Pay up now: Troubled Queensland builder Oracle Homes demands up to $122k to finish houses

A struggling major builder has written to scores of its clients, saying they need to pay tens of thousands of dollars extra if they want their homes to be completed.

An Oracle home under construction.

One of Queensland’s largest builders is demanding tens of thousands of extra dollars from clients to complete their homes amid the deepening financial crisis in the construction sector.

Disgruntled clients of Underwood-based Oracle Building Corporation (which trades under a number of names including Oracle Platinum Homes) say they are being asked to pay cost variations of up to $122,000 before they can move into their homes, sparking a warning from the building watchdog to seek legal advice before paying any extra money.

The construction industry is facing unprecedented pressure following big hikes in material costs due to Covid-19 pandemic lockdowns and recent floods.

Oracle director Tom Orel sent a letter to one customer asking for an additional $50,000 on top of the contract price.

In the letter, Mr Orel said the increase was due to the “ongoing ripple effects” of the pandemic causing supply shortage for the entire construction industry.

The company is believed to be working on 300 new homes across Queensland with about half facing price increases.

Oracle has sent hefty price hikes to customers

One client Ian Smith said his son’s home being built by Oracle near Ipswich was almost finished when he received an email from the company wanting an extra $50,000.

Mr Smith, who works in the construction industry, said retrospective revisions to a fixed price contract were not enforceable and refused to pay.

Despite that, he claimed Oracle refused to hand over the property until Mr Smith threatened legal action. “There are other people in the same boat,” said Mr Smith. “Young people – working class people – are receiving these demands and it is stressing them out due to the time blowout as well as increased living and legal costs. Some are just paying up.”

A copy of a letter sent to a client by Oracle director Tom Orel.

Similar complaints are being aired on a Facebook page dedicated to complaints about Oracle.

One retired couple building with Oracle said they had been given no completion date on their “dream retirement home” and hit with a $65,000 increase.

Another customer claims they were asked for two prices increases totalling $122,000 on a contract price base of $391,000.

Another Oracle customer, who did not wish to be named, said he was asked for an additional $40,000 to complete his home. “I met with Mr Orel and offered to pay an extra $10,000 because I realised costs had gone up but that was rejected,” the customer said.

According to the Queensland Building and Construction Commission (QBCC), Oracle holds a category six licence that allows it to complete work worth up to $240m each year.

Oracle has completed 112 houses worth $36.6m so far this financial year compared to 318 homes worth more than $90m last year.

Design studio operated by Platinum Homes

Oracle’s lawyers say that while the price hikes are “terrible” they are in response to surging costs and it would be even worse if a “builder was placed in administration.”

In a letter to customers, law firm Holding Redlich said Oracle had been forced to act to avoid substantial losses on affected building contracts.

“The impact on Oracle’s clients is terrible and they acknowledge that,” said the letter. “However, it would be even worse to be the client of a builder placed in administration because the business had ceased to be viable. Legal disputes about the contract will only make things worse for Oracle and its clients.

“Seeking a new contract with a new builder is very likely to result in a substantial contract price rise when compared to the price increase requested by Oracle.”

A screenshot of a request for $50,000 extra to cover price increases caused by the Covid pandemic and other supply issues.

The QBCC said homeowners were urged to seek legal advice before making payments that fall outside the terms of a fixed price building contract under the guise of ‘contract variations’.

A QBCC spokesperson said that whether there is any legal basis for builders to demand payment for increased labour and material costs as ‘contract variations’ depended on the terms of the individual contract.

“Generally, under many fixed price contracts, variations to the price are only permitted in very limited circumstances and demands for cost increases may breach the contract,” the spokesperson said.

Mr Orel said it was difficult to comment on any matter without specific details, however the building environment was unprecedented.

“Oracle remains committed to working with their clients to help them achieve a positive construction outcome at this challenging time,” Mr Orel said.

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