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Montego Homes liquation creates financial stress in building crisis

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Pam Kiriakidis
Pam Kiriakidis
Pam Kiriakidis has worked as a journalist at the North Central Review since 2022, with a particular focus on the City of Whittlesea and stories for the Whittlesea Review. She graduated with a Bachelor’s Degree in Media and Communications majoring in journalism and focuses on politics, community, and health with the occasional niche sports story finding its way in front of her.

Victims of the latest collapse in Victoria’s building crisis are calling on the State Government to extend the Liquidated Builders Customer Support Payment Scheme.

The payment scheme originally covered Porter Davis customers left in limbo when its buyers failed to take out Domestic Building Insurance, DBI.

Customers of builder Montego Homes now face the same crisis, with over 60 homeowners in Melbourne’s growing corridors drowning in financial distress.

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The Victorian Building Authorisation, VBA, suspended the registration of the company’s nominee director Todd Searle, with concerns that almost $900,000 may have been received by way of deposit or otherwise in relation to 64 sites. 

Single mother Jessica Rodriguez, who organised the petition to extend the payment scheme for Montego Homes and Chatham Homes customers, signed a contract with her mother in March 2022 to build homes in Doreen, but together they lost $30,000 to Montego Homes. 

Ms Rodriguez said there was zero communication from Montego until November 2023, when they demanded an extra $45,000 per proposed home, and claimed the fixed-price contracts were no longer economical to build.

On January 15, 2024, Montego Homes entered voluntary administration.

Ms Rodriguez said the ‘big clincher’ in the situation was that not one of Montego Homes’ current policies was compliant with legal obligations.

“They fooled us, they said they had bought insurance on the contracts that we signed, but they never did, “ she said.

“Everything they told us were lies because we can’t even build our houses anyway. We purchased the house to build on land they sold us, and we can’t build it because it doesn’t comply with the construction code for small lot homes.

“We have to get planning permits, which the council have indicated, they are not going to approve, so they had no intention of building our houses anyway.”

Dozens of Montego Home customers are dealing with the consequences, some of whom want the State Government to extend the Liquidated Builders Customers Support Payment Scheme.

For a person to be eligible their builder must have entered liquidation between July 1, 2022, and June 30, 2023, meaning Montego Homes victims have now been left behind.

“I want changes to stop this from happening to others, this has to be made an example – we have to be the last people that get compensation from the government,” Ms Rodriguez said.

“The government was made aware of the construction industry two years ago and did nothing, then Porter Davis collapsed, and they still did nothing … they knew if these big builders were going down, then the small ones were going to go down too right?

“They said that there’s a suite of changes that are coming, but the only change so far is they’ve increased the fines and slightly changed the penalties for not obtaining good insurance.

“But the clincher is that most people don’t find out they don’t have building insurance until after the company has gone broke, so what good is an increased fine going to be when the company does not have to pay it?”

The Opposition leadership team visited residents in Doreen last week hearing from City of Whittlesea council and groups on growth challenges in the region, while also calling on the State Government to support Montego Homes victims.

Member for Northern Metropolitan Region Evan Mulholland, who sponsored Ms Rodriguez’s petition, said the Porter Davis scheme should have been a ‘wake-up call’ for the State Government.

“We want to see proper enforcement of law so that the VBA is stopping this from ever happening again,” he said.

“The current laws in the Building Act provide the VBA with the necessary power to stop dodgy builders, it only seems to be Victoria where we have builders going bust and taking customers’ deposits with them without taking out insurance on their behalf.

“Obviously a lot of them are really distressed … the only right thing to do is for the government to offer financial assistance – what’s the difference between Montego Homes customers and Porter Davis customers? Nothing.”

Liberal Party State Leader John Pesutto said the government needed to apologise for its incompetence and insensitivity.

“Frankly the government was warned about the risks running throughout the residential construction sector in Victoria and the minister who was in charge at the time, Danny Pearson, was well aware of this, he was briefed about the risks confronting the sector,” he said.

“The government did nothing – one of its chief responsibilities in this area is to make sure that it is enforcing the obligations of builders to take out appropriate insurance.

“The government dropped the ball completely in enforcing those requirements and that’s not fair on the home buyers …  people who are suffering and facing real financial distress need a government to come forward and support them at this difficult time as if that insurance had been put in place.”

The Review reached out to the State Government for comment however it was not received in time for publication.

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