Builder's customers must pay more to get homes completed

Upcharge is part of a plan to save the business, which went into voluntary administration last month

Builder's customers must pay more to get homes completed

The founder of a Melbourne home builder that went into administration last month is asking customers to pay more to have their homes completed.

The plan would also see subcontractors that stop working with the firm take a financial penalty, according to a report by The Australian.

Melbourne-based Mahercorp went into voluntary administration last month, halting work on more than 700 homes. However, founder Steve Maher insisted that the builder would not collapse and presented a plan to administrators Cor Cordis to save the company.

Maher’s plan has won the support of  the administrators, as no other proposals for the company have been put forward, The Australian reported.

Mahercorp is just one of a string of home builders to run aground amid a perfect storm of higher interest rates, supply chain issues, and spiking labour costs.

Maher told customers in a letter that he had worked on a restructure plan via a Deed of Company Arrangement to complete their homes, The Australian reported.

Additional charges

“I want you to know that we have fought hard over the last two years to honour our fixed price contracts, despite spiralling labour and material costs coupled with supply shortages that have affected all builders in the industry,” Maher wrote. “I strongly believe that we are in the best position to complete your home, with the least amount of disruption, delay and limited financial costs to you.”

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However, Maher told customers that they would have to pay a 6.5% “price variation charge” in addition to their contract price, including post-contract variations, The Australian reported.

Maher also told customers that the company would need an additional 90 working days to finish homes.

“Without these variations, we will not be able to complete your home,” he wrote.

The charges for partially built homes will affect about 707 customers, and Mahercorp will honour the contracts of 710 customers who have paid deposits where building has not commenced, The Australian reported. Mahercorp will also honour the pricing and terms for another 416 customers with signed contracts.

Subcontractors to be paid

The plan also calls for subcontractors to be paid in full for pre-appointed purchase-order claims invoiced in the last four months, provided the work is complete, The Australian reported.

However, if subcontractors stop working for Mahercorp before the end of October, the company will only pay 50% of the amount owed.

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