Melbourne Homeowners Devastated After Two Builders Collapse

According to the Herald Sun, two Melbourne homeowners, Ajith Suraweera and Tony Varghese, are among the many impacted by the collapse of Varaich Homes, a builder that left clients in financial ruin and with unfinished homes. Both men have shared stories of frustration, loss, and the uphill battle to seek justice.

Ajith Suraweera initially lost $180,000 when Porter Davis collapsed last year. He then signed with Varaich Homes, only to face another financial disaster. “They promised me they would finish the house in six months,” Suraweera explained. Despite paying $288,000, only $80,000 worth of work was done before the company became unreachable. “How is it that these people can take money in advance and then just disappear?” he asked, feeling abandoned by the authorities.

Tony Varghese, another affected homeowner, paid Varaich Homes $455,000 for his home, only to be asked for an additional $125,000 upfront for the fixing stage. “After receiving the payment, no work was completed, and they stopped responding to communications,” he said, describing his situation as “financial turmoil.” Varghese feels powerless, adding, “For me, this is a life-altering crisis.”

One Varaich customer, who had Faridkot listed on their contract, said he had paid nearly $400,000 of a $570,000 contract for his home in Doncaster East. “(Varaich) told us this (Faridkot) is our new company, a parent company, and not to worry about it, that everything will be the same,” he said.

The Varaich Homes Collapse and Legal Fallout

Varaich Homes, which specialised in custom luxury homes and multi-unit developments, collapsed last month, leaving 21 homes across Victoria incomplete. The collapse has left devastated clients struggling to find a way forward, with many discovering that their contracts were not even under Varaich Homes but listed another builder, Faridkot. This has raised concerns about license lending, a practice where one builder allows another to use their building license to sign contracts.

Faridkot, which also trades as Harcon Projects, is now demanding additional payments from another customer, blaming the need for $20,000 to $200,000 more on rising material and labour costs. Clients, including Varghese, have expressed frustration at being asked for more money despite no work being completed and are now considering legal action against the company.

Defective Builds and Financial Burdens

The financial toll is compounded by the number of defects discovered in the unfinished homes. An inspection of one Varaich property revealed 38 defects, including issues with the roof, brickwork, drainage, and guttering.One homeowner, who had Faridkot listed on their contract, paid nearly $400,000 of a $570,000 contract for their home in Doncaster East. The customer explained that after paying for the lock-up stage, no work had been completed before Varaich collapsed. An inspection before the lock-up stage found 38 defects, including issues with the roof cover, brickwork, downpipes, stormwater drainage, and guttering. After reaching out to another builder, they were quoted around $300,000 to finish the project.”

Legal Action and Compensation Efforts

Varaich Homes is currently facing legal action from creditors such as Star Scaffolds and Austral Bricks, who are seeking to recover unpaid debts. Meanwhile, homeowners are turning to the Victorian Managed Insurance Authority (VMIA) for compensation, with 16 claims filed so far. Lawyer Raynal Kapadia, representing several Varaich customers, has highlighted the company’s troubling history of forcing clients to pay large sums upfront without delivering on promised work. Tradespeople, left unpaid, have even resorted to removing materials from sites, further delaying progress for these already struggling homeowners.

While the legal battles continue, many of Varaich’s clients are left uncertain about when—or if—their homes will ever be completed.