‘Hope to move forward’: Porter Davis customers get a $15m lifeline

The anguish that the collapse of Porter Davis caused can never be undone, but Anil Vemula’s dream of building a family home is still alive after the state government announced it would step in to support Victorians who faced losing their deposits.

“At least now we can go out and see where we can make our dreams possible,” he said.

Anil Vemula at his vacant block.Credit: Jason South

Australia’s 12th largest home builder left 1700 homes in Victoria and Queensland unfinished when it went into liquidation last month, prompting the Victorian Building Authority to investigate if it broke the law by taking deposits from customers without first securing building insurance.

Premier Daniel Andrews on Thursday said Porter Davis customers whose homes were yet to start construction and were not covered by the necessary insurance would get their 5 per cent deposits back under a $15 million government support package.

Consumer Affairs Victoria says builders must obtain insurance for all residential builds valued at more than $16,000 before taking customers’ deposits or any other money. The insurance, which the builder pays, covers the client if the builder dies or is declared insolvent before work is complete.

Affected families were in tears of joy on Thursday after the announcement.

Vemula, 45, put a $32,000 deposit towards a new Porter Davis build in Tarneit for his family of four, but was left with just a windswept block after the home builder went under.

“We cannot pay back the mental agony that we have gone through. However, it is a great relief that we actually got our money back. That was our demand and Dan did the right thing,” he said.

“[Andrews’ announcement] has given us some sort of hope to move forward.”

The package does not include properties that are under construction. Plans are under way to see if that work can be picked up by another builder.

“There are 560 families who have gone and signed a contract, they have paid a deposit,” Andrews said on Thursday morning. “We will take care of them, just as if they had been insured.”

Andrews expected the support for each family to be about $25,000 on average. A website will be set up through the Victorian Managed Insurance Authority in the coming days with details for those affected.

Vemula said that with interest rates and construction costs rising, it may take some time to restart their planned build. He and his wife, Anuradha, spent three years saving after their two kids – Abishai, 13, and Avishai, 11 – outgrew their Hoppers Crossing home.

“We may not achieve whatever we anticipated, however we can do something in the circumstances. That’s the hope.”

Richard Williams, who would have lost $40,000 without the government support package, was relieved and exhausted.

“We can’t thank the Victorian government enough for stepping in to support us after Porter Davis left us high and dry,” he said.

“It’s all very overwhelming. Being able to sleep tonight without the aid of Valium for the first time in three weeks will be valuable.”

Williams said he was not emotionally ready to find another builder to get started on his family home, but wants the government to reform the sector.

Mike Tarno (left) comforts another homeowner at the steps of the Victorian Parliament on Sunday after the collapse of builder Porter Davis.Credit: Wayne Taylor

He said there should be more transparency for consumers to ensure builders were financially stable and capable of completing work.

Andrews has flagged that reform could be required in the future.

“We don’t want another family to come to the steps of parliament again,” Vemula said. “Many of my friends wanted to build, but they were afraid because they can’t trust the process.”

Mike Tarno, 38, and his partner deposited $40,000 with Porter Davis to build a home in Gisborne, where they planned to start a family.

“Tears of sadness have turned to tears of joy for a lot of people,” Tarno said. “A lot of us were unable to sleep. There were people who couldn’t eat … constantly crying.”

The premier on Thursday acknowledged that Porter Davis may be unable to pay fines if found to have breached the law.

He did not rule out going after any individuals found to be responsible if they showed blatant disregard for their customers.

“Let’s not get ahead of ourselves ... [but] absolutely there should be consequences for those people,” Andrews said.

Opposition housing spokeswoman Jess Wilson said an urgent and comprehensive review into the operation of the domestic building insurance scheme was needed.

“When 560 families pay a deposit but don’t get the insurance they are legally entitled to, it’s clear the system has failed,” she said.

“This is a real-time risk for Victorians and the Andrews government must enforce compliance now rather than just respond after the damage has been done.”

Master Builders Victoria on Thursday condemned the behaviour of Porter Davis for its alleged failure to seek compulsory insurance, which interim CEO Michaela Lihou said had unfairly tainted the industry at a challenging time.

With Sumeyya Ilanbey and Caroline Schelle

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