Two families who bought newly built homes in Adelaide’s northern suburbs say their dream of home ownership has turned into a nightmare after discovering serious defects, with the builder now fined $75,000 following an investigation by South Australia’s consumer watchdog.

Rimple and Preet Sharma bought one of two newly built homes on a subdivided block after the properties were marketed as “masterfully constructed”.

The couple invested their life savings into the $800,000 home, hoping it would provide a safe and compliant place for their young family.

“We have expected [it] to be a safe home, a good house for our family, which should be complying, and up to the building standards, but we didn’t get anything like that,” Ms Sharma told the ABC.

“[We] are seeing it as a bad nightmare. It is the worst nightmare for us.”

Before settlement, the Sharmas ordered a building inspection, which identified several concerns, including holes in walls and ceiling plastering, weatherproofing issues, and problems with plumbing and drainage.

According to email correspondence seen by the ABC, the vendor told the family that outstanding work would be completed before settlement and described items such as paint touch-ups and plaster rectification as standard handover matters.

But the couple said many of the promised fixes had not been completed as the settlement approached.

The vendor, Khorshed Alam, an owner-builder who also works as a home loan adviser with a credit union, rejected suggestions that nothing had been done.

In correspondence seen by the ABC, Mr Alam said all safety-related matters raised in the building report had been rectified and did not provide grounds to delay settlement.

Ms Sharma said the family felt trapped. They had already given notice on their rental property, had no family support nearby, and feared losing their $50,000 deposit if they walked away.

“At that time, we were helpless, and it was just three days before the settlement, and we couldn’t move back,” she said.

“We were hoping that everything would be fixed and maybe finished, but when we moved here, we saw that nothing had been done.”

After moving in, Ms Sharma said a council representative arrived with alarming news.

“He said, ‘I just want to [make you] aware you guys … can’t live in this house, because this house has so many defects, and it hasn’t any occupancy certificate’,” she said.

The council confirmed to the ABC that occupancy certificates for the two homes had initially been revoked before later being reinstated.

In a letter to residents, sighted by the ABC, the council said it continued to have concerns about the dwellings, particularly the quality of the building work, the appearance, and the overall standard of the development. It advised the owners to seek independent legal advice and referred them to Consumer and Business Services.

South Australian Consumer and Business Affairs Minister Michael Brown issued a public warning notice last Friday about eight traders, including Mr Alam, who had been fined by the Consumer and Business Services Building Industry Response Team.

Mr Alam was fined $75,000 for three counts of operating without a licence and three counts of performing building work without building indemnity insurance. The fines related to the two properties and another home in Adelaide’s northern suburbs.

“I have determined to issue this notice because I consider Mr Alam has demonstrated a tendency to disregard important legal obligations, such as requirements to hold a building work contractor licence and requirements to obtain builders’ indemnity insurance,” Mr Brown said.

Before the fine was issued, Mr Alam’s lawyer told the ABC his client was in discussions with Consumer and Business Services and was seeking legal advice.

“As those discussions are ongoing, and our client is currently in the process of obtaining legal advice, our client does not consider it appropriate to provide further comment at this time,” the lawyer said.

The case has raised fresh questions about protections for buyers of homes built by owner-builders.

Under South Australian law, an owner-builder cannot construct multiple properties as a business. Anyone who sells or rents two or more buildings they have built or improved within five years is considered a building work contractor.

For building work costing $20,000 or more that requires council approval, building indemnity insurance must be taken out by someone with a builder’s licence.

Master Builders SA chief executive Will Frogley said the system was open to abuse.

“Unfortunately, some people can take advantage of that if it’s not closely monitored,” Mr Frogley said.

“We are concerned that people are posing as owner-builders to essentially avoid the requirements of a licensed builder.”

Mr Frogley said Master Builders SA had asked the state government to introduce a permit system to keep closer watch on owner-builders and better protect consumers.

Consumer and Business Services Commissioner Brett Humphrey said the watchdog was also investigating potential breaches of Australian consumer law in relation to Mr Alam’s builds.

“We really feel for the consumers that have purchased these homes in good faith, and now there are defects with the property due to the standard of building, if you like, and aren’t covered by any builder’s indemnity insurance,” Mr Humphrey said.

“If the offences against the trader are proven, there’s an opportunity for compensation through the court process.”

Mr Humphrey said the investigation also included other tradespeople and the building supervisor involved.

The owner of the second $800,000 property, who did not want to be named, said the situation had seriously affected her mental health.

The aged care worker said she had spent eight years saving for a deposit to buy her own home.

“I felt betrayed because this is just too much to bear,” she told the ABC.

“When you stay here, you keep seeing the defects in the house.

“I’m not focusing, I can’t sleep properly.”

For the families, the case has become a painful warning about the risks facing buyers in a housing market where newly built properties can still leave owners facing costly defects, legal uncertainty and emotional distress.

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