Govt unveils home building insurance bill

Tasmania is currently the only state or territory without a home building warranty scheme, but the government is now looking to change that, said Minister for Workplace Safety and Consumer Affairs, Elise Archer.

The new bill will require residential builders to take home warranty insurance for the benefit of home owners covering them in the event of loss of deposits, non-completion and defects, and the death, disappearance or insolvency of the builder.

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"It also complements other changes already being implemented by the Tasmanian Government to strengthen consumer protections within our building regulatory framework," Ms Archer said.

"We recognise that building a home is the most significant investment many Tasmanians will make, and we are committed to providing strong protections for homeowners undertaking residential building work."

The sharp rise in the price of building materials during COVID caught some construction firms flat-footed, leaving them with fixed price contracts but surging expenses.

At least two Tasmanian builders have entered insolvency over the past year, catching out about 50 families who had paid big deposits but were left with partially built homes.

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Hotondo Homes' Tasmanian branch entered insolvency at the start of this year, while Hobart-based Inside Out Construction went to the wall in November 2021.

The state government announced compensation for those affected by the collapses earlier in the year.

News of the draft bill was welcomed by Matthew Pollock, chief executive officer of Master Builders Tasmania.

"We've been advocating for the reintroduction of a home warranty scheme for a number of years because we could see a gap in the consumer protection system," Mr Pollock said.

"Tasmania has previously had a home warranty insurance scheme in place, but it collapsed because it didnt get the balance right."

"We need to avoid making those same mistakes again and so this legislation will need to address the causes of the failure of the scheme last time.

"Importantly, the Government needs to ensure that any scheme will encourage multiple insurers into the market to drive competition and reduce the cost of insurance."

"The important thing is that the scheme is structured in a way so that it provides adequate protection, but doesn't impose unreasonable costs on either industry or the consumer," he said.

MBT would work with the government through the bill's consultation process, he said.

Public submissions on the draft bill close on March 31 next year.

ben.seeder@austcommunitymedia.com.au

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