Fears of dodgy builder rip-off for thousands of homeowners

Consumer advocates claim victims of dodgy builders will be the worst hit by little-known changes to payment laws due in March.

Thousands could be ripped off by dodgy builders because of new payment laws that erode customer protections.

Consumer advocates claim little-known changes to the Security of Payments Act (SOPA) will mean homeowners will end up forking out for substandard building work in order to keep debt collectors at bay.

Under current rules, unpaid builders must go to the NSW Civil and Administrative Tribunal (NCAT) to get their money back from homeowners.

Thousands of homeowners could be ripped off by dodgy builders.

From March 1 next year, if homeowners don’t provide a payment schedule within 10 business days of receiving a SOPA invoice they must pay the whole amount.

The cash has to come through even if the builder’s work is defective or the builder has invoiced for more than the builder is entitled to.

Victims of defective building work will also have to go to NCAT to get their money back, rather than the other way round.

“These changes will result in thousands of homeowners being ripped off by dodgy builders,” construction law expert and former UNSW Adjunct Professor Philip Davenport said.

“Those protections under the Home Building Act will be gone. It’s disgraceful.

“It has all been done under the cover of darkness with no public messaging.”

Karen Stiles is an executive at the Owners Corporation Network.

The changes were made as part of a suite of building reforms in September that improve other protections for homeowners.

The reforms followed the consumer fallouts from Opal and Mascot Towers, which revealed how consumers effectively had more rights buying a new toaster than they did purchasing an apartment.

Owners Corporation Network executive officer Karen Stiles said the new laws “are not good for mum and dad homeowners”.

“Sadly, SOPA already applies to apartment buildings (owners corporations),” she said.

“Homeowners and owners corporation committees do not have the construction knowledge to fairly compete with a builder under the system.

“A compromise approach would be to exempt all residential building work, including for owners corporations, from SOPA except where the value of the work exceeds say $2m.”

NSW Labor building reform spokeswoman Yasmin Catley said ”the government have unwittingly created a mechanism for dodgy builders to shake down their customers in the middle of a warranty claim before defects are resolved”.

A new home is seen under construction in the western suburbs in Sydney.

In October the NSW planning system approved 4865 dwellings (total public and private sector, apartment and separated dwellings), up from only 3554 in September.

Better Regulation Minister Kevin Anderson said: “We have already made a series of changes to help our subbies, making sure they’re paid what they’re owed in full and on time for their work.

“Our changes will also apply to owner occupier residential jobs come March.

“We’ve deliberately allowed for a delayed commencement to ensure that all involved are aware of their new obligations.

“Alongside the changes we are also introducing new measures to ensure that mums and dads hiring builders both understand and comply with the legislation.”

Housing Industry Association industry policy chief executive Kristin Brookfield said “the amendment simply provides one further avenue to resolve disputes among a range of options available to both builders and homeowner”.

Originally published as Fears of dodgy builder rip-off for thousands of homeowners