House boom nailed for building company bust

By ANNE GIBSON


The home-building boom is being blamed for the collapse of a construction firm working on 25 house sites between Clevedon and Warkworth.

The liquidators for Heartland Homes say in an initial report that the rising cost of materials and labour - fuelled by the boom - was one cause of the company's demise.

The Master Builders Federation is helping Heartland clients.

Under a guarantee system, Master Build Services - a subsidiary of the federation - has backed the Heartland building deals.

Master Build is legally obliged to find new builders and fix problems at sites where Heartland had been building.

Its manager, Bruce Richardson, said this was the biggest house-building collapse since last year, when Christchurch company Perfect Homes went under, resulting in 60 claims to Master Build Services.

Richardson is now trying to find builders for more than $6 million worth of work.

He said the boom was also causing him problems because it was hard to find tradespeople.

One Mt Roskill house contract worth $410,000 was only at frame-up stage, and would take many months to complete.

Statistics NZ figures show residential building consents are at a 26-year high this year, resulting in a skills and labour shortage, particularly in Auckland where people are waiting months to build new homes.

Stephen King's Heartland Homes, based at Takanini, went into voluntary liquidation on October 8, appointing Kevin Pitfield and Gareth Hoole of Staples Rodway as liquidators. Mr King said problems getting tradespeople and the rising price of materials were factors behind Heartland's fall.

Another factor was the length of time it took to get resource consents.

Heartland built and sold about 20 homes last year, he said.

Mr King is also a director of Techstyle Developments, Build-It-Rite and Stonecroft Group Holdings.

Would-be home buyers have been left disappointed that the building company has gone under, taking with it their deposits for new homes.

Heartland creditor Bruce Coombes, who paid a $63,000 deposit for three new homes to be built in Mission Bay, said he had no confidence he would get his money back.

He said Heartland had deposits on 18 houses worth $800,000 where construction had not started.

Although Heartland sold a Master Build Guarantee with its deals, he said, some deals were not forwarded to Master Build Services in Wellington so were invalid.

But Master Build's Bruce Richardson said there was a time lag between when deposits were paid and when the guarantee came into force, which was at the time construction started.

The liquidators' initial report of October 14 omits "a number of claims from clients of the company in relation to unfinished building contracts".

It concludes that Heartland was $609,449 in the red at the time of liquidation.

It had $1.6 million in liabilities and $1 million in assets, including a show home on leased ground.

Heartland, formerly Colonial Homes, had cashflow problems some months before liquidation, the report said.

"These cashflow problems were compounded by problems experienced with a regulatory body, coupled with ever-increasing costs of materials and labour."