Cowboy builders Australia: Builders lash out at unlicensed tradespeople

So-called ‘cowboy’ tradespeople are cashing in on consumers’ financial strain amid economic hardship – and the entire industry is suffering.

A Sydney builder, Fouad Reaiche, who directs ETH Group, a small building operation in Sydney, has spoken candidly about the impact of ‘cowboy tradies’ as new data reveals its prevalence throughout the industry nationwide.

It has become commonplace in the industry for unlicensed and underqualified builders to win work over legitimate outfits by drastically underquoting their honest competitors, Mr Reaiche explained.

Given the decreased work available, the market is already competitive for smaller operations.

“We’re ticking along, paying our bills... it’s pretty quiet compared to usual,” Mr Reaiche told news.com.au.

“Preying on people’s vulnerabilities is sort of (the cowboys’) forte.

“It’s such a competitive market I operate in. We’re not a tier 1 builder with hundreds of millions to fill in the hole of not having work for a month.”

Enter the “cowboys”: Tradespeople, often unqualified, unlicensed and uninsured, trading primarily in “cashies”.

For them, business is booming.

Licences, insurance, training qualifications, Mr Reaiche says, “costs thousands” for legitimate operators – critical services the cowboys don’t engage.

Anecdotally, Mr Reaiche said there had been instances of undercutting legitimate quotes on larger builds by up to $50,000.

Where they lack legitimacy and often quality, they make up for it with low prices, which is becoming evermore appealing to customers as rates rise and cost of living prices soar.

“The guys who are really interested and motivated and care about a long-term sustainable business will make sure that they’ve got those things holding them accountable,” he said.

“The backyard cowboys want to get in there as soon as possible, do two-three jobs a day – do their business for six or so months and just close it down and disappear.”

Mr Reaiche said Sydney and much of the nation is amid a remediation boom as a result, driven by the shonky cowboys, defects from significant recent upticks in building in recent years resurfacing, and the ebbs and flows of decent industry regulation.

“Remedial building at the moment is a huge market,” he said.

“It’s a never-ending sort of goose chase (because) clients will always go for price over value – but we’ve got to really focus on value for the dollar.

“Some people don’t know what’s involved and get what they think is an expert giving them a hand, and sometimes people take advantage of that, and that’s unfair.

“There’s a lot of genuine people in the industry. It’s just a shame that the margins, like that one per cent, go about it incorrectly, doing it cheaper with cash jobs.”

Ultimately, it’s a gamble with poor odds, according to Mr Reaiche, who preaches the mantra: “If you pay the cheapest price, you pay twice”.

“Some work is passable … the unfortunate side of it is when you see a high-end job, and it ends up being terrible, and (we’ve) got to come through after they’ve moved in and rip out bathrooms, pull down ceilings,” he said.

He recommended that consumers heavily vet any tradesperson they engage.

Claims backed up by data

Mr Reaiche’s experience is backed up by market research by Hipages, a trade hiring portal which verifies and screens its users, uncovered the detrimental consequences of unlicensed and underqualified tradespeople.

A national survey canvassing more than 500 trade business decision-makers found that 29 per cent of Australian tradies claim to have missed out on job opportunities due to unlicensed and unqualified competitors.

Additionally, 26 per cent have encountered difficulties when hiring or contracting these inexperienced tradespeople.

The study found that one of the most significant ramifications of engaging underqualified tradies was the burden placed on homeowners.

A staggering 65 per cent of tradies have undertaken remediation work within the past five years, often due to the errors of unlicensed workers.

Appliance installation emerged as the most susceptible industry, with 98 per cent of professionals having been involved in remediation work at some point.

The financial toll of such remediation typically falls on homeowners, with an average cost of nearly $2,000 ($1,976), representing a 40 per cent increase from the original job cost.

Unlicensed and unqualified tradies have not only been detrimental to homeowners but have also taken a significant toll on the bottom line of businesses.

Over the past year, 37 per cent of Australian tradies have witnessed a decrease in profits, affecting more than 1.1 million tradespeople across the nation.

It found that to stay afloat, many have resorted to cost-cutting measures, including delaying vehicle upgrades (41 per cent), refraining from purchasing new equipment (38 per cent), reducing utility costs (26 per cent), and contemplating staff redundancies or relying on contractors (21 per cent).

Distressingly, 38 per cent of Aussie tradies have been forced to lower their prices to compete with unlicensed and underqualified rivals, thereby jeopardising their businesses.

Another 21 per cent are considering adopting the same strategy.

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Stuart Tucker, Chief Customer Officer at Hipages, warns against hiring unqualified tradies during a labour shortage, emphasising the potential risks involved.

He advises: “Unlicensed and unqualified tradies can put both licensed workers and homeowners at risk.”

Mr Tucker pointed out red flags for unlicensed workers, such as “too good to be true” quotes, lack of written quotes, poor workmanship, no references, and upfront deposit requests.

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