At least 65 home owners have been left in financial limbo after another Victorian house builder collapsed, citing pressure from construction costs, supply-chain delays and labour shortages.
Family-owned Langford Jones Homes is in liquidation, owing 250 creditors more than $10 million. The builder had projects in Melbourne’s bayside and south-east suburbs and on Phillip Island.
Construction businesses around the country are under stress.Credit:Paul Jeffers
Langford ceased trading last Thursday and appointed RSM Australia partners Jonathon Colbran and Richard Stone as liquidators. Customers with deposits for homes or properties already under construction have been contacted in recent days.
On Tuesday, Stone said all homeowners had been given access to their property and their keys returned. “They’re all at different stages of completion. There are a number of new homeowners who have paid deposits. They will have to go through the liquidation process and submit a claim,” he said.
The company’s collapse is another sign of difficulties within the industry. Many builders across the country are under stress, including high-profile businesses such as Metricon Homes and top-tier construction firm Probuild, which went into administration in February.
Another Victorian builder, Snowdon Developments, went into voluntary administration last week leaving 550 homes unfinished. Snowdon has 262 creditors who are owed $17.8 million.
Wally Burns, 50, and his wife Kelly, 47, are among dozens of customers left in the lurch by the collapse of Langford Jones Homes. The family have already paid a total of $30,000 to build a four-bedroom home in an estate in Kilcunda, on the Bass Coast.
Burns said he signed contracts with the builder in early 2021 and paid a $15,000 deposit for the $375,000 build, after a 12-month wait for a building permit. More than a year later and after, according to Burns, another $15,000 put down for additional costs, his block is empty.
“I’m thirty grand down the shitter with no house,” Burns said. “They’ve done a site cut and that’s it.”
Burns said he had called the Langford offices many times a week every week for the past six months, gradually losing hope that the build would go ahead.
Wally Burns, 50, at his vacant block in Kilcunda which he is now selling due to the collapse of homebuilders Langford Jones Homes.
“It’s caused a fair bit of stress in life. We’ve been renting for the last three years and rent’s not cheap down here. All that financial cost and now we haven’t got a house I’ve actually put the block on the market to sell it.”
Another customer, 53-year-old Donna Taylor, bought a 400-square-metre block in San Remo near Phillip Island in late 2019 with a plan to build her dream beach home, having moved from Wantirna to be closer to family and nature.
Donna Taylor, 53, a part-time postie has paid $155,000 with only a frame to show for it.
She entered into contracts with Langford in November 2020, but said it took until June, 2021, for a permit to be issued. By late 2021, Taylor said it was obvious the builders were in financial trouble as they began requesting advance payments and rumours circulated in the community of tradesmen going unpaid.
The part-time postwoman said receiving the liquidators email on Friday that the company was being wound up was “just devastating”. She said $155,000 of the $343,000 total build cost had already been paid, with only the house frame to show for it.
Although she has builders insurance, Taylor is unsure how much she will be covered for and suspects starting the build with another provider now will cost more than her original budget.
“I was planning to have some leftover money to go towards [putting in] a pool and the rest to go into my retirement, but now I’m kind of [expecting] I’m going to have to take a loan to get it all redone at today’s costs,” she said.
Taylor was meant to be living in her home in six months time, but said she needs to keep renting. She said she had “no sympathy” for Langford Jones Homes.
“It’s just a mess – they should have just stopped two years ago,” she said. “They kept signing people up with nothing happening, when we could have been 12 months ahead with another builder.”
Calls to Langford Jones Homes’ San Remo office by The Age went unanswered on Tuesday.
Before its collapse last week, Snowdon Developments was an average of 39 days late on paying creditors, according to CreditorWatch, an Australian credit reporting agency. The industry average for overdue payments is one week.
CreditorWatch data also shows the Essendon-based company has at least three outstanding default debts to a skip bin provider, a roofing company and a demolition firm totalling more than $255,000 – with court action launched by the demolition company last month.
The company has had over 631 credit inquiries in the past 12 months alone.
Australia’s construction costs spiked over the past few months, driven by inflation, economic stimulus and supply chain challenges.
Large infrastructure projects, the residential construction boom, surging transport costs and increased pressure on freight and reliability combined to drive increases across all key material and staffing indicators over the past 12 months, according to data from global professional services firm Turner & Townsend and commercial agency CBRE.
But, in good news for home builders and the construction sector more broadly, CBRE head of research Kate Bailey said prices should peak this year and moderate next year.
“Most cost escalations have now been built into project pricing, particularly for building materials, and further price increases will be more modest,” Bailey said.
“While supply chain delays will persist, improvements are expected in early 2023 with cost increases from next year onwards to be largely driven by higher wage costs.”
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