Hundreds of people stuck in limbo waiting for embattled builder Nicheliving to complete their homes have been thrown another lifeline, with the WA government brokering a deal with the company.

Commerce Minister Sue Ellery announced the deal on Friday morning, saying it would bring customers one step closer to completing their homes, in exchange for the company's insurance liability being waived.

Ms Ellery said Nicheliving would now drop its challenge against a decision not to renew its building contractor registration in addition to the company's directors, their spouses, and other related entities agreeing not to seek registration for the next 10 years.

It means more than 200 customers – some of whom signed contracts with the company in 2020 – will now be able to claim government-mandated home indemnity insurance and appoint another builder to complete their homes.

"The key priority here is to be able to find a way forward for those customers who've been waiting for too long to have their homes completed," Ms Ellery told ABC Radio Perth.

Decision opens door to insurance claims

The deal brings to a head a situation many hoped was resolved in July, when Nicheliving failed to have its building contractor registration renewed over concerns about its finances – blocking it from undertaking any building work. 

It would have allowed customers to cancel their contracts with Nicheliving, make an insurance claim and complete projects which had been languishing.

But the company challenged the decision in the State Administrative Tribunal (SAT), and in August had its registration reinstated until the case was fully decided, blocking customers from accessing the insurance. 

Minister Ellery said she put a proposal to Nicheliving the following month, which they accepted within five days, and now has been formalised by the company dropping its case in the State Administrative Tribunal.

That once again opens the door to customers accessing their home indemnity insurance.

Minister Ellery said it was "unprecedented" that directors Ronnie Michel-Elhaj and Paul Bitdorf, their spouses and a number of related entities would not be allowed to apply to be a registered building contractor, or own and control a registered building contractor business, for the next 10 years.

Mr Michel-Elhaj and Mr Bitdorf will also waive their rights to home indemnity insurance on their own homes.

Minister's focus building homes not penalties 

To secure those concessions though, the government has said QBE, which provides home indemnity insurance, would not be able to recoup losses from payouts from directors or guarantors of Nicheliving, as would normally happen.

"This is something that the WA government may have been forced to do in any event because while QBE does pursue directors, I'm advised that recovery rates are actually quite low," Ms Ellery said.

"And it's likely that Nicheliving would have contested the recovery of losses, and of course we started with a finding from the Building Services Board that they didn't have sufficient funds."

Ms Ellery said while she could understand some customers would be frustrated with the company and its directors not facing any financial penalty, her focus was on getting their homes built.

"We needed the company to withdraw its proceedings in the SAT and I think they're paying an appropriate and high penalty in a sense that a much broader group of individuals … a much broader group of companies are precluded from operating in the building services industry within WA," she said.

"This avoids the potential long delays in the event that the SAT decision, which hearings weren't scheduled until November, but that any decision out of that could have then been appealed to the Supreme Court, so this could go on for a much longer period."

Customers 'elated and relieved'  

Richard Hamilton signed on with Nicheliving in 2020 and three years later his home still resembles a construction site, pushing him to the verge of homelessness.

He said he was "elated and relieved" by the deal, despite the company's directors walking free from its debts.

"I think it's a pragmatic deal under the circumstances and I accept the reasons the minister gave in terms of why they had to make the compromises they did," he told ABC Radio Perth.

"Myself and other members of the group are going to be exploring various options in terms of recouping some of our costs and damages, so getting into the houses was the priority."

Mr Hamilton said his experience as a Nicheliving customer had been the ultimate challenge.

Calls for better processes

The Housing Industry Association (HIA) welcomed the announcement but said the long-running issues with Nicheliving highlighted the need for better processes to protect consumers.

"This particular situation has dragged on for far too long and highlights the need for a better way to deal with these issues in the future so a clearer and more streamlined solution can be implemented," HIA executive director Michael McGowan said.

Mr McGowan took aim at the state government for not pursuing the directors for the cost of completing unfinished homes.

He said it damaged the integrity of builders doing the right thing.

"Many have sold houses and other assets to keep their businesses afloat as they navigated the challenges of material and labour increases and pulled out all stops to get their customers into their new homes."