Krish Koria no longer believes that using a national building brand is a more secure way of ensuring a trouble-free build. Photo / Sylvie Whinray
A first-home buyer is facing financial ruin after his dream house build turned into a "nightmare", writes Ben Leahy.
Aucklander Krish Koria thought he had it all planned.
He would build his dream Wānaka home, marry the love of his life and move south to start a family surrounded by the pristine Southern Alps.
Instead, his new-build dream has turned into a "nightmare".
Costs have ballooned by more than $140,000 as he's had to find a new builder after the local franchisee of a national building brand left the house half done, despite Koria paying more than $300,000.
His plans to move to the South Island are now in disarray, and he's sounding a warning to Kiwis that he believes national brands don't necessarily give greater peace of mind.
"I don't want other people to get caught in this trap and go through what I've been through - it's been hell," said Koria.
"I thought going through a nationwide builder, nothing would go wrong."
The collapse of the franchisee Mark George's companies has also left a number of other customers, tradies and material suppliers with unpaid bills.
However, Compass Homes, for which George was a franchisee, does not accept responsibility for the failed projects.
Koria says that's left him disillusioned because he only made his decision to buy with them because he believed a national brand gave buyers greater security.
Compass Homes is one of several major New Zealand building companies using franchise arrangements.
The arrangement allows major brands to attract new clients and then farm the work out to builders, who, in return, pay franchise fees.
It was regular Queenstown and Wānaka holidays that seeded a love affair with the area for Koria, originally from the UK, and his partner - who dreamed of a future life near the mountains.
He contacted Compass Homes after seeing advertisements for Wānaka house and land packages and was referred to Central Otago franchisee George.
Koria says they initially found him straightforward and good to talk to.
A highlight of the deal was the house would be used as a show home for two years and they could earn two years of rental income.
"That would give us a good amount of time to get married this year, get our personal lives in order, and [then] move down there and look at having kids," said Koria.
Through his solicitors, he signed a contract with George's Huntingdonshire Homes company, listed on the paperwork as trading as Compass Homes.
Despite it running behind schedule during last year's Covid lockdown, Koria says his build appeared to be on track when he flew to Wānaka in August to take a look.
However, he didn't realise George was no longer officially working with Compass Homes. It had terminated its franchise agreement about a week earlier.
Koria found out only a month later when he sent a message to George's Compass Homes email address and it bounced back.
Unable to reach him by phone or email, Koria phoned Compass Homes' Christchurch office.
He said they told him they had "got rid of" George.
"I'm like, 'Okay, I'm mid-build... this is a really bad situation'."
Koria said he was shocked no one from Compass Homes phoned him to say George's franchise had been terminated.
In a text message sent to the Herald on Sunday, George said he deeply regrets the position "that Krish, our clients, staff and suppliers have been put in due to the collapse of the company".
He added: "As we've seen in the news lately there are a number of companies in the building sector that have been forced into liquidation in the current trading environment. Faced with pricing issues, construction delays, supply issues and debtors, the company did not have sufficient working capital to work through these challenges and unfortunately became insolvent."
His company went into liquidation on February 4 this year.
Koria says he paid Huntingdonshire Holdings about $303,000 out of a fixed $331,000 build cost.
His home had had its roof and walls installed when George stopped work on it, but there was still no kitchen or bathroom and the place was a mess.
Since then he's spent an extra $80,000 hiring new builders to finish the project but has been told he could still spend up to $60,000 more on top of that - money he can't afford.
When asked by the Herald on Sunday why it ended its franchise agreement with George, Compass Homes didn't answer.
But in emails sent to Koria, the company's chief executive Bronwyn Bindon claimed George had been doing projects for Compass Homes clients using companies he set up in a bid to seemingly hide the jobs from them and avoid paying it management fees.
That included George not using Compass Homes' official architects and suppliers, Bindon claimed.
"To say I am disappointed... by this person's behaviour and treatment of the clients involved is an understatement," she said in the email.
"This is not the way Compass Homes conducts its business."
When the claim was put to George by the Herald on Sunday, he said he could not comment.
Deeming it unlikely he would get his cash back from George, Koria says he turned to Compass Homes for help as the umbrella organisation.
But the company denies responsibility for the failed builds.
"Huntingdonshire Holdings, the business entity contracted to construct Mr Koria's home, is not in any way connected to Compass Homes, nor has Compass Homes received any payment from Mr Koria," group director Garry Shuttleworth said.
He said emails exchanged with Koria show he "fully realised" his contract is with Huntingdonshire Holdings.
But Compass Homes offered in September last year to form a new contract with Koria and complete the project "at our cost price", Shuttleworth said.
He said Koria declined the offer and instead elected to remain with George to finish the build.
Koria said Compass Homes initially advised him it was better to try to get George to finish the job because he had paid so much money to George and because Compass Homes had no legal obligation to help.
One month later when Koria was no longer able to get hold of George, he said he asked Compass Homes if they could sign a contract to take over the project.
However, Compass Homes' representatives told him they couldn't.
They said it was now too "far into completion" and that George had used a new type of building material Compass Homes had no experience working with.
The Herald on Sunday understands another couple, from Invercargill, only recently recovered a deposit of about $200,000 they paid to George for a house that was never started.
The couple are understood to still be seeking to recover another payment made to George.
Koria ultimately engaged a builder who had earlier been working on his house as a subcontractor to George to finish the build.
Now project managing from Auckland, Koria's had headaches trying to convince some of the sub-contractors who weren't paid by George to go back on-site and finish the project.
He's also had to try to get further bank loans.
No longer able to afford the mortgage, he says he'll have to sell the home as soon as it's completed, throwing his personal plans into disarray.
He says the saga calls into question what type of service big building brands provide to customers.
Jonathan Wood, senior property lawyer with Court One, says buyers should be aware, in general, they are signing contracts with the small franchisee builder, not the major franchisor brand.
Most big brands set up contract arrangements with their franchisees ensuring they cannot be held legally responsible for the build projects, he said.
It means buyers "are not getting the peace of mind that a national builder is going to be able to step in and fix these problems.
"What you are buying is the brand, but the person sitting behind the brand may be someone who doesn't have a great track record and possibly has problems."
Wood says potential home buyers wanting to protect themselves should talk in detail with the actual contracted builder of their homes - not the brand.
They should ask the builder to share contact details of other people who have used them.
Then they should go and ask those people what the experience was like, he said.
Koria, meanwhile, said hope is fading he'll be able to recover much money from George.
"It's been the worst experience," he said.
"I can't imagine ever building another house in New Zealand."
Former Act president's lawyer claims sentence was too harsh, calls for home detention.