Unfair Treatment from the Building Industry

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After many years of unsecure housing, I finally managed to build my own home and chose Allworth Homes based on their price point and the perceived quality of their builds. The experience was awful. How did you rate your building experience? My issues were:

  • The contract had unfair conditions in it, but I had already invested considerable time and effort and paid a deposit. Allworth assured me everything was ‘standard across the board’, and I did not want to start the process again. I was pressured to sign at the point I was first given the contract, instead of having the opportunity to take it away and have it looked at by someone with experience. I feel this was predatory. I have certainly learnt my lesson the hard way

  • They used my land to store items for their other builds on while I waited five months for them to start my house

  • The first job, clearing the block, blew out the ‘provisional cost’ of soil removal by five grand. This increased to 12 grand incrementally every time I queried them

  • I was only ever given the opportunity to approve one increase in costs, the others were just added to the build without discussion or options

  • The second job, the slab, blew out by several grand also, even though I had was charged for extra surveys. I believe Allworth may deliberately underquote to beat their competitors and secure work, then just increase costs using the provisional cost option in the contract

  • The site supervisor and area manager were rude, aggressive and dismissive when I asked questions. The administration staff mostly ignored my queries, or told me I was ‘repeating myself’ when I had to follow up on issues numerous times. The implication was I was a difficult person for asking questions about build quality, missing items, variations, or blown out costs

  • The general manager told me, as was in my contract, I was not permitted to take my own building inspectors or engineers onto the site to inspect work I felt was of concern

  • The quality of materials in my home was very different, and inferior, to what was implied to me at the point of sale and in the show home

  • Any variations to the build were charged outrageously

  • I was not permitted to have some extras fitted such as a doggie door, or underfloor heating, even though the trades were prepared to do it for an extra charge, Allworth banned them

  • Things were ‘accidently missed’, like the two whirly birds that were delivered, only one was fitted

  • I received an email telling me they had run out of the tiles I had chosen after they were half laid, and would have to choose a different tile for the rest of the house

  • I have had to replace tap handles, door handles and peeling mirrors in a very short period of time. I had to have the painting redone, have door handles fitted straight and my outdoor tiles are laid in a manner that they store water when it rains

  • The area manager cancelled a call out for a broken back door lock even though it was well within the warranty period, his answer when I asked why ‘we have done enough for you, you are not getting anything else’

  • The site supervisor didn’t consider the zero boundary block I was on, and instead of putting the water tank in the back yard first, ended up getting a crane to put in place at a huge extra cost to me

  • I was charged for temporary fencing that wasn’t required

  • When raising my concerns, the general manager threatened to stop the build, knowing full well a mortgage had already been taken out for progress payments

  • My compliance certificate was issued without the officer attending to even look at my completed home

When I complained to Fair Trading, my option was Tribunal. Allworth didn’t bother showing up to negotiate and I was told I simply shouldn’t have signed the contract and I would have to get a lawyer if I wanted to take it any further. Big guy beats little guy again.

Any ideas on how to change the system? Why do builders get away with not guaranteeing their work, even when under warranty? They just refuse to do the right thing and how can you make them? Where else do we go for help? No one seems prepared to take the building industry to task for dodgy work and appalling service, and I have pretty minor concerns compared to some whose houses are falling apart around them like at Mascot Towers. Your thoughts?

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That is a long list of issues, and not a lot of joy in your building experience.

To be fair building a home is a significant expense and complex. It is something many of us will never do and for those who do it may be a once off.

For many it may be absolutely critical when choosing to contract with a builder, especially the first time to seek expert advice and not rush to sign anything. As a minimum a suitably experienced law firm can take one through the intended contract and explain what it means. In particular they should point out any limitations/risks placed on the purchaser and suggest what actions or recommended changes are appropriate. Once committed as the owner/purchaser it is important to understand what rights you have and how best to ensure compliance.

Some builders/contractors are a dream to work with. Some builders will size you the client up and decide to act otherwise.

We are not all experienced sufficiently to be effective clients. I’ll suggest too many of us are however the ideal client some builders are looking for. Having someone appropriately independent of the builder and competent to look after your interests under the contract with the builder is one option. Whether that should be a community born cost or individual, there will be different view points to share?

Thinking out loud!
It is so easy for it to go wrong.
We’ve built to live in and also purchased spec homes. Some of our homes we lived in as rentals were brand new or close to new. Would we build again? Not using a standard industry contract, and not without paying for an independent building consultant to manage the builder. The possibility of achieving the first desire is up there with the flying pigs and the second reliant on winning lotto.

Of interest Spec homes have all the same warranty issues own builds have, except more obvious defects should be apparent prior to contract. The spec is what you see.

To consumers the building industry might complain there are too many controls on them all of which push up costs to us the consumer. To government the construction industry is always complaining it can’t make a profit, that red tape, taxes and high wages are all killing the industry. For consumers the intricacies of contracts, cost management, standards and good workmanship are not within our grasp and neither government nor industry care.

Once upon a time there were large numbers of government employed building inspectors, and owners would pay only for completed work and incorporated materials, more so than in advance as it is today. The modern standardised industry biased (IMO) contract payment T&Cs effectively finance the builders efforts. Supposedly a cost saving to the customer, but also at risk of loss when builders fail to manage their costs and commitments.

P.S.
In the serious business world of $100M contracts (property developers excluded) such things are different. Contracts will provide for bank guarantees to the Principal (purchaser) to cover the risk of any advances, equipment/material purchases and some recovery costs on failure. The legal docs are carefully crafted by the purchaser, and not the contractor/builder. The Principal is also likely to provide or engage experts in contract law and construction to supervise or independently inspect the contracted works.

Even more astounding is while the typical residential home building contract has the purchaser paying the builder in advance (I’m expecting a debate from some on that point) the sub contractors engaged are always paid in arrears. They have nearly always been left owed for work when a builder collapses.

I really like the proposal of much greater social housing construction and direct government involvement in housing construction. It would remove much of the risk. Something the Menzies Government did well with the post WW2 War Services Home program.

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Hi @ToBeFair, since you have started two threads about your experiences with the same company, the threads have been combined. This is to ensure there isn’t similar discussion about the same issues repeated in two different areas of the community. It also allows anyone who searches for the company to find and read your own experience in the same place within the community.

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They get away with it because home building is probably the most unregulated industry in Australia . Anyone can build a house in Australia as long as the electricals and plumbing and drainage work are signed off on by a " qualified tradesman " . The rest can be crap and often is .

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The residential building industry is highly regulated compared to other building sectors. So much so that you need to have your own professionals, including legal, to mobilise those laws in your favour. The layperson is not qualified to fight the opposing building professional. Unfortunately, consumers need to understand that they now must factor into the cost of the building, the cost of engaging their own professionals and lawyers to defend their rights. It is now part of the process if you want to avoid headaches.

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The parts ‘licensed tradesmen’ do can also be poorly done and substandard but our ‘regulators’ accept it because a licensed tradesman signed off and provided a certificate of compliance, no further inspections often necessary.

My house, build in 1998 and I bought it in 2002, had some shocking work, fortunately not expensive to remediate as it was progressively discovered.

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There is some contradiction in the following.
But does it matter? Is the real issue one of compliance?

What the regulations require (few or many, good or bad) would seem irrelevant if no one is checking on what is being done.
IE it’s a failure to have effective oversight. Something that only those responsible for creating the regulations can be accountable for.

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I agree with you, mar_m that oversight is lacking. Whilst I would dearly love the lawmakers to step is and fix the problem (perhaps give control back to Councils), I don’t think it’s going to happen anytime soon. It’s important to note that consumers have been languishing in this situation for the last 20 years since private certification of the residential building industry.
My message therefore is that it’s time for consumers face the harsh reality that they must take responsibility if they are to protect their interest when it comes to building and not hope that others will do this for them. This means that they need to hire their own independent professionals and experts to advise (including oversight) and look after their interests when embarking on a building project and not leave themselves at the mercy of the builder and the complexities of the system. They need to allow for such extra costs up front as part of the project. Unfortunately, I don’t see any other way, at least in the short term. It is another example of governments making users pays in order to reduce their spending.
But in the meantime, well keep pushing to improve the system.

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That is extraordinary. I am no lawyer but by common definition that is an unconscionable contract term.

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A further point to consider is which State or territory is being discussed here. My only direct experience with residential construction is specific to QLD. Some occasionally point out things being a little different away from the centre of the universe of ACT + NSW + Vic.

The following is how it is intended to work here and as legislated. It does put a considerable responsibility on the owner. For other states or territories, is it any better, the same or worse?

Note:
Many of the issues raised by @ToBeFair are provided for in the QBCC advice and recommended actions by the owner. These include the option of seeking legal advice before signing a contract to build, cooling off periods, documentation, owners site access, owners inspections and dispute procedures. The options for an owner to employ a certifier/inspector independent of the builder and a construction consultant to report and assist with management of the work is also mentioned.

The learning curve for anyone entering a contract to have a new home built or substantial works on the home, the written contracts need to be carefully read and fully understood. For some of us the best option may be,

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Agree. Unconscionable. Possibly illegal.
If you are wanting independent inspections, I suggest you speak to your regulator first (ie Fair Trading if NSW) to check the legalities of the clause. If they cant give you a definite answer, get your own legal advice on it.

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I had a home built on a block of land I had bought about 20 years ago and avoided all of the problems the OP has experienced.
How? By taking almost all control away from the builder and putting it into my hands.

I engaged an architect to design the house. I had been to lots of display homes and homemaker centers and had lots of ideas for design, floorplan, materials, fittings in kitchen and bathrooms. This was turned into a very detailed specification for everything from foundation to structural timber and steel, to intricate details right down to door fittings and cabling.

The design then went out to tender for a builder to build to the exact specs. The preferred contract was the plain english HIA building contract and not the builder’s preferred MBA contracts full of legalese. Things like ‘provisional estimates’ not allowed. The contract was fixed price. Variations not allowed unless in writing agreed by both sides. The builder had to agree to both start and completion dates, and penalties would apply.

I decided I knew enough about the building process to manage it myself, but engaged the architect on a per hour basis if needed as a consultant to make sure the builder was building to the specs.

The architect engaged the building inspector, and the contract detailed at each stage an inspection would be required before signoff and payment.

In short, agreed variations, some requested by me, and some by the builder, came to maybe $5000, but most of that was offset by the builder being penalised for completing a few months later than contracted completion date.

The entire cost of the architect and all the services provided was only about $10k. Best money I ever spent.

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A high volume of complaints and media attention seems to be the only way to bring about change. Recent reforms in NSW are an example, after media attention in a number of shocking defects in a number of apartment blocks. So start complaining and talk to the media.

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When my Mum built her house 15-odd years ago, she had specified all power points to be installed 1 metre off the floor, as she had chronic back problems, that were only going to get worse. During early construction, we visited the site on a weekend, and found all those electricals positioned at floor level. When she contacted the firm on the Monday to get them altered as she had requested, she was basically ‘chatted’ by the manager, for going onto the site unsupervised. She was also told those things could be fixed after completion. So, she was expected to let them go ahead and punch holes in the besser blocks at the incorrect position, and then have them all repositioned and patched later. Might I add, the house is unrendered besser block inside, so what a patchy mess that would have been…
Her home build was a continual disaster of things not being monitored or followed up on. And she felt like she lost any real control. Even trying to arrange a visit to the site with the job manager was hit and miss. The whole build she worried what she would end up with.

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The manager (principal contractor) was correct as it was a building site which had been entered. Whether or not you agree with current legislation about entering a building site, to be able to enter you need:

  • approval of the principal contractor/builder; and
  • to be inducted onto site OR supervised by and inducted person nominated by the principal contractor/builder

Even as an owner of the property or the person paying for the works doesn’t give right of entry without meeting the above…this website summarises the owner’s rights in relation to accessing building works on their property and also obligations of either party:

This also applies to other persons which may be engaged by the owner (such as independent building inspector, engineers or tradespeople commissioned independently of the principal contractor/builder).

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What would you change?
Specifically what is it that needs to be different?
Considering there are differences for those buying a new property as a spec home or from a developer, and those entering into a building contract or off the plan project.

For those building:
The discussions across the community often raise consumer rights afforded under Australian Consumer Law. For the ACL it is frequently pointed out how consumers need to act to assert their rights. Consumers are advised to address issues formally and in writing - recorded. Resolution if a retailer does not respond provides for consumers to take their issue to their respective government consumer organisations, ‘Fair Trade, nCat etc’. The ultimate recourse is a court action.

A building contract is a legally binding agreement. Both parties are bound to the agreement according to the form and wording of the contract. Whether that is a good or bad solution, it is what we have. Concerns that arise for the purchaser extend to more than building to standards and good workmanship. There are requirements for timeliness, payments and conformance to specification. There will typically be a dispute resolution process provided for by the contract, and the option of formal proceedings in a court of law. For the average consumer this may be a very daunting prospect. The larger builders have considerable legal expertise available and well trained staff. The advice that for consumers to ensure a formal record and procedure when looking to pursue claims under the ACL applies 10 fold if one has entered into a home building contract. One can be personable and polite with the builders representatives, but one needs to be definite and precise. For the standard of those records consider what a lawyer might put before a court.

Is one solution to require all owners to engage and pay a professional (EG architect) to manage the contract and building? Looking to ‘Grand Designs’ it is a frequent observation of Kevin McCloud, despite which most builds go over both budget and time. Something the average home owner does not want.

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That does not exclude a reasonable right of access for the owner as necessary to ensure the work the owner is paying for is to contract.

Owners should look to their State/Territory statutory building authorities/bodies and contracts for similar wording or advice for clarifications.
EG (ref QLD Govt BSA)

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The ultimate recourse for the owner if the builder is not permitting reasonable access to verify progress, construction to standards and specification may be to direct the builder accordingly. Something that will be specific to the contract, and best advised by your legal representative. The contracted builder does not have absolute or final control. The contract is a two way agreement.

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Well I can tell you that where I built, in Victoria, the owner and any agents working on my behalf have automatic rights of entry to inspect the works that no builder or building contract can override.
Domestic building contracts act 1995 section 19.

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