Australia

Shore Homes: Sad reason why Sunshine Coast housing company went bust

A home builder has gone bankrupt and is no longer allowed to finish unfinished homes. The permit has been revoked because the company failed to report financial problems.

Shore Homes, based on Queensland’s Sunshine Coast, went bust on Tuesday, less than four years after it was reported to be in default of $25,000 in Covid-related housing subsidies.

The Queensland Building and Construction Commission confirmed on June 27 that the permit had been revoked.

“The company, which has had its low-rise and carpentry building permits cancelled, is no longer permitted to carry out any construction work, including completing work already underway,” a spokeswoman told Daily Mail Australia.

Queensland law requires construction companies to report if they are having difficulty servicing debt or having sufficient cash flow. These rules are known as ‘minimum financial requirements’.

“QBCC licensees must always meet their MFR, including having sufficient assets and capital to perform the amount of work permitted within their license category,” the spokeswoman said.

All residential building works, including minor renovations valued at more than $3,300, must be insured through the Queensland Home Warranty Scheme.

Shore Homes Pty Ltd was registered in October 2020, just four months after former Prime Minister Scott Morrison’s government introduced a HomeBuilder program, providing $25,000 grants to homeowners who purchased a new home or renovated an existing property.

A home builder has gone bankrupt and is no longer allowed to complete unfinished homes after its permit was revoked for failing to report financial problems

A home builder has gone bankrupt and is no longer allowed to complete unfinished homes after its permit was revoked for failing to report financial problems

This has led to an increase in the number of new home builders, with construction companies now accounting for a quarter of all bankruptcies, according to Australian Securities and Investments Commission data.

Daily Mail Australia contacted liquidator Kaily Chua, the director of insolvency firm Rodgers Reidy in Brisbane, but she declined to comment.

Shore Homes has taken its website offline, deleted its Instagram and Facebook pages, and disconnected its cell phone number.

“Queensland homeowners affected by the liquidation of homebuilding companies such as Shore Homes can get help through Australia’s most accessible home warranty program,” a QBCC spokesperson said.

Matthew Caddy, a partner at insolvency firm McGrathNicol in Melbourne, said the former government’s HomeBuilder program had created artificial demand for housing construction.

“You saw the pressure on the residential construction market post-Covid where builders were signing record numbers of forward contracts based on government subsidies and incentives for home buyers,” he told Daily Mail Australia.

“Then those prices were fixed and suddenly the home builders had trouble building those houses. They weren’t being built profitably anymore.”

Shore Homes, based on Queensland's Sunshine Coast, went bust this week. Pictured is one of their projects

Shore Homes, based on Queensland’s Sunshine Coast, went bust this week. Pictured is one of their projects

This meant that builders who brought in a lot of new customers could only survive if they had more cash in the bank.

Struggling builders faced rising costs for building materials, causing them to lose money on fixed-price contracts.

“The stronger builders, the top-tier builders, who have deeper pockets and better liquidity, can still perform well,” Mr. Caddy said.

“The companies that go bankrupt are the companies that are not well capitalized. One project can put them in serious trouble.”

Since July 2022, Shore Homes is also known as Zaia Property Group.

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