support program to deal with the fallout has just ended.
“I’m praying something like that can be done for us and all the other people in this situation. It’s so sad,” said affected Montego customer Tiana Hutcherson.
It comes as tougher penalties for builders who fail to obey the law on insurance requirements are being considered by parliament and could be debated as early as next week.
By law, builders are required to take out building insurance the moment they receive a deposit for a contract worth more than $16,000. When Porter Davis was liquidated, about 560 customers with homes not under construction learned this had not happened and the Andrews government committed $15 million to pay them out.
When Montego went into administration earlier this month, more than 60 customers reviewed their contracts and found their insurance documents were missing. A creditors meeting last week confirmed the builder had not taken out the insurance despite receiving money for the deposit.
These customers have contacted the Victorian Managed Insurance Agency – the state government’s insurer and risk adviser – but the support program closed on January 29 and they aren’t eligible.
Hutcherson and her fiance Matthew Coppen had hoped to start a family in a larger home built by Montego at Clyde North after their wedding in eight weeks.
“Losing this deposit and trying to work out where we’re pulling the money from is an absolute nightmare,” she said.
“It is a pretty big deposit for us anyway. What are we going to be sacrificing now that we shouldn’t have to?”
Hutcherson said victims of Porter Davis and others who had been eligible for the government program were lucky to get their deposit back and continue building their homes.
A Victorian government spokesman said it was “investigating claims made regarding the actions of Montego Homes”.
In a statement, Montego administrators Cor Cordis said 63 customers did not have appropriate insurance for deposit holders.
A second meeting of creditors will be held on February 20 where they will be able to vote on the future of the company. A buyer for the business was not found despite multiple expressions of interest.
Bruce Sharp, a self-funded retiree who had hoped to downsize into a townhouse near Mount Duneed, said losing his deposit had put him in an awkward position. He said he blamed himself for not sighting an insurance certificate during the process.
“The whole idea of doing the house and land package and selling our house was actually to move into a new home for retirement and be debt-free,” Sharp said.
“Quite frankly, I cannot go the journey to sign another building contract. At the end of the day, I’ve got to look at selling that block of land once it titles this year and re-thinking what we’re going to do.
“I’m not going to do whole ‘woe is me’ because I know, there are young couples out there who have put their life savings in for the start of their life. They’ve lost it.”
Opposition homeownership spokesman Evan Mulholland said the premier should commit to extending the support scheme until “the issues plaguing domestic building insurance are resolved”.
“Porter Davis should have been a wake-up call for Labor, but the serious issues with domestic building insurance non-compliance clearly have not been addressed,” he said.
”No Victorian should lose a home deposit because of Labor’s incompetence.“
The government spokesman said “we’ve introduced a bill to the Parliament to create tough new penalties for builders who fail to meet their DBI requirements – the first step in a suite of reforms to deliver stronger protections for consumers.”
The Victorian Building Authority is the regulator in charge of enforcing penalties and investigations into builders who breach their requirements for building insurance. In November, it said it was continuing to run compliance audits as new laws imposing tougher penalties were introduced to parliament.
The laws before parliament, introduced in response to the Porter Davis saga, impose new offences for builders who receive money for major home contracts without insurance. Penalties will be up to $96,000 – or $480,000 for companies – and the laws are expected to be debated next week.
Opposition planning spokesman James Newbury said the government wasn’t doing enough to protect Victorians.
“Buying a home is tough. New homebuyers shouldn’t also be fearful of a building company collapsing, and losing hard-earned deposits because the state Labor government isn’t strong enough to stand up to dodgy behaviour,” he said.
The state government spokesperson said a review of the Domestic Building Contracts Act was also examining new measures to strengthen protections for consumers when they entered into a domestic building contract.
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