Hotondo Homes Hobart collapse: Devastated families lose thousands of dollars
A family of five thought they were on the cusp of moving into their dream home. Over several agonising months, it all went wrong.
A Tasmanian family are devastated after a major Australian home building company collapsed, leaving them thousands of dollars out of pocket and almost homeless.
Nathan Meyers and Jayne Dillon, who have three kids aged 14, 13 and 11, signed a contract with Hotondo Homes Hobart in December 2020 and put down a $26,000 deposit.
But Mr Meyers said that began 10 months of “absolute hell” dealing with the company.
The couple, who describe themselves as a “blended family”, took the “risk” of each selling their respective homes to raise the deposit and build a dream place together.
The government workers wanted to take advantage of the $45,000 HomeBuilder’s grant as it was cheaper to build a house than to buy one, Mr Meyers said.
They secured land for $200,000 and were set to spend $330,000 on the build with Hotondo Hobart.
“We shopped around and most builders said they couldn’t build a house within the time frames to receive the grant but Hotondo said not a problem, we can start in four months and finish in 10 months,” he told news.com.au.
“We didn’t hear anything for months and that’s when the trouble started. We found out planning approval had been denied by council as it didn’t meet Australian standards and it all went downhill from there.”
‘It destroys all your dreams’
On January 4, the Hotondo Hobart branch went into receivership and left as many as 80 contractors and 40 customers in limbo with unfinished homes.
Tasmanian Constructions, which owns the Hotondo Homes franchise in Hobart, informed the Australian Securities and Investments Commission (ASIC) that it was closing down with estimated liabilities of more than $1 million, not including amounts paid by customers.
A report from the appointed liquidator, Revive Financial, released on Wednesday showed some tradies are owed between $75,000 and $100,000 from work completed for Hotondo Hobart.
Overall, creditors are owed $1.33 million in total, according to its report, but $1.2 million is outstanding to unsecured creditors.
Mr Meyers describes the experience with Hotondo Hobart as having destroyed dreams.
“When you can’t sleep every night, as you don’t where you are going to live and if you can put a roof over your kids’ heads, and you don’t know what’s going to happen next and you’re completely at the mercy of a builder, it breaks you mentally,” he said.
“It puts your relationship under immense strain and we were fighting all the time, as you have no other outlet, and it’s more than the financial impact, it destroys all your dreams and hopes and you don’t know what to do and you question your decision.”
He added that going with a franchisee of a national company made him think protections would be there, but that wasn’t the case.
“If the builder does this to you and goes into liquidation, each person has to take the financial losses and its not insignificant. It’s $10,000, $20,000 and $30,000 that you can’t afford to lose,” he said.
“For most people it’s half a year’s wages they have lost and they are trying to feed their kids like everyone else.”
Delays to approvals
Mr Meyers, who has lived in Tasmania his whole life, said they had nothing but problems with Hotondo Hobart.
The franchise told them there was a “minor delay” in obtaining planning approval, but he claims he was forced to ring and email them constantly to find out what was happening.
An email from Craig Ellis, director of Hotondo Hobart, to Mr Meyers blamed the council for the issue and delay but added he anticipated starting the build from May, which was subsequently pushed back to June and beyond.
Mr Meyers continued to chase the issue of when building would begin over the following months, with Hotondo Hobart pointing to engineering and construction plans taking longer than expected as reasons why building approvals hadn’t yet been submitted to the council.
Staff assured him the start on the house would happen within weeks in August, with the necessary materials ordered.
Yet building never began for the family’s promised dream home.
Facing homelessness
Meanwhile, the family of five were renting while they waited for their home to be built, and were expecting to move in before Christmas 2021.
Then they were hit with 10 weeks’ notice in September that the landlords intended to move back in.
The dad-of-three said finding a new place to rent proved incredibly difficult, particularly as they have two cats and a dog.
“We had to find somewhere to live in a 10-week period and rent in Tasmania is not only extremely expensive, but it’s also really hard to find places. We were knocked back from a dozen properties and we literally thought we were going to be homeless for several weeks,” he said.
“We went to open homes and there were 20 or 30 people lined up in each and every home and a lot of properties say no pets. So we would rock up and put applications in but with a dog and cats you are pretty much ruled out anyway.”
At one stage the couple, both in theirs 40s, were considering moving back in with their parents to put a roof over their family’s heads, he added.
Legal dispute
Before the collapse, Mr Meyers said they got a lawyer involved to recoup their losses as the issues stretched out and building had still not started.
Hotondo Hobart terminated the contract in September 2021, based on a clause concerning the owner’s capacity to pay.
But Mr Meyers’ lawyer wrote to Hotondo Hobart alleging the contract termination was “unlawful and ineffective”.
“On 8 January 2021 my clients provided to your then sales manager Jeremy Parker a letter of
finance approval from Commonwealth Bank, a copy of which is enclosed,” the lawyer wrote. “That approval was clearly satisfactory to you, because Mr Parker subsequently communicated with my clients’ finance broker to facilitate provision of the documents requested by Commonwealth Bank in its approval letter.”
The lawyer went on to allege that “extensive and unwarranted delays in obtaining the required permits” meant the family had incurred a number of losses.
The couple were looking to recoup their $26,000 deposit, the $45,000 Homebuilders Grant and another $50,000 in incidentals, including rent money.
However, Hotondo Homes Australia has disputed Mr Meyers’ claims.
It told news.com.au that while Mr Meyers provided pre-approval documents, he failed to provide formal approval documents.
“Director Craig Ellis informed us that he provided a refund of any monies owed from his initial deposit less costs incurred plus $1000 as a goodwill gesture when he terminated the contract,” it said.
Mr Meyers said the family never received any money from Mr Ellis.
“They knew we had finance approval, there is no doubt we had approval,” he said.
“Considering their builder has gone into liquidation, to then turn around and try to blame us is insane.”
Hotondo Home Australia also added that Mr Meyers wouldn’t have qualified for the $45,000 HomeBuilders grant, alleging he did not fulfil his financial obligations and that he was not the registered titled owner for the land he intended to build on.
But Mr Meyers has provided title documents to news.com.au showing the couple purchased the land, with the sale settled in November 2020 and proof of title given to Hotondo Hobart in December.
He added they also recently sold the land, which wouldn’t be possible if they didn’t own it.
‘Devastating outcome’
Mr Meyers is particularly scathing towards the national arm of home builder Hotondo Homes Australia, which he said he begged for help on multiple occasions.
Hotondo Homes Australia blamed a mix of supply and labour price increases, high demand from government HomeBuilder grants and delays in material availability as factors that led to the branch becoming insolvent.
“These factors have created an unprecedented and challenging environment, which placed significant pressure upon the franchisee with regards to the company’s workflow, then in turn negatively impacted the business’s cashflow,” Hotondo Homes Australia said.
It said it became aware of issues with Hotondo Hobart in late December before commencing work “with our franchisee on their building workflow and financial status” before being advised on January 7 that a liquidator had been appointed.
The company acknowledged it was “a devastating outcome” and said it was “working with the liquidator to get the best outcome possible for all involved”.
But the national company added that the events unfolding in Tasmania were an “isolated case”.
“As a franchise network, every Hotondo Homes builder operates independently of each other and as such, are not involved with the Hobart franchisee,” the company told The Mercury.
“This is not a trend. Builders are navigating unprecedented spikes in the cost of materials and labour, widespread shortages in materials and trades, council delays and other ongoing impacts of the Covid-19 pandemic and current industry environment.”
Another franchise collapse
But Mr Meyers said another Hotondo franchisee in the Tasmanian town of Sorell had gone under back in May 2020.
“It’s the second franchise that’s gone insolvent but if you try and look up anything about Hotondo Sorell it’s got a Google one star review, otherwise they have sanitised it and you can’t find anything about it,” he claimed.
“They work really hard at having a good positive online presence but when it comes to people who have been ripped off they won’t send anything back, except here’s your liquidator emails, best of luck to you.”
News.com.au has obtained an email from Hotondo Homes’ national marketing manager Jodie Flower on 13 January sent to franchisees, which attempts to deal with the fallout from the Hobart branch collapse.
“The Support Office is working to ensure any damage to the Hotondo Homes brand is minimised and will be closely monitoring all online platforms to ensure any negative comments are addressed immediately,” she writes.
“You may see/hear that this is making news across various sites/news outlets at the moment. Although we are aiming to minimise this, they are also misleading in their headlines so you may find clients/suppliers will reach out to you for some confirmation/clarification around the article.”
She adds that a letter has been attached “that can be sent to your database to advise that this is an isolated incident and does not affect their partnership with you and your business”.
‘Awful grief’
Meanwhile, Mr Meyers has emailed the liquidator, but believes there is “no chance” of getting his family’s money back and has started a support group for other impacted customers.
He said many have lost between $20,000 and $30,000.
News.com.au has been contacted by a number of customers – one family, with a six-week-old baby, said they risked losing their $21,000 deposit.
Jessica, who did not want her surname to be used, was another customer who said she had put down a deposit of $38,000. The only things she has to show for that investment are some half completed drawings, a soil report and BAL rating, which looks at the fire risk.
She said it was “heartbreaking” and she was struggling to cope day to day.
“We still want to build but I don’t know if I can trust anyone … I can’t even explain the amount of devastation if you save up for something and are missing out on a lot – we don’t even go on holidays – we were aiming on saving up for this deposit,” she said.
“It feels like this is such a loss and everyone in the same situation will be going through this awful grief and it doesn’t feel like there’s much more support from Hotondo’s head office or even politicians.”
She said her family of six were about to sell their family home but were lucky they didn’t as they would have been left homeless.
Both Mr Meyers and Jessica want to see more protections for everyday Aussies who find themselves in this situation.
“It’s the biggest investment in your life, yet in Tasmania it can make you or break you. Some people may have to go bankrupt or never be able to buy a house because of this and there is no protection,” Mr Meyers noted.
“It’s a cliche that you can buy a toaster from Kmart and if it doesn’t work or is broken, you can take it back and get your money back. Yet you can spend up to $1 million with a Hotondo builder (in Tasmania) and you don’t see a cent of money back and no one protects you.”
The Tasmanian government is looking to reintroduce home warranty insurance in the state to strengthen protections for consumers, which is currently available across the rest of Australia.
Meanwhile, the Meyers and Dillon family had a “fire sale” on the block of land from Hotondo and were lucky to have found a house to buy, but spent $850,000 on it rather than the $530,000 mortgage they had planned.
“I will be working for next 30 years to pay off the house and will retire at 74 or 75 maybe. I’m going to be working the rest of my life because one builder couldn’t run a business,” he said.
Hotondo Hobart’s liquidator Jarvis Archer, from Revive Financial, said last week it was unclear whether creditors would get their money back.
He confirmed around five employees were also short of entitlements such as superannuation.
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“The director advised that despite the company’s contracts being profitable, delays to planning and construction stages, in particular due to difficulty sourcing building materials, meant projects couldn’t progress as planned,” Mr Archer said.
“Consequently, the company was slower to reach progress milestones and issue invoices, severely impacting cashflow and its ability to continue operating.
“We have been obtaining information regarding the affairs and financial position of the business and dealing with various stakeholders.”
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