Tasmania set to reintroduce home warranty insurance

Tasmania is moving to reintroduce home warranty insurance in response to concerns about consumer protections amid strong building demand, after a previous scheme in the state was abolished in 2008.

Workplace Safety and Consumer Affairs Minister Elise Archer says a model is being developed by the Departments of Justice and Treasury and Finance. Consultations are set to be held with industry and consumer stakeholders and the insurance sector.

The Government says that, in the meantime, it will develop a financial support package to assist people affected by the recent failures of Tasmanian Constructions, trading as Hotondo Homes, and Inside Out Constructions.

“Once implemented, home warranty insurance will provide Tasmanian property owners with greater protection when building a home,” Ms Archer said this week.

“However, we recognise that more needs to be done to help those affected by the recent failures, and it is our intention that the financial support package will operate similarly to home warranty insurance, if it was already in place.”

Tasmania is the only state without home warranty insurance, which covers incomplete or defective work when a builder has died, disappeared or become insolvent.

The previous scheme ended after the Labor government in 2008 said that it did not offer value for money for consumers.

Australia continues to experience a building boom, while supply chain issues amid the pandemic are contributing to price increases for materials and skilled labour is in short supply.

The Housing Industry Association says in a Federal pre-Budget submission that it’s estimated a record 148,880 detached homes started construction last year, up 31.3% on the previous period. A further 121,200 starts are expected this year, which is 11% above average for the decade to 2020.

The Tasmanian Government last year said it is also moving reduce the cost of addressing building defects by giving the newly formed Tasmanian Civil and Administrative Tribunal (TasCAT) the jurisdiction to handle disputes, offering a faster and cheaper alternative to formal court proceedings.