State package targets stranded builds

Treasurer Rita Saffioti is confident a $10 million government loan package designed to free up hundreds of Western Australian homes “stranded” in the building process will not interrupt the housing market.

The package, announced this morning at Dumas House, will offer eligible builders the chance to loan up to $300,000 from government coffers to complete housing projects that have been under construction for more than two years.

The scheme is designed to free up homes trapped in a stalemate where borrowers are unable to access progress payments made available at construction milestones, and project cash flow has dried up.

Up to $60,000 will be made available to eligible builders per home meeting the criteria, with a cap of $300,000 in loans per builder.

The loans will be repayable over five years, interest free.

Ms Saffioti said the facility would deliver on overdue residential builds with flow-on effects for the housing market.

“We believe there are hundreds of homes out there that are not being completed by builders, leaving families stranded in a stalemate, in relation to the builder not being able to complete that home because of cash flow issues, and of course homeowners who are left in limbo, living with family members or continuing to rent and pay a mortgage without a home to move into,” she said.

“This is all about making sure homeowners have the ability to move into a home that they’ve been building for a number of years, and it’s targeted at homes that have been started more than two years ago.”

The government believes up to 600 homes currently fall into the stranded category, with many currently unable to progress without access to key milestone payments made available by lenders.

Builders will have to meet a series of eligibility requirements to access the facility, including proof of solvency and evidence of continued business in WA for more than four years, and one or more homes that fit the stranded criteria.

Ms Saffioti said it was hoped the scheme – announced alongside Commerce Minister Sue Ellery and Housing Industry Association executive director Michael McGowan – would help prevent further insolvencies in the industry.

She conceded COVID-era housing stimulus initiatives from state and federal governments, which paid out more than $900 million in building incentives, had not helped the current situation.

“It’s sometimes easy to look back in hindsight and say ‘this should have happened, this shouldn’t have happened',” she said.

“But at the time, all the best intentions from both state and federal governments was to help support the housing industry.

“There’s no doubt we saw a significant boom in housing construction. We saw extraordinary demand, and now of course we’re working through the results of that, coupled with international supply chain interruptions that also occurred.”

The Housing Industry Association was consulted on the new facility. Mr McGowan said it would be critical to supporting the residential building industry navigate the challenges it currently faced.

“Skilled labour and cash flow have been the builders’ biggest challenges over the last 12 months,” he said.

“Implementing the builders’ support facility is a step to support customers who may be suffering cash flow constraints to complete homes for their customers.”

Mr McGowan said the industry was wiser for the lessons of recent years.

“I think what we learned in the last couple of years is we can’t have an unlimited amount of money that goes into the pool, with the inflationary pressure that drives,” he said.

“I think it’s definitely the right amount at this point in time, and through the expressions of interest period we’ll get a really good understanding of what that looks like for the industry, and the proportion of builders that are struggling at the moment.”

Expressions of interest for loan access open today and will run for a month.

The facility will be overseen by the Small Business Development Corporation.