What happens when a home builder becomes insolvent in Australia?

When a residential builder becomes insolvent mid-build, the amount a homeowner may recover depends on the state or territory, the contract date, the certificate and the way the builder failed. Australia has no national home warranty scheme, and cover rules and payout limits differ across jurisdictions.

In 2025–26, 712 residential building companies entered external administration or had a controller appointed for the first time, according to ASIC.

Each of the eight selected scheme limits or statutory minimums is below the corresponding ABS 2024–25 average new-house cost for its state or territory. Their illustrative limit-to-cost ratios range from 31.0% in the ACT to 82.4% under Victoria's new scheme, with a median of 48.3%.

The measures are not directly comparable. They include total caps, policy limits, a per-category maximum, statutory minimum cover levels and Tasmania's temporary assistance maximum. In Queensland, non-completion accounted for 58.1% of the $284.4 million in home warranty claims approved over the five years to 2024–25.

How often residential builders enter external administration

The 2025–26 count was the first annual decline in the five years covered by the ASIC series. Before this decline, the number of residential building companies entering external administration or having a controller appointed rose 156.7% from 319 in 2021–22 to 819 in 2024–25.

Not all of those appointments represent confirmed insolvencies. ASIC's Series 1 counts the first time a company enters external administration or has a controller appointed, which the regulator uses as a proxy for corporate insolvency rather than a count of it.

This article groups the appointments into three categories

• a liquidation category,
• administration or restructuring, and
• receiver or controller appointments.

The liquidation category includes 23 provisional-liquidator appointments in 2025–26. A provisional liquidator appointment does not, by itself, establish that a company will be wound up.

The composition moved as much as the total did. Administrations and restructurings peaked at 232 in 2024–25 and more than halved the following year, while receiver and controller appointments fell from 57 to 49 in 2022–23 and have risen in each year since, reaching 117. Across the five years, the liquidation category accounted for 2,069 of 3,129 appointments, or 66.1%.

New South Wales accounted for 322 of the 712 appointments in 2025–26, ahead of Victoria on 217 and Queensland on 114, measured by principal place of business.

Stages six and seven are broadly common across jurisdictions, although Victoria's new scheme may require a written complaint where the builder is still trading.

Home warranty claim lodgement deadlines by jurisdiction

The published deadlines are not directly comparable because they apply to different claim types and begin from different events. The shortest named window is 90 days, which applies to Northern Territory defective-work claims.

For Northern Territory certificates issued from 30 March 2026, a defective-work claim must be made within the cover period. The 90-day deadline therefore does not apply to a mid-build non-completion claim.

The longest published window in the table is 12 months, compared with 90 days for the shortest specified claim type. This does not mean one scheme always provides four times as long to lodge a claim, because the deadlines cover different losses and begin from different events.

The Northern Territory defective-work clock runs from the later of defect awareness and the trigger event. The ACT clock begins when the homeowner becomes aware of the relevant insured event, such as the builder's insolvency, death or disappearance, rather than a building problem. Queensland's runs from the date the contract ends, which can precede awareness of any defect.

Victoria's new scheme adds a step the others do not share in the same form. Where the builder is still trading, a written complaint and a 28-day builder response period generally apply before a claim proceeds, though this may not be required after some insurable events.

Living costs and site-protection payments can be included within the main scheme limit rather than provided in addition to it.

Victoria allows up to $12,000 for accommodation and $5,000 for site security, both counting toward the $400,000 total. Queensland's $200,000 category maximum includes up to $5,000 for alternative accommodation, removal and storage.

Queensland home warranty claims by cause

Queensland approved $284.4 million in home warranty claims across the five years to 2024–25. Non-completion accounted for 58.1% of the approved value, which was more than defective work and subsidence combined.

No comparable multi-year breakdown was located for another scheme in the official sources reviewed. The Queensland data therefore provides a state-specific measure of how approved claim value was distributed by cause, rather than a national pattern.

Approved non-completion claims rose from $9.9 million in 2020–21 to $62.9 million in 2023–24, then fell to $31.4 million in 2024–25, a decrease of 50.1% on the published annual figures. Approved defective-work claims moved differently, rising in every year from $16.6 million to $23.5 million, an increase of 41.6% over the five years, calculated the same way and in nominal terms.

Non-completion was the largest single claim category by approved value in three of the five years.

Movement in non-completion accounts for almost all of the shape of the series. Defective work and subsidence together moved within a range of $8.2 million across the whole period, while non-completion moved through a range of $53.0 million.

Claims received peaked at 2,745 in 2022–23, one year before approved value peaked, and stood at 1,964 in 2024–25. This sequence is consistent with, but does not prove, a lag between claim lodgement and approval.

The audit sample is small, relates to one scheme and measures liability decisions rather than end-to-end claim resolution. It therefore cannot be treated as a typical national claim timeframe.

Claim volumes do not fill the gap either. Queensland received 2,745 claims in 2022–23, and 1,964 in 2024–25, but a count of claims received says nothing about how long any of them took.

The first group of exclusions applies broadly across schemes. The second depends on decisions made before any problem arises. Queensland's exclusion of cost-plus and construction-management contracts from non-completion cover turns on the contract type chosen at signing. Defect cover may still apply to the same work.

Northern Territory regulations set out what an authorised policy is permitted to exclude, which includes payments above the contract price, wear and poor maintenance, loss of income, value or opportunity, inconvenience, and delay damages. The regulations permit these exclusions, but do not require every policy to contain them.

Recoveries from insolvent or defaulting builders

Recovered paid-out costs reached $18.5 million across the five years to 2024–25, including $4.3 million in 2024–25, against $284.4 million in claims approved over the same period.

The two figures should not be treated as a recovery rate. Recoveries can relate to claims approved in earlier years, and approved amounts are not the same as cash paid, so the numerator and denominator do not describe a matched group of claims.

What published home warranty data does not answer

Four gaps constrain what published figures can support.

One published inconsistency also affects the Queensland figures. In the 2021–22 row, the three claim causes sum to $36.0 million against a published approved-claims total of $35.1 million. The other four years reconcile exactly, and the published totals are used throughout the article.