Kazi Nahar and Asik Hossain outside their unfinished home in Franklin. Photo: Rohan Thomson
Asik Hossain was one of the last Canberrans to qualify for the federal government's $7000 ''boost'' for first-home owners building a home.
He had signed the lease for a $211,000 block in Franklin in 2008, taken possession of it in 2009 and, on September 29 that year, signed a $430,000 contract for a four-bedroom, three-bathroom home with a separate granny flat above the double garage.
But, unlike almost every other Canberran who signed a building contract in 2009, he is still waiting for the house to be finished. More than three years on, the 36-year-old from Bangladesh and his wife, Karzi Farzana Nahar, are making do in the cramped granny flat while their unfinished dream home deteriorates around them.
They are the victims of yet another ACT residential building company collapse; an ''unforseen consequence'' of the rush by untested builders to cash in on the early 21st century building boom, government deregulation, an insurance regime that offers only a third of the compensation that is available to NSW residents and the global financial crisis.
To say Hossain and Nahar's lives have been on hold since their builder, 4TH Dimension Pty Ltd, ceased work on the site in September 2010 is a gross understatement. Devastated is a much more accurate description.
The couple, who married in Bangladesh in 2008 after having been introduced by family, have had to put any plans for children on hold. It has also been impossible to bring family members over for the extended visits they had planned and Hossain, a computer science graduate who does contract work with the federal government, was between contracts for three months last year.
Nahar, a qualified dietitian in her birth country, had to work in retail to keep the family afloat at the expense of the study she must do to have her skills recognised in Australia. It was a traumatic time and Hossain, who has since secured a new contract, says there is still a significant amount of catching up to do on the money front.
That said, he is determined to ensure Nahar can do her study in 2013. ''She was there for me and now I must be there for her,'' he said.
4TH Dimension had been given 50 weeks from the date of commencement (in February 2010) to complete the home. Hossain's lawyers terminated the agreement in November 2011 after the builders had missed their deadline by more than a year. Most building contracts are for less than six months.
Hossain claims he is out of pocket for about $100,000 and has been waiting for almost six months for the Master Builders Fidelity Fund to make a decision on his claim for $84,500 in home builders insurance ($85,000 but with a $500 excess). The MBFF refused to even accept the application unless he paid the $500 excess up front. That advice was given in direct response to an email in which he had written ''financially I am struggling badly, I cannot afford any place to rent''.
Master Builders Association of the ACT technical services manager Jason Grieves declined to say whether or not Hossain's $500 would be returned to him if the claim was unsuccessful.
''All claimants are required to submit the excess amount in accordance with current legislative requirements,'' he told Fairfax Media.
Grieves also declined to comment on Hossain's claim the MBFF has already paid out on at least one claim lodged by a family affected by 4TH Dimension's decision to go into voluntary administration on November 18.
''The fidelity fund is currently dealing with a number of claims in relation to builders who have an insolvency event,'' Grieves said.
A $2 company with two directors, each holding a $1 share, 4TH Dimension's only physical asset when it went into administration was a $72.09 photocopier. While it has ceased operating as a builder it is still in existence under the terms of a deed of company arrangement (DOCA) agreed to at a creditors' meeting on December 22, 2011.
Administrator Frank Lo Pilato told Fairfax Media he had recommended acceptance of the DOCA by the creditors as it appeared reasonable to assume funds could be recovered from the three construction contracts 4TH Dimension was involved in. One of those contracts was with Hossain. Lo Pilato said the reason for the delay in resolving 4TH Dimension's affairs was that he had to seek a legal opinion on whether or not funds could be recovered under the contracts and, if so, what any court action might cost. He hopes this opinion will be received early this year.
''The directors have attributed the company's financial difficulties to the inability to enforce payments being made to the company under the contracts entered between the company and its clients,'' his report to the creditors' meeting stated.
Hossain and Nahar are among the latest victims of a ''perfect storm'' of catastrophes that has burnt dozens, if not hundreds, of territory families whose hopes of living in heavily promoted new subdivisions have morphed into nightmares on boulevards of broken dreams.
In the last six months Fairfax Media has investigated four building company collapses and claims of sub-standard and non-compliant workmanship on two apartment block developments built by two different companies. Along the way, Fairfax has been told ''most new apartment blocks in Canberra leak badly, regardless of their price and location''.
ACT Attorney-General Simon Corbell said his government did not have a ''legal duty of care'' to ensure residents can commission new homes confident they will meet appropriate standards, be finished in the specified time and that the builder would not fold during construction. ''Duty of care has a very specific legal meaning in the context of the law of civil wrongs,'' he said. ''The government does not have that kind of duty.''
Corbell also said the territory could not afford the same level of insurance protection for local homebuilders that was standard across the border in NSW. ACT victims of defaulting builders can claim only up to $84,500 - compared to $340,000 for someone building an identical home in Queanbeyan or Yass.
''In the ACT, the pool [of properties insured] is not large enough to cover all of the risk, consequently the government has to consider whether it intervenes further and creates further statutory obligations for insurance purposes or focuses on rectification and an enforceable adjudication process for residential buildings.
''The cap of $85,000 is relevant to the statutory scheme as it stands at the moment. The options for reform of insurance for single residential houses that is affordable to consumers are limited. The government is examining how to extend and improve the statutory rectification powers to make people, who are liable for the defects, to be individually responsible to rectify or compensate for the loss endured by the consumer.''
Statistics supplied by the minister's own authority, the Environment and Sustainable Development Directorate, show there is widespread community dissatisfaction with the standard and quality of work being carried out by residential builders.
Corbell told Fairfax Media that from January to October 2012, 1458 single dwelling houses were completed in the ACT. In the year from July 2011 to June 2012, the construction services branch of the ESDD investigated more than 300 complaints against holders of building licences.
In 2009-2010 it completed 1370 investigations into building, planning and lease breaches. Those figures at that time were not ''disaggregated'' between the subject areas of law, however it is likely that about half of the investigations would have involved building work.
In 2010-2011 its construction services branch completed 432 investigations related to construction laws.
While the government appears to view corner-cutting builders as the major element of the problem, the industry has some unexpected advocates who argue the issues are much more complex and that the prevailing consumer culture of ''cheapest is best'' is partly to blame.
Lo Pilato, a 26-year-veteran of the insolvency industry who has worked for RSM Bird Cameron since 1991, says his experience has been that most builders - even those who get into financial difficulties - never set out to defraud or deceive.
The surge in the number of residential building companies going into administration or liquidation in the ACT is the result of a combination of factors that have created a ''perfect storm'' scenario in which some businesses, despite the best intentions of operators who are usually genuine and hardworking, just cannot survive.
''Whereas before the last 18 months or so it would have been unusual to have even one [residential builder] go under, we now have a situation where at least four or five have gone since, say, mid-2010,'' Lo Pilato said.
''The last 12 months in particular have proven very difficult with margins down, working capital in short supply and banks adopting a more conservative approach to extending credit to builders on the one hand and adopting a more aggressive approach to debt recovery on the other; sometimes with little apparent regard for the personal hardship this may cause the individuals concerned, their clients and their contractors and suppliers.''
Lo Pilato said the 2012-2013 trading environment was very different to that during the pre-GFC ''boom'', during which there was an influx of new companies and operators into the Canberra residential building market.
His advice to all residential builders is to stay focused on quality of workmanship, adherence to schedule and good cash flow.
''Perceived failure to meet contract conditions can [and does] lead to delays in progress payments which, in turn, cause cash flow problems,'' he said. ''It is important to avoid disputes with clients that may lead to delayed payments.''
Banks, which have adopted a more cautious approach since the GFC, are less willing to help builders ''over the hump'' when this happens than in the past. Additional credit may not be extended and, in some cases, a company might find its borrowings under review.
''If a company is unable to obtain the working capital it needs to keep on operating, it has little option but to go into administration if it is to avoid the risk of trading while insolvent,'' Lo Pilato said.
Ross Taylor, a 30-year building industry veteran who has worked as an adviser on some of the ACT's highest-profile construction disputes, is another who says it is wrong to say builders alone are the cause of the problems affecting the industry.
He says owners and investors are obsessed with obtaining the lowest possible price and have ignored the old adage ''quality is remembered long after cost is forgotten''.
''Builders are in a highly competitive environment that does not offer a level playing field between the honest and the unscrupulous,'' he said. ''The unscrupulous will buy the job by underquoting and then pick up their profit margin by compromising on quality. This ultimately forces the honest builder to go down the same road or to go out of business because they can't secure any work.''
There are signs the ACT government could soon improve the lot of prospective new-home buyers in the territory. One initiative on the cards is a website, similar to one already in existence in Queensland, that will allow consumers to vet a builder's licence conditions, past conduct, financial standing, years in the industry and work completed.
The really big news is that plans are under way for a major revision of the Building Act of 2004 with a major emphasis on consumer protection.
''The government believes it is better to target reforms to the Building Act itself to better support home owners resolve issues that arise with their builders,'' Corbell said. ''The reforms are part of the government's overall legislative program and a final forecast of the legislation program has yet to be decided … It is likely … the first bill [will be] introduced in the autumn 2013 sittings.''
This will, unfortunately, be too late for Asik Hossain and Karzi Nahar and dozens of other Canberrans like them. All they can do is hope and wait while the current inadequate processes run their course.