The dilapidated three-bedroom house was resold at auction last month for $830,000. Photo / Chris Loufte
The dilapidated three-bedroom house was resold at auction last month for $830,000. Photo / Chris Loufte
Investor makes monster profit on property in rates wrangle.
A house sold forcibly last year by Auckland Council over unpaid rates has been resold less than a year later for a monster profit.
The dilapidated three-bedroom house at 16 Rogers Rd in Manurewa was bought by investor Ming Zhang in August from mortgagee Charlotte Marsh for $597,000.
But theHerald has confirmed the 1950s property was resold at auction last month for $830,000 - a $233,000 profit and daily capital gain of nearly $800.
It is understood Zhang had not lived in the property herself.
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A neighbour said no visible improvement work had been done on the house.
The revelations came a day after the Reserve Bank announced new measures to crack down on property investors in an effort to slow rocketing house price inflation that is locking a generation out of home ownership and threatening financial stability.
Investors - who now account for nearly half of all Auckland property transactions - will need deposits of at least 40 per cent to secure mortgages. "Speed limit" lending restrictions requiring other buyers to have at least 20 per cent equity are also being expanded nationwide.
The Manurewa home is on a large, flat section. It was marketed by Barfoot & Thompson as "prime real estate waiting to be developed" within a terraced housing and apartment zone under the Proposed Unitary Plan.
Marsh owned the property for 20 years before the council took the unprecedented action of a court-ordered mortgagee sale after she failed to pay $12,000 in rates.
It was the first forced sale the council took under the Local Government (Ratings) Act. The owners of six other properties with significant arrears have now paid up or come to repayment arrangements with the council, while activist Penny Bright is still fighting her case through the courts.
Speaking to the Herald yesterday, Marsh said she was aware the house, which has a CV of just $400,000, had recently sold for a huge profit.
"The poor fool who's bought it, because it's still mine."
Legal action was "in the works" to recover her old family home, she said.
Charlotte Marsh says legal action is "in the works" to recover her old family home. Picture / Dean Purcell
QV Auckland valuer James Wilson said a $233,000 capital gain since August was "far in excess of what you would describe as the norm".
"If there hasn't been any work done to it bar clearing the site out, it sounds like a pretty reasonable capital gain has been made."
Manurewa is traditionally a more affordable blue-collar suburb popular with first home-buyers but it is also targeted by investors.
"It's investors that are transacting in that sphere - buy and sell-on is usually their game," Wilson said.
The Labour Party's housing spokesman, Phil Twyford, said a $230,000 capital gain in less than a year was "crazy".
"It shows how out of control the housing market is."
This year, the High Court ordered Marsh to pay an additional $44,000 to Zhang in legal costs, lost rent and storage costs after "abandoning" two container-loads of belongings in the house.
Zhang had to seek a court order and use security staff to gain access after Marsh refused to leave the home.
Marsh said she had no plans to pay Zhang the $44,000.
"As far as I'm concerned, I don't need to pay her anything. It is still my house."
