Why Builders Are Going Bust and Why Homeowners Are Turning to Renown Lending
Australia’s residential construction sector is in crisis. Once a reliable pathway to homeownership, building a house has become fraught with delays, rising costs, and the risk of financial collapse. Amid this volatility, a quiet revolution is emerging—led not by developers or financiers, but by everyday Australians.
Across the country, so-called “mum and dad” homeowners are stepping in to save their dream homes by taking over the financial reins. No longer content to wait for banks or hope their builder can stay solvent, many are now directly funding their construction projects through private lenders, and in particular, through firms like South Australia’s Renown Lending.
This shift in behaviour comes amid a surge in insolvencies in the building industry. In the past 12 months alone, more than 2,000 construction companies have collapsed nationally. Analysts point to a toxic combination of fixed-price contracts, volatile supply chain costs, and delayed payments that have crippled even the most established builders.
But while material prices and labour shortages make headlines, insiders say the root cause is often more mundane—funding delays from traditional banks.
A Broken System: Why Builders Can’t Wait
In a conventional residential build, the builder typically secures bank finance or arranges for the homeowner’s bank to release staged payments based on construction milestones. But in today’s climate, even these standard steps are proving unworkable.
“It’s taking six weeks just to get approval,” said Mark*, a Sydney-based builder who recently switched to a private finance model. “Then it takes another two to three weeks to actually get a drawdown. Meanwhile, my sparkies and plumbers are calling me every day for payment.”
These delays don’t just stall progress—they undermine trust between builders and their teams. In the worst cases, they cause workers to walk off the job, suppliers to pull credit, and clients to cancel contracts entirely.
For many builders, it’s a vicious cycle. Waiting for bank payments means they can’t pay subcontractors. Not paying subcontractors means progress slows. Slow progress jeopardises future payments. Eventually, cash flow dries up and insolvency looms.
And homeowners? They’re left with a half-finished house, a mountain of stress, and little recourse.
Enter the Owner-Funders
Faced with this uncertainty, an increasing number of homeowners are taking a radical but practical step: requesting—sometimes insisting—that their builder secure finance through a private lender, not a bank.
In this model, the builder still manages the project day-to-day, but the funding is arranged via an intermediary like Renown Lending, who holds the loan funds in trust and pays builder invoices within 24 hours of verification.
“We’re seeing families come to us before the first brick is laid and say, ‘We want to make sure this doesn’t fall over halfway through,’” said Kalpi Prasad, founder of Renown Lending. “They’re asking us to work with their builder directly and control the funding side.”
According to Prasad, this shift is being driven by both fear and foresight. Families have seen the news reports, watched neighbours go bankrupt, and heard stories of abandoned construction sites. They want to avoid becoming another statistic—and they want their builder to succeed.
“Honestly, it’s better for everyone,” Prasad said. “The client knows the money’s being used properly, the builder knows they’ll be paid, and the tradies can keep turning up.”
Why Renown’s Model Is Gaining Momentum
Renown Lending’s approach flips the traditional funding model on its head. Instead of drip-feeding money through progress payments determined by external bank valuations, Renown:
Pre-approves the full loan before construction begins
Holds funds in trust with a clear schedule of use
Pays invoices within 24 hours of receipt and verification
Communicates directly with the builder and borrower throughout the project
For builders, this provides consistent cash flow, removes the need to negotiate with slow-moving banks, and allows them to focus on delivery—not paperwork. For homeowners, it offers peace of mind and a higher likelihood their home will be completed on time.
“This model works because it aligns everyone’s interests,” said Prasad. “We’re not just another lender—we’re part of the project management solution.”
The importance of such an approach cannot be overstated in the current environment. According to data from the Australian Bureau of Statistics, the cost of new residential dwellings has increased by nearly 35% over the past three years, driven largely by global supply chain issues and domestic labour shortages.
This has left many builders operating on razor-thin margins. Any delay in payment can tip a project from profitable to loss-making.
Builders Welcome the Change
While some builders were initially hesitant to work under a private funding arrangement, many have come around—especially those who have experienced the financial strain of delayed payments firsthand.
David*, a small-volume builder based in regional Victoria, said the difference was immediate.
“With the bank, I was always chasing someone for paperwork or waiting on a drawdown. With Renown, I upload the invoice and get paid the next day. My chippies are happy, the client is happy, and I’m sleeping again.”
Builder advocacy groups have also expressed support for more flexible finance models, warning that without reform in the way construction is funded, the industry risks continued volatility.
“It’s a question of survival now,” said a spokesperson for the Master Builders Association. “Alternative finance providers are not just helpful—they’re essential.”
What It Means for the Future of Residential Construction
The rise of private, fast-response lending in the construction sector may represent more than just a temporary workaround. As more families and builders experience the benefits of simplified funding, the days of relying solely on banks for staged construction finance may be numbered.
That said, the private model is not without its challenges. Prasad notes that lenders must maintain rigorous due diligence, clear documentation processes, and regular site inspections to protect all parties involved.
“We hold ourselves to a higher standard because trust is everything in this business,” he said. “But we’re proving that you can deliver fast, ethical funding that actually helps people.”
Final Word
As Australia’s construction sector navigates its most challenging period in decades, innovation in funding may be the key to survival.
For thousands of homeowners, the dream of building their own house no longer lies in waiting for a loan officer’s approval. It lies in being proactive—choosing a finance partner who can match the speed and complexity of the building process.
In the words of Kalpi Prasad: “A home is too important to leave to chance. That’s why we’re here.”
