Homes built by development company substandard, say investors. Heather McCracken reports.
A development company offering hassle-free rentals is under fire from investors who claim their homes are substandard.
Buyers have demanded action from Wealth Buy Property, which sells houses off plans with the promise of 10 years' rental income.
The company has sold more than 200 properties, including houses in Cambridge,
Morrinsville and Whangarei, and subdivisions in Huntly and Invercargill. A second 22-home development in Huntly is under construction.
The company offers to make things trouble-free for buyers by managing the building process and finding tenants.
Director Martin Hutchin said the complaints were from a few unhappy customers and most of his several hundred clients were satisfied.
Sarah and Dylan Menefy said their Huntly house had been plagued by problems, including delays of more than a year in completion.
The house was also a different style and plan from examples they had been shown.
Menefy said they couldn't charge the rent indicated and would be unlikely to recover their investment if they sold.
Australian-based investor Glenn Richards said he'd been trying to resolve problems with his Huntly property since 2007.
"The whole situation has just been a nightmare really."
Original specifications included eight items absent from the finished building, he said, including lawns and fencing, a "feature front entrance" and wet-area tiling.
The first tenants reported a long list of complaints, including poorly fitting doors, dampness, and a lack of stormwater control, landscaping, lawns and fencing.
A letter from Waikato District Council to Richards in 2007 said a number of properties in the same subdivision needed remedial work.
That work is understood to have been completed.
But new complaints were made to the council late last year about several properties in the development.
A council spokeswoman said staff were working through the information, and officers were to inspect the properties on Tuesday.
There have been similar complaints about Wealth Buy Property houses in Invercargill.
Darren Donnellan said faults at his property, bought in August 2007, included light fittings falling from the ceiling and the stove rangehood coming off the kitchen wall.
The stories have deterred other investors who paid hefty deposits for houses yet to be built in Russell Rd, Huntly.
Whangarei residents Terry Adams and Dr Mike Mullany want out of the deal after waiting more than a year for their houses to be completed.
Another buyer has taken legal action, to be heard in North Shore District Court next week, to be released from contract. Wealth Buy Property plans to defend the case, which it says relates to the interpretation of a clause in the contract.
Hutchin supplied letters from eight customers pleased with their houses, and the service they received.
"As with most things you get a few little silly things like door stops missing," he said. "We don't get major issues because the council checks all those things."
Hutchin has received a report about the Menefy property and said the builder did not believe it gave a fair indication of the state of the property at handover.
He had been advised by the builder that all maintenance issues at Richards' property had been addressed and is working through an independent report on Donnellan's house.
No easy solution to investors' woes
Investors who signed up to Wealth Buy Property's promised 10-year rent guarantee were left out of pocket - along with their tenants.
EasyStart, the rental management company handling all the company's properties, folded in 2008 owing thousands of dollars in rent payments.
Owners had paid $1000 for their houses to be managed by EasyStart and secure the 10-year guarantee.
But property owner Darren Donnellan said payments were irregular and had fallen three months behind when EasyStart admitted they were in financial trouble.
Donnellan lost $3000 in rent, the $1000 fee, and the tenant's bond, which hadn't been lodged.
EasyStart owner Steve Bennett blamed the property downturn and delays in finishing new properties.
"With the downturn and the slow progress coming from [Wealth Buy Property] we couldn't operate any longer," he said. "That put us into an insolvent position."
He said most owners were owed about a month's rent, and acknowledged some bonds had not been lodged.
Bennett said he was trying to collect rent arrears, which would be used to repay the missing bond money.
The Department of Building and Housing confirmed investigators had been looking at EasyStart. Tenants were encouraged to take action to recover the money through the Tenancy Tribunal.
heather.mccracken@hos.co.nz
