BGC Housing Group fights potential $200 million pay-out to disgruntled customers
Australia's fourth largest builder, BGC Housing Group, has said it would vigorously defend itself from a class action lawsuit brought by thousands of customers angry at building delays and additional project costs.
Thousands of customers facing cost blow-outs and lengthy waits for the completion of their new homes have launched a class action law suit against BGC Housing Group.
The Perth-based building company has blamed a shortage of labour and a glut of orders arising from earlier stimulus grants for the delays it says are plaguing the entire industry nationally.
Morgan Alteruthemeyer Legal Group announced it had secured funding with Omni Bridgeway to proceed with a class action on behalf of homeowners who entered into home building contracts between 1 July 2019 and 30 June 2022. Owners will not be required to pay for the legal action.
As many as 5,000 customers may eventually join the action that could, if successful, could see them recoup up to $200 million from the company.
The culmination of ongoing complaints reaching this stage comes after hundreds of customers had complained their new home builds were stalled or were, or are still, moving at glacial pace for years.
Speaking on ABC Radio, Lawyer Spencer Lieberfreund, who is supporting the claimants, blamed BGC for taking on way more work than they should have accepted.
Australia's fourth largest home builder, BGC Housing Group in April ceased taking any new home orders to allow it work through a lengthy backlog of delayed residential and commercial projects.
Mr Lieberfreund said in just one month - July 2020 – the company signed contracts with 1,000 people.
“(This was) more homes than any other builder in Australia and half the number of contracts it signed in all of 2019.”
He identified one customer as having waited almost three years for her home to be built, with an extra $10,000 added to her bill as a result of the delays.
BGC says demand exceeds industry capacity
In a statement, BGC Housing Group defended their position by arguing the problem was a national one.
“Like all builders, BGC Housing Group was unaware the total take-up (as later revealed by the government) was in the order of 25,000 homes in a market completing 11,000 homes in the prior twelve months to June 2020,” the statement said.
“There simply is not enough capacity in the market.
“Western Australia has approximately 22,000 homes currently under construction while build completions across the state remain at around 12,000 per annum.”
The statement made mention of their actions to address the situation by declining new business.
“As a result of a severe lack of labour and materials in the building industry – something beyond the control of BGC Housing Group – we have taken the unprecedented step of ceasing new home sales until the backlog is cleared,” the statement said.
“We are acutely aware of the impact of delays on homeowners, and we remain focused on finishing all homes we currently have under construction.”
BGC’s comments about industry’s ability to keep up with demand comes as the Federal Government’s signature housing policy cleared hurdles in the Senate, while many argue the ambitious building targets are unachievable.