Melbourne builder Chatham Homes collapses into liquidation owing $2m, 50 homes impacted

Staff have lost their jobs on the spot and 50 homeowners have been left in limbo as another victim joins a growing pile in Victoria’s building industry.

EXCLUSIVE

A building company has collapsed into liquidation with 50 homeowners across Melbourne and regional Victoria impacted.

News.com.au can reveal that River Dale Building Group Pty Ltd which traded under the name Chatham Homes went into voluntary liquidation less than 24 hours ago.

Andrew Schwarz of insolvency firm AS Advisory was appointed as the liquidator around noon on Monday.

All 16 employees lost their jobs on the spot at a company-wide meeting and Chatham Homes has now officially ceased to trade.

Chathom owes around $2 million to around 200 creditors, most of them tradies, according to preliminary findings.

“The business was operating but the business had basically run out of cash,” Mr Schwarz told news.com.au.

“It’s a victim of the industry unfortunately, all the usual pressures, increasing costs, delays, supply constraints.”

News.com.au understands the building firm did not take out insurance for a handful of customers which means they are set to lose their entire deposits without government intervention.

Chatham Homes has gone into liquidation. Picture: Supplied/news.com.au

The Strachan family have been impacted by the company’s collapse. Picture: Supplied/news.com.au

School teachers Louise and Brett Strachan have been devastated to learn of the company’s demise, especially because domestic building insurance was not taken out in their name.

“We’re going to lose $32,000 in total,” Ms Strachan, 32, told news.com.au.

The mum-of-two said they first engaged Chatham Homes way back in 2021 but despite the passage of two years, there’s only an empty block of land to show for their time and money.

Ms Strachan was due to have another baby and so she and her husband fast tracked signing the building contract, which was done at the end of June.

“My husband and I were completely fooled, we were so excited,” Ms Strachan said.

They have since learned there is no policy number or insurance in their name and the builder has now gone bust.

The liquidator said at this early stage of investigations, it was unclear how many people were in the same boat regarding having no insurance.

“We’re both teachers so we literally work for the government,” Ms Strachan added.

“I just think we work so hard. I cannot believe someone took that amount given how hard we saved that. I am hoping the government is going to help. I would lose all faith otherwise.”

Earlier this year, the collapse of major Victorian builder Porter Davis Homes sparked a major review into Victoria’s building regulations and prompted a government bailout package after a similar situation where hundreds of homeowners were left without insurance despite it being required under the law.

The scheme was widened to include any victims of a builder that had gone bust in the past 12 months and had not taken out insurance, ending June 30.

The irony is not lost on the Strachans – they signed their contract just before the end of the financial year, but unfortunately the builder only went bust on Monday, rendering them outside the eligible window of time.

Victoria’s new premier, Jacinta Allan, has been contacted for comment over whether she plans to create a bailout package or extend the rescue scheme. At time of writing, she had not responded.

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Ms Strachan was so excited to build her dream home. Picture: Supplied/news.com.au

She has an eight-week old baby and is $32,000 worse off. Picture: Supplied/news.com.au

Hamish C, who did not want to provide his last name, signed a $707,000 building contract with Chatham Homes at the beginning of last year after receiving a recommendation from a friend.

His home is at lockup stage which means it is about halfway completed.

The dad-of-three has been renting with his family ever since building works commenced in March 2022.

“We’ve been paying a lot of rent, we’re not likely to see any liquidated damages and we have no idea how or when we’ll be able to move forward with the build of our family home,” Hamish lamented to news.com.au.

He plans to lodge a claim through the VMIA insurance process but it will likely take months before that progresses, during which time his home will continue to languish.

“Alarms bells probably started to go off when they couldn’t get the site cleaned,” he recalled. “We made the lockup payment around mid April. Since then there’s been minimum trades on site.

“I was between a rock and a hard place trying to get them to build the house.”

He said he was assured the home would be done by April this year.

The rubbish that took a long time to clean from Hamish’s site. Picture: Supplied/news.com.au

Customers said there were a number of “alarm bells” in the months leading up to its collapse. Picture: Supplied/news.com.au

Chatham Homes still has an active website and social media presence.

It had been operating under its current leadership team since 2019 but news.com.au understands it had been in business for years before then.

Mr Schwarz encouraged impacted parties to get in touch with him.

He said homeowners should lodge an insurance claim to start the ball rolling with their payout.

ASIC insolvency statistics show 2213 building companies collapsed during the 2022-23 financial year — a 72 per cent increase on the previous 12-month period.

The alarming trend has been blamed on a “perfect storm” of factors, including fixed price contracts, escalating costs, supply chain disruptions and tradie shortages.

The previous Morrison government’s HomeBuilder grant, which was introduced in June 2020 and handed out $2.52 billion to owner-occupiers who wanted to build or substantially renovate a home, turbocharged the sector.

More than 130,000 customers signed on for the program, with many tradies agreeing to the work under fixed-price contracts that soon became unsustainable as prices began to soar.

This year alone, news.com.au has reported on dozens of major builders that have collapsed.

Australia’s 13th biggest builder, Porter Davis, also collapsed earlier this year, placing 1700 projects and another 779 empty blocks of land in jeopardy across Victoria and Queensland, while more than 1000 unsecured creditors owed a whopping $71 million.

In one week in July, news.com.au reported on a new builder going into external administration every day.

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Originally published as Melbourne builder Chatham Homes collapses into liquidation owing $2m, 50 homes impacted