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Illegal Construction in Ontario Costs Billions

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Illegal construction of new homes and home renovations in Ontario is costing the industry billions of dollars, causing the government to lose out on tax revenues and forcing home owners to shell out for costly repairs as a result of shoddy workmanship, an industry conference has heard.

Doug Tarry, president of the Ontario Home Builders’ Association has told a conference of home builders at the Ciociaro Club that the volume of work performed by unregistered contractors, ranging from the building of entire homes to smaller jobs such as basement renovations, adds up to billions of dollars in work – work which legitimately registered builders are missing out on.

By law, any contractor wishing to enter into a contract to construct a new home must be a member of the Tarion Warranty Corporation, a consumer protection agency. The home must also be registered with Tarion, which provides home owners with a seven-year warranty covering issues such as structural failure, concrete defects and other areas where inadequate workmanship causes portions of the building to become unusable.

While most contractors do the right thing, a significant number do not. In the second quarter of this year alone, investigators discovered 56 unregistered builders as well as 14 unenrolled homes, according to Tarion’s 2012 Second Quarter Conviction Report. In that same period, courts issued 16 convictions and levied $44,985 in fines.

Doug Tarry Ontario Home BuildersWhen contractors are not registered, home owners are left without protection if something goes wrong. Work performed by unregistered contractors also takes jobs away from those who register properly, to the tune of what Tarry says is in the billions of dollars.

Worse, unregistered contractors typically do not pay HST or Workplace Safety and Insurance Board premiums, allowing them to undercut legitimate builders who properly pay these.

“If you include home renovations, work being done by non-registered contractors is in the billions of dollars,” Tarry said. “We’d like to see all our builders have a level playing field.”

Tarry likened unregistered builders to cross-border shopping saying that “if people bringing back goods don’t pay the GST or duty, then the local merchant is disadvantaged by an unfair playing field.”

Howard Bagach, president and CEO of Tarion, says unregistered builders are bad for the industry and good builders want a strong warranty scheme to protect the reputation of the industry.

By Andrew Heaton
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