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Home builder Porter Davis collapses affecting 1,700 homes, LLoyd Group enters voluntary administration
By Zalika Rizmal.
Some Porter Davis customers have been left with little more than a concrete slab, with construction on homes stopped across all of the major builder’s projects.
Victorian-based home builder Porter Davis is going into liquidation, while a second construction firm has entered voluntary administration.
Porter Davis’ liquidators are looking for builders to take over customer contracts
Dozens of public building projects are at risk in New South Wales and Victoria
More than 600 employees across both companies have been affected
Construction has been suspended on all Porter Davis’ projects, with 1,700 homes affected across Victoria and Queensland.
The construction company has about 470 employees and was forecasting revenue of $555 million in the 2023 financial year.
Customers and other creditors are being told to contact the liquidator Grant Thornton, as it investigates the reasons for the builder’s collapse.
A spokesperson for the liquidator said the company ran out of options.
“The extremely challenging environment for the residential home building has directly contributed … with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the Group’s liquidity,” the spokesperson said in a statement.
“Notwithstanding the financial support from shareholders and lenders, the Group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably.”
Rising material costs, labour shortages and interest rate increases have led to cost blowouts, putting mounting financial pressure on builders.
Construction on all current Porter Davis builds has been suspended immediately, with 1,500 unfinished homes in Victoria and another 200 in Queensland.
There are also around 780 projects under contract, where construction is yet to begin.
The liquidator said it was “working urgently” to find a solution for customers and employees, including by contacting potential interested parties willing to take over the customer contracts.
Porter Davis’s collapse is the latest in a long string of construction companies, with experts warning companies across the country will continue to go broke as material costs and interest rates keep rising.
John and his family are among thousands of Porter Davis customers who have been left with an unfinished home and an uncertain future.
The family invested their life savings to build a five-bedroom house in Melbourne’s outer-northern suburbs.
Just last week, John received a call from Porter Davis confirming the house frame was going to be delivered within weeks.
“We were hoping to be in before Christmas this year,” he said.
This morning, John found out on social media that would not be happening.
All the family has been left with at the site of their dream home is a concrete foundation.
“I was very disappointed. This is a million-dollar home that we’re building, I actually would have liked a little bit more notice,” he said.
With the family of five currently staying in cramped quarters with his in-laws, John said he was worried about their future.
“First we have to look for somewhere else to live, I guess,” he said.
A concrete slab foundation
This is Porter Davis customer John’s unfinished house in Melbourne’s north. (Supplied)
Lloyd Group enters voluntary administration
The collapse of the Victorian-based builder comes as another Victorian construction firm, Lloyd Group, called in voluntary administrators amid financial woes.
The Port Melbourne-based builder specialises in infrastructure projects for state and local governments, primarily in Victoria and New South Wales.
Construction firm Lloyd Group specialises in public building projects, such as the 2021 redevelopment of the Burrinja Cultural Centre in Melbourne’s south east. (Lloyd Group)
The appointment will affect more than 200 employees and 59 projects under construction, including 29 in Victoria and 30 in New South Wales.
“Despite significant effort, Lloyd Group has been unable to overcome increasingly challenging circumstances over recent months that have eroded project margins, Deloitte voluntary administrator Sam Marsden said.
“We will be undertaking an urgent assessment of the business’s financial position and project-by-project status.”
Mr Marsden said administrators would begin an “accelerated sale process” while speaking with with potential parties interested in taking on individual projects.
Home owners in Australia are being impacted by a broken building industry causing emotional distress, financial ruin, family dynamics and distress, and only a Royal Commission will arrest the downfall.
The cladding issue, the lack of consumer protection, the quality of buildings, the quality of trades, and a culture not aligned with a fair go, all contribute to massive building failures in Australia.
Home owners with flammable cladding are being targeted to pay for the industries failure with bills arriving out of the blue of up to $100k when they in fact purchased a fully compliant building.
The systems failure being thrust on the end user is just not fair.
All home owners deserve better but when things go wrong this current system virtually destroys people and puts them on a merry-go-round of despair for many years.
To highlight the extent of the issue the report “Governing the Compact City” by the NSW university showed 85% of all apartments built in NSW between 2002 & 2012 had defects.
Key stakeholders who work at the coal face have been ignored and continue to be held captive by unconscionable government behaviour which continues to deliver regulatory outcomes that further compound accountability at the top of the chain.
Almost 70 reviews/inquiries over the past decade and a half have only fiddled at the edges and not resolved the fundamental issues facing the industry.
A short sharp Royal Commission will expose all the shortfalls of the national building industry.
Link to petition: https://www.change.org/p/building-in-australia-is-broken
The fire broke out at the 33-story building around 11 p.m., and continued burning through Friday morning, authorities told CNN. Photos of the scene show black smoke billowing above the building, and blackened debris scattered along the street.There have been no deaths reported so far.
A resident of one of Sydney’s several evacuated apartment buildings has broken down in tears before a parliamentary inquiry when describing the uncertainty he and his young family are now facing. Vijay Vital, who was evacuated from Sydney’s Mascot Towers on June 14, was overcome with emotion when he addressed the NSW Legislative Council inquiry into the state’s building standards on Monday. “I stand here as a parent as well; my daughter asked me, ‘When can I go home?’ ” Mr Vital said. The upper house committee heard from several residents affected by mass evacuations in recent months as well as bureaucrats still working to implement laws passed by the government last year.
A resident of one of Sydney’s several evacuated apartment buildings has broken down in tears before a parliamentary inquiry when describing the uncertainty he and his young family are now facing.
Vijay Vital, who was evacuated from Sydney’s Mascot Towers on June 14, was overcome with emotion when he addressed the NSW Legislative Council inquiry into the state’s building standards on Monday.
“I stand here as a parent as well; my daughter asked me, ‘When can I go home?’ ” Mr Vital said.
The upper house committee heard from several residents affected by mass evacuations in recent months as well as bureaucrats still working to implement laws passed by the government last year.
‘Breathtakingly irresponsible’: Sydney mayors lash building controls
Sydney lord mayor Clover Moore says a lack of independent certification has paved the way for buildings “unfit for occupation”.
The lord mayor of the City of Sydney, Clover Moore, has lashed the state government’s regulation of the building industry as “breathtakingly irresponsible”, saying a lack of independent certification has paved the way for buildings that were “unfit for occupation”. (more…)
Premier Gladys Berejiklian says the system of regulation in the building industry is not working, after the Herald revealed the evacuation of a third apartment building in Sydney. As the state opposition called for an immediate response to the growing number of building defects emerging in the city, Ms Berejiklian said she wanted to “assure the community that we know there’s a problem. A third Sydney apartment block is now under scrutiny over severe defects and safety issues. “We know there’s a gap in legislation,” she said. “We allowed the industry to self-regulate and it hasn’t worked. There are too many challenges, too many problems, and that’s why the government’s willing to legislate.” After the existence of the third multi-storey residential building recently evacuated on safety grounds emerged on Wednesday, the Herald asked each council in Sydney if it was aware of any similar evacuations in the past year.
Premier Gladys Berejiklian says the system of regulation in the building industry is not working, after the Herald revealed the evacuation of a third apartment building in Sydney.
As the state opposition called for an immediate response to the growing number of building defects emerging in the city, Ms Berejiklian said she wanted to “assure the community that we know there’s a problem.
A third Sydney apartment block is now under scrutiny over severe defects and safety issues.
“We know there’s a gap in legislation,” she said. “We allowed the industry to self-regulate and it hasn’t worked. There are too many challenges, too many problems, and that’s why the government’s willing to legislate.”
After the existence of the third multi-storey residential building recently evacuated on safety grounds emerged on Wednesday, the Herald asked each council in Sydney if it was aware of any similar evacuations in the past year.
Public confidence in apartment buildings has taken another hit, after it was revealed a block of units in Sydney’s south west was evacuated late last year.
Residents of the 30 loft-style apartments at Zetland’s Garland Lofts were forced to abandon the building after “water damage caused the failure of the internal fire-rated construction throughout several apartments,” a City of Sydney spokesperson said in a statement.
After learning of the evacuation, a City of Sydney officer inspected the building in February 2019 and found that it was vacant and suffering from “extensive and severe water damage”.
A staff member from the City of Sydney then spoke to the building owner “who had engaged consultants to address the issues and make the building habitable again”, the spokesperson said.
But the Sydney Morning Herald revealed on Wednesday that residents have still not been able to move back into the property, roughly five months after the City of Sydney first inspected it.
Garland 204 Pty Ltd was the developer behind the project, according to the SMH.
The company’s directors, Janet Pennington and Phillip Bartlett, notified ASIC on May 19, 2014, that it had appointed external administrators, and the company was officially deregistered on February 19, 2019, an ASIC spokesperson told The New Daily.
“There were a number of parties involved, and I am unable to make any further comment,” he said.
The latest revelations come at a time of heightened scrutiny into standards in the construction industry, after the high-profile evacuations of Sydney Olympic Park’s Opal Tower and the Mascot Towers on Bourke Street led to a public outcry over shoddy workmanship.
Builders Collective of Australia president Phil Dwyer believes the recent evacuations and ongoing flammable cladding crisis showed standards had slipped so much that a royal commission was needed to fix the industry.
“Developers will always try to get the most amount for the least amount of money, but cutting corners doesn’t save money – it costs money,” he told The New Daily after the Mascot Towers evacuation.
“We want reform for the building industry, and a short and sharp royal commission.”
Residents of the 132 units in Mascot Towers were evacuated on June 14 after cracks were discovered in the facade masonry and primary support structure.
After being told “there was no money for them” at a meeting on June 20, unit owners agreed to pay an initial $1.1 million to cover emergency repairs.
David Bannerman, principal of Sydney-based strata law firm Bannermans Lawyers, told The New Daily the day after that meeting that, until a thorough investigation had taken place, the owners were the only party that could legally be asked to foot the bill, as the building was too old to fall under warranty.
“Whatever way they go, whenever you’re trying to recover that sort of money, you’ll be in court for a while, because people don’t flash that sort of cash around very quickly,” he said.
Engineers are still investigating the cause of the cracks, and residents have not yet been able to move back into the property.
But the NSW government has since set up an emergency $3 million fund to cover the temporary accommodation costs of tenants and owner-occupiers for up to three months.
Meanwhile, Opal Tower builder Icon revealed in a statement last week that structural remedial works would likely be completed in mid-August, with 63 of the apartments expected to be re-occupied some time in July.
The recent evacuations have put pressure on the NSW government to live up to its promise of implementing reforms recommended by the Shergold-Weir Report in February 2018.
Among other things, that report recommended introducing mandatory registration of all building practitioners and highlighted the privatisation of the certification industry as a worrisome conflict of interest.
In response to that report and growing public distrust in the construction industry, the NSW government announced in February that it would introduce legislation requiring building designers and builders to be registered and appoint a building commissioner to act as the state’s consolidated building regulator.
That legislation has yet to pass, but NSW Premier Gladys Berejiklian told reporters in June that she would hold “everybody to account”.
LESS than a week after the Mascot Towers evacuation, a joint report by Deakin and Griffith universities has revealed defects in 85% of apartment buildings such as cracking, dangerous cladding or other fire safety breaches, threatening lives and potentially putting unaware owners and investors hundreds of thousands of dollars out of pocket. (more…)