Largest home builder terminates fixed-price contracts
Australia's biggest homebuilder, Metricon, has threatened to terminate a raft of fixed-price contracts, forcing customers to pay higher prices, or walk away from their dream of home ownership.
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TVTranscript
00:00 Many people are attracted to potentially building their new home if they can be sure they can
00:05 lock in this fixed price and costs won't soar out of control. But many Metricon customers
00:10 are now learning the hard way. There can be certain caveats around that. Now Metricon
00:15 has this year sent letters to dozens of its customers terminating their fixed price contract
00:22 and then offering them new ones but for substantially higher prices. Now the fine print of these
00:27 contracts is varied between customer and customer. It varies between the states as
00:31 well. But in each case Metricon justifies cancelling the contract by saying that the
00:36 customer breached it. They can breach a variety of clauses. It can range from things like
00:41 not providing development consent or proof of finance or there might be delays around
00:46 land titling. But in the case of New South Wales' grandparents, Peter and Pat McQuay
00:51 who we spoke to, they received their termination letter in February. Metricon said it would
00:56 still like to build their home if they paid a quarter of a million dollars more to sign
01:02 a new contract. Now they said they simply could not afford to do this and they're upset
01:06 with the builder because they claim they did everything that the builder asked them to
01:09 do, provided all the documents that were requested and they have significant concerns because
01:14 they don't believe they breached their contract. This is what Peter had to say. It was just
01:19 an incredible punch, wasn't it? $266,000 without any justification of the price increase. I
01:26 don't think we've got a decent night's sleep since this debacle began. Now we spoke to
01:35 another customer, another New South Wales customer, Frank Fay and he said that he received
01:41 a similar termination letter in March, which was just the next month, saying that he also
01:46 would need to sign this new expensive contract. He was asked to pay an extra $53,000. He said
01:52 he didn't want to do that. He went to walk away from his contract. But then claims that
01:56 Metricon withheld his $24,000 deposit and initially didn't want to return it to him.
02:03 He says the only way they ended up paying it back was after he threatened legal action.
02:07 Have a listen. It came as a huge shock, completely out of the blue, considering only the day
02:13 before they were telling me about going ahead with the bill, how exciting it is. So what's
02:18 Metricon saying about these complaints? Well Metricon insists that it is operating within
02:22 the law and it is committed to fulfilling every valid contract. Now it says in a small
02:28 number of cases where it has asked customers to sign new contracts for these inflated prices,
02:34 the higher prices only reflect the increase in costs and labour in the market. And we
02:38 know that the building sector is really struggling in Australia in the last financial year alone.
02:43 Around 2,000 companies in the industry went broke and fixed price contracts that were
02:48 locked in ahead of these costs soaring is a big part of that. Now in the case of Metricon,
02:55 the builder has also frozen commission payments to some of its agents without explanation.
03:01 We've spoken to one agent that says she's owed $80,000. The home builder though denies
03:06 that it's a sign that they're in financial trouble. It says it is committed to fulfilling
03:10 all 4,500 homes it has in the pipeline.
03:13 [BLANK_AUDIO]