According to ASIC Data, there was an average of 27 insolvencies each year, for the last four financial years, for registered builders in Western Australia.
This can leave homeowners with partially completed homes and no one to finish them.
Under WA’s home indemnity insurance scheme, homeowners can call on the scheme where a builder becomes insolvent, dies or disappears.
The problem faced by many homeowners is that there can be a lag period between noticing indications the builder is in financial distress but before they are actually declared insolvent.
Common examples we see in legal practice are late payments to subcontractors and requests for homeowners to make early progress payments, when the work the subject of that payment has not been completed.
The WA State Government is introducing changes through its Building Services Legislation Amendment (Financial Oversight) Bill 2026 to allow the Building Commissioner to better scrutinise the financial capacity of builders and prevent instances of businesses continuing to trade while insolvent.
Specifically, builders can be required to show that they satisfy the financial requirements for the class of building services for which they are registered. Examples discussed in the Bill’s Explanatory Memorandum include: providing audited or verified financial reports, loan documents, work in progress reports or other relevant material.
If they fail to satisfy the test, there is the power to impose conditions on, or in serious cases, cancel a builder’s registration.
Examples of conditions include: the need to provide periodic financial reports or project updates (which may also include revised completion dates – a major bug bear for owners waiting many years for their homes to be finished – and cost to complete information).
There will be an ability for builders to contest any cancellation notice through the State Administrative Tribunal.
The impact of a cancelled registration is that a homeowner can call on the home indemnity insurance scheme, which can provide them with a financial lifeline to find a new builder to finish their build.
The changes come on the back of homeowner complaints and media scrutiny that the Building Commissioner lacked effective powers to scrutinise builders who were a perilous financial position.
