Builder collapses, multiple customers impacted
Australian customers are speaking out after their building company collapsed, revealing the stress, financial burden and one gross find inside a home.
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Desperate Australians don’t know if their dream homes will ever be finished after their builder collapsed.
Multiple customers of Melbourne builder Varaich Homes have revealed the crushing financial burden as building of their houses has been delayed, while others have documented disturbing vandalism to their homes.
Varaich Homes, which also traded under the name Harcon Property Group, was placed into administration on 18 September, leaving multiple clients in limbo.
One customer is Harpreet Singh who shared shocking photos that show unknown people had entered his property leaving behind a used condom in the master bedroom of his unfinished home, urine in the bathtub, oil in the pantry and a blocked toilet.
The bus driver signed up to build with Varaich Homes in 2021 for $457,000.
“The fence surrounding it has been taken off and people were going in and having beers, using the toilet, I found a used condom on the master bedroom floor and there are a few other damages,” he told news.com.au.
Prior to this in 2022, he was told the construction firm would need an extra $45,000 to continue with the project, which was money the family didn’t have.
In an email, Varaich Homes said the cost of building had increased by nearly 30 per cent due to the flooding in NSW and QLD combined with the Russia/Ukraine conflict, forcing up the cost of material and labour.
Then building started in June 2022 on his Lyndhurst home. But Mr Singh said work was very slow and caused “a lot of stress” and cost them a “lot of money”.
The dad-of-three said his wife is working three jobs as they are under a huge financial strain paying off two mortgages. He claimed there had been no explanation from the company on why construction had been delayed.
Do you have a story? Contact sarah.sharples@news.com.au
Now with Varaich Home’s collapse, the 39-year-old said he doesn’t even have the keys to his own house.
“I’m not sure what is going to happen. Recently I received a letter from the bank that I won’t be able to withdraw that last instalment, the last stage payment because the construction loan period was only for two years which is passed,” he said.
He said it may mean the family have to take out a personal loan to even complete the house. “It’s very stressful,” he added.
Another customer is Vijay Bhusal, who signed on with Varaich Homes to build their dream home for $836,000.
But the building company’s collapse has left them in “utter devastation”.
“We signed contracts in August 2021, filled with excitement and anticipation. However, instead of joy, we have been met with endless delays … and broken promises,” he told news.com.au.
“The company repeatedly missed deadlines, starting construction six months later than agreed upon and failing to complete our homes even after the promised time frame. Our houses remain unfinished, a constant reminder of our shattered dreams.”
The 39-year-old, who was building his first house along with his wife and 5-year-old daughter, said the huge delays to construction has resulted in “crushing” financial burden.
“We have lost over $100,000 in holding interest and fees, a devastating blow that threatens our financial stability,” he revealed.
Building on their house didn’t start until June 2022 and he said the house should have been delivered a year later.
The cyber security engineer said he started to fear things were going really wrong when calling Varaich Homes and finding the phone lines disconnected, while he said employees claimed their access to internal systems had been revoked.
He said he had paid 90 per cent of the contract price but estimated it could cost an extra $200,000 to complete the house.
“All the other houses which weren’t even there have been finished and … they are not built by bulk home builders, they are still built by smaller builders and they are moving in and ours is taking years,” he said.
“Two weeks ago the company called and said if you can make the final payment, if you have cash or can get that from bank the remaining $80,000, it could speed up the process and the company could finish the house from two weeks.”
He said the house isn’t secured properly and he fears it could be vandalised, while a glass door was broken recently and hasn’t been fixed.
In a further blow, Mr Bhusal said he planned to hold his brother’s wedding at the house but that dream is all but dashed now.
He believes that the cost to complete the house would be $300,000, which won’t be all covered by insurance.
For customer Mallikharjuna Allanki, his Melbourne house was due to be delivered in June after signing with Varaich Homes in 2022 before construction kicked off the following year. He signed up to pay $731,000 for a double storey home build in the suburb of Keilor Downs.
But it remains unfinished and he claimed there had been no major construction activity on the site for the past two months.
The 42-year-old claimed Varaich Homes repeatedly requested payments for construction stages before they are completed, which is a breach of the contract terms and building regulations.
“For example, they demanded the frame stage payment two months ago, yet the frame is still not approved and remains incomplete. This has caused significant delays and financial strain for me,” he said.
The software engineer claimed the framework has also been exposed too leaving it “completely rotted and peeling”.
“The ongoing delays and issues with the construction project have caused significant emotional and financial strain on my family. One of the major issues is that the ground frame of my house was left exposed for 12 months, leading to it rotting completely. As a result, I now need to replace the framing, which has doubled my costs,” he added.
Varaich Homes failed to provide adequate communication regarding the delays or progress of the construction, he added, leaving him in the “dark” about what was happening.
“It’s a very big mess,” he added.
Tony Varghese is another customer who has been impacted but he is currently living in the Northern Territory with his family making it harder to oversee his house project in Melbourne.
The social worker signed up with Varaich Homes in 2022, although construction didn’t kick off until March last year in the Melbourne suburb of Botanic Ridge.
He said the home was meant to be delivered in 280 days, according to the contract, yet it still remains incomplete.
The dad-of-one claimed he paid $125,000 for work that hasn’t been completed.
“I don’t believe I will be able to complete the project now, nor am I certain whether I can recover the money I paid in advance. According to the VIMA website, the compensation for non-completion is capped at 20 per cent,” he noted.
“Given the current circumstances, this would be insufficient to finish the project. I am now staring at the possibility of being locked into a lifetime of mortgage payments without ever having a finished home. This is a hopeless situation.”
The 43-year-old said the experience had been a “nightmare” and had a “profound impact” on his mental health, “especially as I am far away from Victoria and unable to directly manage the issues on-site”.
“I’ve been under significant stress and have sought professional help, receiving regular support from a clinical psychologist for the past four months,” he said.
“It’s shocking to see that this has become a common occurrence in the building industry over the past few years. The government cannot remain a bystander in this situation, allowing people’s hard-earned money to be (taken) and leaving them trapped in financial despair through no fault of their own.”
Malcolm Howell from Jirsch Sutherland has been appointed as the administrator.
News.com.au has contacted for him comment but understands at least 10 customers are impacted by the collapse.
The company had previously faced a winding up application that was lodged in September.
The director of the company also has another business called Varaich Developments, which was registered on ASIC in 2022.
sarah.sharples@news.com.au
Originally published as Builder collapses, multiple customers impacted
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