Customers have been left hundreds of thousands of dollars out of pocket as yet another builder goes bust, owing $14.2 million.
Dozens of homeowners and hundreds of tradies have been left reeling after a Victorian building firm quietly collapsed.
Last week, staff, contractors, suppliers and homeowners learned that Langford Jones Homes had been placed into voluntary liquidation, with liquidators putting out a statement on Monday evening.
The company specialised in custom-designed residential homes along Melbourne’s bayside and south eastern suburbs as well as the Bass Coast and was named after the Langford-Jones family, who run the business.
According to liquidation documents obtained by news.com.au, the home builder owes $14.2 million in unsecured credit and has more than 300 creditors. One supplier claims he used his life savings to buy materials in the expectation that the builder would pay but is yet to see a cent.
Several former employees who spoke to news.com.au quit their jobs months ago sensing the company was on the brink of collapse — with one claiming 60 per cent of builds were not turning a profit.
There are also 65 houses impacted. Homeowners close to completion facing massive losses as insurance only covers up to 20 per cent of the contract price.
‘My dream is gone’
Donna Taylor, a postwoman in Phillip Island south of Melbourne, signed with Langford Jones in 2020 and only has a frame after 18 months on her $365,000 build.
“My dream gone,” the devastated homeowner told news.com.au. “I am totally devastated like so many other people. Tears are rolling down my face (right now).”
Langford Jones Homes is the latest to join a growing list of failed building firms as rising costs for construction materials and the ongoing supply chain crisis sparked from the Covid-19 pandemic coupled with locked-in price contracts have driven many to collapse.
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Brurob Nominees Pty Ltd, also known as Langford Jones Homes, and also its sister company Woodside Building Services Pty Ltd, went into liquidation last week.
A creditors’ voluntary liquidation was called last Thursday, on June 30, and the following morning shocked staff, creditors and homeowners were informed that the company was no longer operating via email.
Richard Stone and Jonathon Colbran of RSM Australia Partners were appointed as joint liquidators.
Mr Stone told news.com.au that his investigation was in “very early stages” and that the total list of creditors and amount owed could be more.
Ms Taylor, 53, said she suspected something was wrong with the company for a long time because of extreme delays to her dream home.
“It’s taken a year and a half and all I’ve got is a frame,” she said.
Even that is in doubt, as it has been uncovered for 2.5 months during heavy rain and some of the wood has turned black, causing her to fear the whole $70,000 structure needs replacing.
One time, the rain was so “horrendous” Ms Taylor rushed to her building site and used a mop and a broom to wipe away the water.
News.com.au has attempted to contact the Langford-Jones family for comment.
Homeowners affected by the closure of Langford Jones Homes should contact Vinod Karunasinghe via email at [email protected], according to the liquidator.
Do you know more or have a similar story? Get in touch | [email protected]
Ms Taylor has paid $155,000 in progress payments to Langford Jones already but because Victoria’s Domestic Building Insurance only pays back up to 20 per cent of the building contract price, she’s set to lose $82,000.
On top of that, the costs of builds have gone up nationally by about $50,000 to $100,000 on average, making her wonder how she will ever afford to complete her home.
She first knew something was wrong with Langford Jones Homes in January, when they insisted she pay for the upgrades to her home upfront.
“I was hoping for a miracle, I was praying they wouldn’t go under,” she said.
When she received the liquidation notice last week, she “cried all day”.
“I was trying to deliver letters, I couldn’t concentrate, reality has hit pretty hard, I’ve worked so hard. I’ve gone without holidays, I don’t spend a lot (so I could afford my dream home).”
‘We begged for our money’
Brody* runs a small business with three other employees and claims he is owed $150,000 from Langford Jones Homes after outlaying his own money to buy materials.
The contractor, based in Victoria’s Mornington Peninsula, said that was the sum total of his life savings.
“I really don’t have any money, I’m having to borrow money from my father,” the 49-year-old told news.com.au.
The dad regularly visited the Bentleigh East head office of Langford Jones Homes while his partner would write to the company explaining how they couldn’t pay their mortgage, bills or groceries without the payment.
“We pretty much begged him for (our) money,” Brody said.
“Six months ago, just before Christmas, they allege they were hacked [which was why] they didn’t pay anyone.”
However, the tradie believes the company had problems way before they were hacked or the Covid-19 pandemic came along, as Langford Jones Homes always struggled to pay him.
“I started working for them in 2019, for the first six months I wasn’t paid,” he added.
Liquidators said Langford Jones’ demise was a culmination of a malware attack and difficult market conditions.
“The company recently experienced a significant cyber-attack, higher costs for labour, supplies and materials, supply chain delays and skilled labour shortage and all of this has resulted in substantial financial losses to the business,” RSM partner Jonathon Colbran said.
“This perfect storm of supply and labour shortages and high costs are a common theme across the building and construction industry at the moment and unfortunately, it’s become unsustainable for Langford Jones.”
‘Worst time of my life’
James* was one of several site supervisors for Langford Jones Homes who quit en masse once they understood the scope of financial problems the company was facing.
“It was the worst time of my life,” he said.
“It was horrible, you’d constantly having to lie to these people about why their build wasn’t progressing.”
The same went for tradies, as they came to him asking for their money and he had no suitable answers about why they hadn’t been paid.
“Typically trades that were supplying labour only like carpenters would be owed $30,000,” James explained.
“Trades that supplied materials and labour like electricians, plumbers and plasterers would always be owed around $130,000 to $200,000.”
At first, “all of the trades kept coming back for fear of not seeing their money” however it reached a point where everyone refused business with Langford Jones, James said.
He quit a few months ago and had to chase up for several months to receive the superannuation owed to him.
James estimates there were about 25 staff members who lost their jobs after the firm went under, although at least eight had quit in the last few months as the company’s issues became more obvious.
‘Writing on the wall’
Vincent* is another ex-employee who quit last year as he saw the situation worsening.
“I could see the writing on the wall,” he told news.com.au. “I couldn’t face clients, you know people are paying deposits and not getting their house built.”
The former staff member said he could see the company bleeding money by the time he left.
“We had houses we were building with no profit. By the time I left, probably 60 per cent of the houses weren’t making any money,” he said.
“There was always Chinese whispers around the office but nothing was ever confirmed. I kept telling people to get out, this thing’s going over.”
Vincent has kept in touch with several customers and says the whole situation “is awful”.
“So many people now that are in such a horrible position,” he added. “They’ll never be able to pay for what they (were intending to get) built … I feel so sorry for them.”
When trades heard that the company had been liquidated, many rushed out to sites to pick up their tools — and some took materials to try to make up some of their payment.
Vincent knows of one home where the water tank and water pump were stolen. The customer told him that their pipes had also been cut, which he assumes was out of anger towards the builder. But the homeowner will ultimately have to wear the cost.
“Their reason has gone, they’re acting out of emotion,” he added.
‘Huge loss for us’
David Drummond and his wife, in their late 60s, said they are “devastated” and that the company’s winding up “will be a huge financial loss for us”.
“We will sell and move on and not proceed with the build with anyone else. This has also destroyed our plans for a retirement by the sea,” he told news.com.au.
The couple signed with Langford Jones in May last year for a $680,000 San Remo home and paid $34,000 by way of a deposit.
Mr Drummond said that they were “coerced” into paying $111,000 for their colours selection.
“The invoice contained a demand that the full amount be paid within seven days and contained a coercive threat that any amounts unpaid would be levied with penalty interest of 15 per cent a year,” he explained.
But then they got radio silence.
“Our requests for information as to the progress of a building permit went unanswered,” he said.
Growing concerned, they engaged a lawyer who said it was a breach of contract asking for the $111,000 payment upfront as it was not one of the progress payments they had agreed to.
They were in the process of trying to get their six figure sum returned to them when they informed that the company had gone bust.
Kelly* and her husband were planning to move into their San Remo home with their two kids aged 7 and 9 but 17 months later their build is still not done.
“It’s like a swamp at the moment in our block,” she told news.com.au.
The mum-of-two admitted “We thought they (the builders) were just bad at their jobs” until they got a bizarre request in January this year.
Langford Jones Homes “asked for us to pay for an entire build upfront,” she said.
“I’m lucky I’m not an idiot. The company said ‘98 per cent of our customers are happy to do so, and said then there’s 2 per cent like you guys who can’t afford it’.
“The thing is we could afford it but we didn’t want to give them a cent more.”
When she received the liquidation papers, at first she felt “relief” because “finally we can move forward and get our house finished”.
However, that said, the Victorian family have forked out around $200,000 for their build to get past the frame stage and said they “will be lucky” to get back $90,000 from insurance.
Customers and creditors are also furious because just a month before the company went into liquidation, Paul Langford-Jones, the father of the company’s current director, won a prestigious award for his “exceptional service” to the construction sector.
The award, given out by the Housing Industry Association which regulates insurance for builders, described the award as “one of the highest honours bestowed in the residential building industry”.
News.com.au has contacted the HIA for comment.
Building industry in crisis
Australia’s building industry is in crisis, with many companies going into liquidation so far this year amid rising costs for construction materials and ongoing supply chain issues, putting them out of business.
And that grim list has continued to grow as a number of other high profile companies also collapsed, including Hotondo Homes Hobart, Inside Out Construction, Dyldam Developments, Home Innovation Builders, ABG Group, New Sensation Homes, Next, Pindan, ABD Group, Pivotal Homes and Solido Builders, Waterford Homes Affordable Modular Homes and Statement Builders.
Last week, on the same day that Langford Jones Homes went under, another Victorian construction firm, Snowdon Developments Pty Ltd, also collapsed. Then on Monday, two other Victorian construction firms collapsed.
News.com.au also raised questions about NSW builder Willoughby Homes last week, which is under investigation by the government after builds stalled and debts blew out to 90 days.
An industry insider told news.com.au earlier this year that half of Australia’s building companies are on the brink of collapse as they trade insolvent.
There are between 10,000 to 12,000 residential building companies in Australia undertaking new homes or large renovation projects, a figure estimated by the Association of Professional Builders.
A healthy construction industry is vital to a strong economy and ongoing growth, with the sector accounting for the employment of almost nine per cent of Australian workers and 7.5 per cent of Australia’s GDP, according to CreditorWatch.
*Names withheld over privacy concerns
Originally published as ‘Dream gone’: Customers reeling as another Victorian builder goes bust