Recent news reports about building companies in Victoria collapsing is worrying news for their clients and those considering building a new home.

Watersun Homes is the latest company to go into liquidation, bringing to a halt 300 construction projects and resulting in 90 staff losing their jobs.

A few months earlier, Ashford Homes, together with Homestead Homes in South Australia and Huxley Homes in New South Wales, went into liquidation. The companies are owned by former Family First senator Bob Day, who was the only registered builder across all three states.

Berstan Homes director, Mark Bryson, says before people commit to a new home build, they should ask building companies some hard questions.

“Find out how many registered builders they have compared to the number of homes they build each year,” he says. “If there’s only one registered builder and they build 800 homes, that is a recipe for disaster.”

In contrast, Berstan Homes has two registered builders, who are also the owners of the family-run business, and the company builds 70-80 homes a year.

“It’s all about quality assurance and customer service,” Mark says, “It’s our name that’s at stake and that’s why we don’t want to get too big.”

While customers caught up in the building company collapses have the benefit of the new home warranty insurance, they will still be out of pocket.

The warranty doesn’t cover the interest on the land purchase or the additional costs, such as rent, incurred while waiting for the project to be completed.

“The build time can blow out by months while the owner try and find a builder to take it over,” Mark says, “And if the sub-contractors are owned money, they won’t be back to do any more work.”

Mark warns customers not to choose their building company on price. If the firm collapses, other builders will be reluctant to take on a half-finished project as the final build will be compromised by cheap materials and corner-cutting.

Homeowners may have higher maintenance costs once the house is finished as materials used are not good quality.

“The headaches that come from dealing with low cost builders are just not worth it,” Mark says.

Before signing a contract with a building company, ask the following questions:

• Does the builder have any disputes with the Victoria Civil and Administrative Tribunal (VCAT)

• Do they have Domestic Builder Unlimited registration? This allows them to undertake all types of construction, not just smaller projects like a fence.

• How long has the company been in business?

• Can you see a display home?

• How many homes do they build a year?

• Can you meet the actual builder?

• Once the build is underway, do you deal with the builder, or just the sales staff?

• Who will do the design?

• Who will check for residential code compliance and apply for planning permits?

• What happens if you want to change a part of the plan?

• How long will the build take?

• Can the company help you find a block of land?

Choosing a builder and building a new home is not something you should rush into. The building process can be a very stressful situation if you choose the wrong builder.

Berstan Homes takes pride in answering all client’s questions before any contracts are signed. It is a custom new home builder, so changes to its plans can be made, or it can build from client’s plans. Knockdown rebuilds are also a large part of its business. Berstan Homes works with all the major developers across Melbourne so sourcing suitable land is not a problem.