Broke builders shatter retirement dreams

Kym never thought of herself as someone who struggled financially – but that view has changed since her dream retirement build came to a halt three months ago. Kym, 63, is one of a growing number of Australians hit hard by a broken contract with a builder who went broke. Now, she is left wondering how she will fund the completion of the home she hoped to retire to in 2024.

As a Victorian, Kym believed she was covered by the compulsory insurance that builders are legally required to obtain for all residential builds over a certain value.

This type of insurance exists in every state and territory except Tasmania and the Northern Territory, and offers legal protection that covers clients for a loss of deposit, failure to start or finish a job, or defective work.

But, as Kym has discovered, even with the protection this insurance offers, she is now facing out-of-pocket expenses that have left her facing some tough decisions.

Facing putting retirement plans on hold

“I was due to finish my teaching contract in Melbourne this year. Now I’m thinking I need to keep going for another couple of years and bump my move back to Mansfield later,” she says.

Her plans to return to the Victorian town she grew up in was not just about retiring to a more laid-back lifestyle. Her widowed mother, now 82, is healthy and happy and living in her own home, but Kym’s plan to live nearby was designed to be a safety net, in case her mother’s circumstances changed.

“I was building my new place on a block of land I’ve owned for about 10 years and there was room for mum to be with me when the time comes for her to need someone close,” Kym says.

“The things I’m thinking about now is if I would be better off moving in with mum in her home and trying to get teaching work at one of the regional schools nearby while I try to figure out the next steps,” she says.

Kym went through a messy divorce 10 years ago and the dent in her bank balance – including losing a sizeable percentage of her superannuation in the division of financial assets and being forced back into the rental market after losing the family home – is something she found hard to bounce back from.

Now, as just one victim affected by the string of recent insolvencies in the construction sector across Australia, Kym still believes she is luckier than most and says she feels sorry for young couples just starting out on their home ownership journey.

Compared to others who are feeling the pinch due to a broke builder, Kym says she is grateful for the fact that, in the case of her own dream eco-friendly retirement residence, the builder had done the majority of the work on her home before suddenly shutting up shop.

But even though her home is only awaiting what Kym optimistically refers to as “some finishing touches” (including installation of two bathrooms and the kitchen, as well as painting throughout), the fact that the insurance she thought would protect her will only pay up to 20 per cent of the cost of getting her home ready to live in means that Kym is now down around $80,000. And with the crisis in the construction industry making it virtually impossible to find builders who can complete the job within a reasonable time frame, Kym fears the cost will continue to go up as building materials and labour shortages within the industry continue to worsen.

Figures from the Australian Bureau of Statistics reveal the average cost of building a new home has jumped from approximately $327,000 to $450,000 in the past two years.

With limited super, Kym’s plan to keep working for another couple of years seems like the only solution.

Construction industry crisis

According to an ABC news report about the crisis in the construction industry, insolvencies in the sector are reaching a 10-year high. And with the latest figures from ASIC showing an average of five construction companies are closing in Australia daily, it’s a problem that will have a flow-on effect for years to come.

“It’s not what I planned and it’s going to make things more challenging, but, again, I still think I’m luckier than some,” Kym says. “I know a few people in my age range who have also been hit by this. At least I can keep working and earning. I just try to look for the positives.”

Have you ever had a bad experience with a builder? How did things turn out for you? Let us know in the comments section below.

Also read: How to protect yourself from dodgy builders and defects

Claire Halliday
Claire Halliday
Claire is an accomplished journalist who has written for leading magazines and newspapers, such as The Sunday Age and Sydney Morning Herald, Australian Women's Weekly, Marie Claire, Rolling Stone, Australian House & Garden, GQ, The Australian, Herald Sun, The Weekly Review, and The Independent on Sunday (UK).


  1. Kym is one of the lucky ones, at least she owns the land and has her home substantially completed. Given the amount of theft and vandalism sufferered by homes under construction she may even be fortunate that her bathroom and kitchen PC items had not been installed.
    If she had purchased a house and land package she would probably not yet own the land and so not have access to the property to protect and complete the house.
    Four precautions that prospective home owners can take. Remember the contract is a mutual document and the client can agree and insert clauses that suit their needs and one I suggest is that “in the event the builder is unable to complete the contracted building, the builder will provide every cooperation in transferring the outstanding work to other capable parties.”
    Secondly, if possible buy your own land freehold so you have access. Thirdly, have clear progress payment intervals and pay only a modest upfront token amount and then only defined amounts after each stage is fully completed.
    Most builders will want a rise and fall clause to cover price rises. Ensure that the builder will provide you with the opportunity to find alternative products or services. I found that building in a a regional area while living in a city I was able to buy trailer loads of products at substantially lower prices and I was able to negotiate local engineering services at far Lower prices than the builder.
    There is a big difference in a builder buying products and services where the price can be passed on to the client against you negotiating for products and services that you must pay for.

- Our Partners -


- Advertisment -
- Advertisment -