How to protect yourself from dodgy builders and defects

Building a home can be a stressful time, made more anxiety-inducing if you end up locked in a legal battle over defects instead of moving into the dream home you’ll be paying off for decades.

Stories of home builders failing to deliver continue to surface, with multiple homeowners telling of issues that cost hundreds of thousands of dollars to fix, or problems so bad their new home needs to be demolished.

How do people stop these issues from happening?
Industry experts say research and clear communication are the best ways to guard against trouble. 

Building surveyor Gabriel Barnes says research needs to start early and homeowners need to take lots of care in who they entrust to build their dream home. 

“Researching your builder is number one, and it’s not just a matter of looking at their photographs on their phone or basically looking at the pretty folio that they bring with them,” he said.

Brown bricks sitting on a scaffold. Temporary fencing can be seen in the background.
Experts say choosing the right builder can take time. (ABC News: Luke Bowden)

“You need to get names and addresses of people who have had houses built by them, talk to the people, see how they were to negotiate with, to work with, see whether people are happy with their homes that they’re living in, see whether they had any problems.”

Luke Eiszele, the managing director of Eiszele Constructions, says people should then ensure their shortlisted builder has the required permits and insurance to do the job.

“A reputable builder will be one that’s fully insured, has a full contract involved that benefits both client and builders, there’s an agreed terms and conditions and clear outlined plans, those things go a long way to getting a good outcome,” he said.

Getting the contract right is important, too.

Housing Industry Association executive director Stuart Collins says a contract should set out things like cooling off periods, deposits caps, handover requirements and statutory warranties.

“While some of those terms are implied, it’s important to set the framework in which the building work is to be performed,” Mr Collins said.

“Then it’s a matter of understanding the contract and exercising your rights where appropriate.”

Homes on a block in various stages of construction in a new suburban area.
Knowing what’s in your contract can help you exercise your rights as a property owner. (ABC News: Luke Bowden)

I’ve done the research on my builder, what’s next? 
A key part of the process that often goes under the radar is the building surveyor.

Mr Barnes says while they’re often appointed by the builder or an architect, they should work in the best interests of the homeowner.

They do checks of the building work at key parts of the process and can identify issues for the builder to fix if work doesn’t conform to the standards. 

“The owners need to upfront know who their building surveyor is because that building surveyor is meant to be working for you,” Mr Barnes said.

“They’re meant to be there to check that building work, and if in the first instance you have a problem with that building work, you need to be speaking with your statutory building surveyor.”

Mr Collins says communication with a surveyor and having a good relationship with a builder can be key to fixing issues when they arise, rather than late in the building process, or not at all. 

“It’s that early intervention which often prevents these issues from spiralling out of control and getting lawyers involved,” he said.

Things have started going wrong. What can I do? 
Most of the time, minor issues can be fixed if raised early, avoiding the need for lawyers. 

Mr Barnes says some number of defects are bound to happen because building a new house is complex. 

“I think you’d have to be living with rose-coloured glasses if you don’t think houses have defects,” he said.

“By their very nature they’re complex pieces of construction, they’re based on science, and sometimes there are going to be items within a building that haven’t been done correctly.

“They’re usually minor items that are never going to see the light of day because we have such safety-backed design into our systems.

“But having said that, we are seeing more and more bad buildings where builders are effectively in over their heads, they’re building buildings they’re not competent to build.”

An aerial shot of two wooden house frames. Piles of red bricks are scattered around.
Experts say bad builds are on the rise. (ABC News: Luke Bowden)

The Housing Industry Association says the majority of home builders complete work to a high standard, but said there were some “regrettable” instances where quality issues surface.

The Tasmanian regulator, the Consumer Building and Occupation Services (CBOS), insists there are enough protections to force builders to fix defects without legal action.

But in some cases, no amount of contact with a builder, or mediation, can fix disputes over major defects. 

Doesn’t my insurance cover the big issues?
Contracts are where this gets a bit complicated.

In all states bar Tasmania, there is mandatory building warranty insurance. It covers a range of different issues – but mostly builders who die, lose their licence, or become insolvent, rather than defects.

Construction worker on ladder wearing toolbelt working on a modern house in Brisbane.
The state government says it’s considering whether it can improve the building regulatory framework to better protect consumers. (ABC News: Liz Pickering)

Tasmania previously had a mandatory scheme, but scrapped it in 2008, and Attorney-General Elise Archer isn’t keen to return to it. 

Mr Collins says Tasmania’s scheme was too expensive, and too few claims were made, but others, including Mr Barnes, want it to return, alongside a more robust licensing scheme. 

Home insurance won’t do the job either, and contract works insurance taken out by a builder only covers damage for things like storms or floods, or people stealing equipment from worksites, rather than issues caused by shoddy work. 

That’s led to a push by Tasmanian Labor for a parliamentary inquiry into whether there are enough consumer protections for people left hundreds of thousands of dollars out of pocket. 

A worker smooths concrete at slab pour at building construction site at Radar Street at Lytton at Brisbane.
Calls for an inquiry have been pushed aside by the government. (ABC News: Chris Gillette)

But Ms Archer says that is not necessary and has instead asked CBOS to make sure that Tasmania has up to date consumer protections. 

She has promised the state government will do all it can to strengthen consumer protections, and ensure builders are fixing defects.

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