Grandeur Homes enters administration leaving home construction projects in limbo

Major Victorian builder Grandeur Homes has collapsed leaving aspiring homeowners out-of-pocket and without any answers on when construction will resume.

Yannish Chittoo has paid almost $100,000 so far for his dream home to be built, only for the frame of the house to be put up and a single slab of concrete laid in almost two years.

The 37-year-old, who is building a home with his wife in Donnybrook in Victoria, said they were now in “limbo” and had no idea when their future home would be built.

They are one of many customers who are facing uncertainty as builds on multiple constructions stall after Victorian builder Grandeur Homes went into administration.

Mr Chittoo said he was still awaiting direct communication from the builder.

“My wife and I are in a really difficult position,” he said.

“I only learned about the building company having financial issues via Facebook groups.

“There were many delays with our build - which now, in hindsight, I realise was a red flag. We signed our contract in 2022, and have only just had the A-Frame completed on our house, but now all work has stopped completely.”

Construction on Yannish Chittoo's home in Donnybrook has been stalled. Picture: Supplied

Yannish Chittoo and his wife have been left in a difficult situation after paying $900,000 to Grandeur Homes. Picture: Supplied

Mr Chittoo paid Grandeur Homes $90,000 to date and said he could currently service a loan he took out for his mortgage, but it would be a “challenge” once more costs arise.

He said even didn’t have faith the subcontractors who were working on his house would come back to complete the job as they were overseen by Grandeur Homes.

“I know from my conversation with the trades on-site and calls I have had with subcontractors, that many of them haven’t been paid,” he said.

Sunny Kumar is facing a similar nightmare after two of his home constructions, both managed by Grandeur Homes, suddenly came to a halt.

The 41-year-old nurse from Manors Lake in Victoria said he received minimal communication, with subcontractors refusing to continue without upfront payments.

He’s been forced to borrow from family and friends to keep up with his mortgage. Now renting, he said he was unsure how to proceed, with an additional half a million dollars needed to complete the projects.

“We are a family of four on one income and I have two children under the age of 10. Whilst we knew there was significant delays throughout this process, I had no idea it would come to this,” Mr Kumar said.

Sunny Kumar's home sits unfinished after Grandeur Homes went into administration. Picture: Supplied

Sunny Kumar says he chased up subcontractors, but they won’t finish the job until they’re paid. Picture: Supplied

The father-of-two said he had received an email from the administrator, his only communication to date.

“The day before we had that email, I was getting phone calls from the building company requesting additional payments,” Mr Kumar said.

“They were telling me that there would be even more delays if payments weren’t made immediately.

“Subcontractors and trades who were working on the build have told me they also haven’t been paid. Some understandably want nothing to do with the project as they think they won’t get paid again.”

It comes as new data revealed Australia’s construction industry is in turmoil, grappling with insolvencies and payment delays to subcontractors.

Insolvencies in the sector throughout Australia have surged to 2,975 in 2023-24, up from an annual pre-Covid-19 average of 1,570, according to figures from ProjectPay’s Global Economic Impact report.

The report pointed the finger at government stimulus packages, which aimed to boost economic activity but inadvertently fuelled inflation and instability in the sector.

According to the report, subcontractors were also facing payment delays of up to 120 days, forcing many to rely on high-interest credit options.

Insolvencies in the construction sector in Australia have surged to 2,975 in 2023-24.

ProjectPay founder Louise Stewart said her fintech platform is designed to ensure all parties in a construction project are paid.

“We have been able to develop a technology infrastructure that removes the risk of payments being lost to builder collapse or any potential misuse of funds on a project,” she explained.

“Because the whole industry is working like a buy now, pay later - without any controls to make sure that the pay laters happen - so subcontractors typically have to go out and do the work; they have to use credit cards or high interest loans, or, unfortunately, many times they put the family home as security to get a loan from the bank to finance that work before they get paid.

“And so they’re left carrying all this interest expensed, while they’re also waiting to be paid for 120 plus days, and then if they don’t get paid at all, they’re left holding all that debt with no way to repay it.

“And so what we’ve done is we’ve actually built a buy now, pay later for the construction sector. So what we do is we partner with contractors, that is subcontractors, trade subcontractors and builders, where we effectively have built a system that manages the unique construction payment process, in compliance with the Security of Payment acts in Australia.”

Grandeur Homes was placed into external administration on August 30, with Sam Kaso and Daniel Juratowitch of insolvency firm Cor Cordis appointed as administrators.

They had their first meeting with creditors on Monday September 11 and will assess Grandeur Homes’ financial position and explore all viable options, including a possible restructure.

A Cor Cordis spokesperson said all construction was still currently on hold until they assessed Grandeur Homes’ financial position and explored viable options, including a possible restructure.

“According to the company’s records, we have identified six properties at the handover stage. We are evaluating the works needed to complete these properties and will conduct site visits with the affected customers to review outstanding items per their contracts,” they said.

“Once this assessment is finalised, we can inform these six customers whether the works can be completed under the current administration.”

Cor Cordis said subcontractors who had completed construction work but had not been paid by the company were identified as

unsecured creditors and were involved in a first creditors’ meeting on Wednesday 11 September, where 100 customers also attended.

Another meeting is scheduled for 7 October where the future of the company will be decided.

Originally published as Grandeur Homes enters administration leaving home construction projects in limbo