Taxpayers on the hook for up to $40 million to get Nicheliving homes built

West Australian taxpayers could fork out up to $40 million to help customers of embattled builder Nicheliving finish their homes.

The state government has reached an agreement with Nicheliving that will see the company cease its State Administrative Tribunal appeal and relinquish its building contractor license, thereby allowing customers to access home indemnity insurance.

Commerce Minister Sue Ellery.Credit: Hamish Hastie

Commerce Minister Sue Ellery on Friday said Nicheliving had withdrawn its proceedings in the SAT against the Building Service Board’s decision not to renew its building contractor licence, and will not commence any new proceedings in relation to the board’s decision.

“Nicheliving and the company directors cannot reapply or seek registration as a building service contractor for a period of 10 years, either in their own names, personally, indirectly or through any other entity, or seek to take control of another building service contractor in any other manner that would see them carrying out building services within WA,” she said.

Some Nicheliving customers have waited nearly four years to get the keys to their homes after being promised timeframes of between 12 and 18 months.

Ellery said Nicheliving’s directors and related entities would waive their rights to make any claim under home indemnity insurance policies issued by QBE for their own homes.

With about 200 homes unfinished, the final bill for taxpayers could reach the $40 million mark though it is unlikely all homes would require the $200,000 available to them through the home indemnity insurance scheme.

Ellery defended the decision, and said it was something the government “may well have been forced to do in any event”.

Nicheliving managing director Ronnie Michel-Elhaj.Credit: Nicheliving

“While QBE does pursue directors, I’m advised that recovery rates are quite low, and it’s likely that Nicheliving would have contested the recovery losses,” she said.

She also dismissed concerns that this could set a precedent for other building companies to seek government intervention.

“I don’t know any builder that is prepared to have their business barred for at least 10 years with all of the reputational issues that go with that,” she said.

“Well, [Nicheliving] been willing to, I don’t know any sensible builder who would want to do that.”

Nicheliving customer Kathy Ellis, who has been living in a caravan with her two teenagers for the past two years, said it was a bittersweet outcome.

She understood why the decision was made to stop the issue dragging on for years.

“I’m really crushed that they get to walk away.”

Nicheliving blamed COVID and government stimulus for the woes, but the company signed on more than double the number of customers it would normally sign on during 2020 to 2021, which left it exposed when building material supply chains and labour availability were impacted.

Michel-Elhaj again blamed COVID and supply chain issues for his company’s woes.

“Due to unforeseen industry-wide cost escalations as a result of to the impact of COVID19, the company has agreed to cease its building registration and will focus on its core development business and pipeline of over 409 property titles in the coming 2 to 3 years to help address the WA housing crises,” he said.

“Nicheliving Construction’s decision to withdraw the review proceedings and to surrender our registration was made taking into account the best interests of our customers and the business as a whole. Nicheliving Construction has suffered significant financial losses to this point, due to the inflationary pressures in our industry since COVID-19.

“Further, Nicheliving Construction has agreed to forgo one of its largest income streams for many years in the future. This decision was not taken lightly.”

Opposition housing spokesman Steve Martin said he felt for the builders who had covered their own losses during this disastrous period.

“Spare a thought for the honest builders who have covered their own losses during this disastrous period. It’s never been harder to be a builder. Massive government spending has soaked up all the available workers and caused inflation,” he said.

“Most builders are family businesses who have suffered genuine losses caused by Labor’s mismanagement in the construction sector, where’s their support? It seems the government has only stepped in to help a builder who has done the wrong thing, not those who have done the right thing by their customers.”

Michel-Elhaj told this masthead in a sit-down interview last week that while the company was carrying $44 million worth of debt, it was also backed by $100 million worth of property and contract assets.

Ellery said the Building Services Board investigation into Nicheliving’s finances suggested otherwise.

She said the company was ineligible for the builder’s support loan program announced in 2024 because they were unable to meet the strict guidelines on the financial viability of the company.

Ellery said the Building Services Board investigation into Nicheliving’s finances suggested otherwise.

“Nicheliving tried that and couldn’t demonstrate their financial situation to be eligible for that program,” she said.

Michel-Elhaj again refuted that and said his company was granted the stay by the State Administrative Tribunal in August because it considered its asset base.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.