A residential homebuilder has gone into liquidation and is banned from completing unfinished homes after its licence was suspended for failing to disclose financial problems.
Sunshine Coast, Queensland-based Shore Homes went into liquidation on Tuesday, less than four years after being registered during an era of $25,000 Covid home building grants.
The Queensland Building and Construction Commission confirmed that its licence was cancelled on June 27.
“The company, which has had its building, low-rise construction and carpentry licences cancelled, is prohibited from carrying out any construction work, including completing any work already in progress,” a spokeswoman told Daily Mail Australia.
Queensland law requires construction companies to disclose whether they are having trouble paying their debts or having sufficient cash flow, under rules known as “minimum financial requirements.”
“QBCC licensees must always comply with their MFR, which includes having sufficient assets and capital to undertake the amount of work permitted under their licence category,” the spokeswoman said.
Any residential construction work, including minor renovations worth more than $3,300, must be insured through the Queensland Home Assurance Scheme.
Shore Homes Pty Ltd was registered in October 2020, just four months after former Prime Minister Scott Morrison’s government introduced a HomeBuilder program that provided $25,000 grants to homeowners to build a new home or renovate an existing property.
A residential homebuilder has gone into liquidation and is banned from completing unfinished homes after its licence was suspended for failing to disclose financial problems.
This has led to a surge in the number of new home builders – construction companies now account for a quarter of all insolvencies according to Australian Securities and Investments Commission data.
Daily Mail Australia contacted liquidator Kaily Chua, Brisbane director of insolvency firm Rodgers Reidy, but she declined to comment.
Shore Homes has shut down its website, deleted its Instagram and Facebook pages and disconnected its mobile phone number.
“Queensland homeowners affected by the liquidation of residential construction and building companies such as Shore Homes can seek help through Australia’s most affordable home guarantee scheme,” a QBCC spokesperson said.
Matthew Caddy, a partner at Melbourne-based insolvency firm McGrathNicol, said the previous government’s HomeBuilder program had created artificial demand for home building.
“You saw all the pressure on the homebuilding market post-Covid, where builders had gone out and signed record numbers of forward contracts thanks to government subsidies and incentives for homebuyers,” he told Daily Mail Australia.
‘Then those prices were fixed and suddenly homebuilders were having a hard time building those homes – they weren’t making a profit building them.’
Sunshine Coast, Queensland-based Shore Homes went into liquidation this week. One of its projects is pictured.
This meant that builders who gained a lot of new clients could only survive if they had more money in the bank.
Struggling builders had been faced with rising costs for building materials, causing them to make losses on fixed-price contracts.
“The stronger, tier-one builders that have deeper pockets and better liquidity can still do well,” Caddy said.
‘Those who become insolvent are those who are not well capitalized and a project can materially trap them.’
Shore Homes is also known as Zaia Property Group since July 2022.