State government contracts are impacted after liquidators were appointed to Individual Developments, while another builder, WA Housing Group, has also gone under.
Dozens of customers face an uncertain wait after two Western Australian building companies, WA Housing Group and Individual Developments, entered liquidation in recent weeks.
ASIC documents show that WA Housing Group entered liquidation on December 7, while Individual Developments went under last week.
Mathieu Tribut of GTS Advisory was appointed as liquidator for both companies.
Business News understands both companies owe north of $1 million to creditors.
Individual Developments had three apartment-building contracts with the state government, and completed a social housing development in Duncraig in late 2021.
Mr Tribut said Individual Developments had been hit by rising costs of material and labour, and was unable to complete the state government builds.
But he said most of the company's homebuilding projects were on track, with up to 20 customers.
A state government spokesperson said it was aware that Malaga-based Individual Developments had entered liquidation this month.
“Communities has two projects under construction, and will be working with the State-wide builders panel to recontract these properties and get them completed," the spokesperson said.
“The state government announced a $30 million support package to assist local builders, of which several Individual Developments WA projects were eligible.
“Prior to being advised of the appointment of liquidators, the department has been in regular communication with IDWA regarding progressing their active projects and the documentation required to substantiate their claim under the builder support package.
“The state government works to support the industry and works closely with contracted residential builders in the current construction market while ensuring sensible and appropriate expenditure of taxpayer funds.”
WA Housing Group had 12 ongoing builds, Mr Tribut said, with as many as 20 clients to be affected by the liquidation.
None of those are contracts with the state government.
The company had sought financial backing but ran out of cash.
Mr Tribut said costs had been rising on WA Housing's fixed-price contracts.
Tough market
New Home Building Brokers managing director Tristan Kirkham said while WA’s construction market was a difficult environment, there is a light at the end of the tunnel.
“Margins on jobs like that have always been tight and they’re really risky from our experience and that’s why many builders that we know of don’t want to touch those projects,” he said.
“But we need to help builders out with projects like that and have the ability to renegotiate a contract that’s so important, given the lack of housing we’ve got.
“When we spoke to our builders at the end of last year they said it would get better towards the end of 2023, but it’s just unfortunate a few more had to wash out. We think we’ll work through these things and the next 12 months will improve.”
Business News understands WA Housing Group was tapped out of indemnity insurance about a year ago.
The state government announced changes to indemnity insurance last year, lifting the caps, but the changes are yet to come into effect.
