A young Auckland couple face a repair bill of up to $200,000 after buying a rotting villa with serious foundation problems, having relied on a building report provided by their real estate agent.

The couple are planning court action seeking damages against the agent, building inspector and seller, alleging failure to disclose serious building defects.

Another couple with a 6-month-old baby have discovered their recently purchased Auckland house is contaminated by methamphetamine, but can't afford to move into rental accommodation on top of mortgage repayments.

The toxic health risk was not flagged by the seller or their agent when they bought the house late last year.


The Home Owners & Buyers Association of New Zealand (HOBANZ) says these examples are among a raft of cases it is dealing with involving alleged misrepresentation by real estate agents.

President John Gray said the association was handling about 10 new claims a month.

Misrepresentations to do with building quality and materials, and failure to disclose building defects, were among the most common issues reported.

Gray said the numbers reflected the inherent tension of a commission-based payment scheme in which agents were duty-bound to get the best price for the clients without undermining the sale.

"I am very disappointed at the level of misrepresentation. It might be out of naivety, however it might be wilful, or 'creative'."

His comments follow a Weekend Herald investigation into the activity of several Auckland agents.

Kelston-based Ray White agent Ronald Hachache lost his job this week after failing to tell a young couple selling their Massey home that the buyer was a Ray White colleague.

Ray White also confirmed that its former Te Atatu agent John Goodrum was asked to leave the agency in September after a Fair Go investigation into allegations he failed to tell buyers about his links to a property inspection company that provided free building reports for homes he was marketing.

Both men have been referred to the Real Estate Agents Authority (REAA).

Labour's housing spokesman Phil Twyford said the cases showed a "worrying pattern of disregard" for conflict-of-interest rules by agents that could damage public confidence in the real estate industry.

He called for an independent investigation by the REAA to establish whether non-disclosure problems were more widespread.

Ray White spokeswoman Lisa Pennell said the company had zero tolerance for deliberate misconduct and held its agents to high ethical standards.

"There is no evidence to suggest this type of activity is widespread in our organisation."

Gray wants better public education so buyers and sellers know their rights and what is required from agents, along with higher entry-level qualifications for new agents and continuing professional education for existing licensees.

Real Estate Institute chief Colleen Milne said the agency had a strict code relating to conflicts of interest, which must be immediately declared.

Agents were required to disclose a property's known defects to buyers but were not obligated to disclose "hidden or underlying defects".

"Any agent who withholds information is in breach of their duties as a real estate agent."

However, it was at the seller's discretion whether they disclosed potential building defects to their salesperson.