Syed Khurram Iqbal, here with wife Syeda Narjis Khurram and daughters Syeda Raneeya Batool and Syeda Waneeya Batool Naqvi, is distraught at delays and the possible loss of a $175,000 deposit for an Auckland home.
Syed Khurram Iqbal, here with wife Syeda Narjis Khurram and daughters Syeda Raneeya Batool and Syeda Waneeya Batool Naqvi, is distraught at delays and the possible loss of a $175,000 deposit for an Auckland home.
Companies planning nearly 200 homes in West Auckland are in liquidation and a customer is concerned for his $175,000 townhouse deposit.
Reed Myers has not started a 99-home Henderson project, nor bought the land for the build.
Company director claims recovery plans are underway, despite the liquidation of three companies.
An Auckland man worries he’s paid a $175,000 deposit for a townhouse that will never be built, with the company behind the project admitting cash from some customer deposits has been spent.
Syed Khurram Iqbal handed over his 20 per cent deposit in 2021, but now fears theworst after an arm of developer Reed Myers went into liquidation in April.
Not only has Reed Myers failed to start building any of the 99 planned townhouses at the Garelja Rd, Henderson site, but it is yet to even buy the land, according to a company director.
It is the second recent Reed Myers project in liquidation, after a 100-plus-home development in Massey was put in liquidation last December.
Alex Constable, sole director of the three Reed Myers companies behind the two projects, said his team still hopes to complete the homes, but that he cannot yet give specific details.
However, Iqbal - a New Zealand citizen who made the move from Pakistan in 1998 as a skilled migrant and now serves as a justice of the peace - said it feels like he might not see his money again.
“When I was investing this amount of money, I asked many people here how secure these people are,” he said.
“And they said: ‘It’s New Zealand, it’s a safe place to invest. It’s not the third-world country’.”
Syed Khurram Iqbal cooking a traditional lunch in Napier. Photo / Warren Buckland
Iqbal agreed to pay the $175,000 deposit because Reed Myers offered him a $90,000 discount for doing so - meaning the final off-the-plan build price for his two-storey townhouse would be $679,000.
However, Iqbal said he believed his deposit would be held untouched in a trust account operated by Auckland firm Vodanovich Law as he believed his contract had stipulated.
Reed Myers also sent him marketing material that included a frequently asked questions section.
One heading in the section stated: “Is my deposit safe and where does it go?”
“Yes, your deposit is always safe, it is held in the Solicitors Trust Account, until it is time for settlement,” the answer states.
Constable told the Herald some customer deposit money had been spent.
He is listed as sole director of The Raroa Project, the company set up for the Henderson development.
He is also sole director of Reedmyers Securities and Red Hills Road, the companies responsible for the Massey development.
“When the people put up these deposits, those deposits are used for things like to further the project, like you have to do resource consents and so on and so forth and, put deposits on the land, get finance, all that sort of stuff,” Constable said.
“And that’s what that money is actually applied towards.”
Typically deposits are held in trust accounts and used by developers to show to banks so the banks agree to grant them finances to pay for construction costs.
But Constable claimed Reed Myers customers knew their deposits would be spent on construction costs, and that by being entitled to discounts on homes yet to be built they’d got a good deal.
“These guys put up the deposit and got a benefit for that deposit, for putting up that deposit and allowing it to be used in construction,” he said.
“So it’s not as if they’ve given up the deposit and got nothing for it, they actually got a concessional rate.”
He said the Henderson and Massey developments both ran into trouble early on when developers couldn’t get loans to complete the projects
“Because of the Covid situation, no one was lending or developing or doing anything else, everything sort of went on hold,” he said.
Some of the financiers the developers hoped would lend them money even “went broke themselves”, Constable said.
“So we had to find alternative finances, and that’s what we’re doing at the moment.”
Constable said that because the three companies were in liquidation, he couldn’t make public announcements without first speaking to the liquidator.
“However, I can tell you that behind the scene there is a recovery plan under evaluation at the moment,” he said.
That plan involved getting finance from offshore, he claimed.
“We obviously feel a sense of responsibility to actually try and get this thing to work and indications are at the moment that it’s looking very promising,” he said.
Constable claimed that while being listed as the companies’ sole director, he was more a caretaker director and the finance negotiations were being handled by others who were experts in the field.
All three companies - The Raroa Project, Reedmyers Securities and Red Hills Road - were put into liquidation by home buyers seeking to recover money given to the companies as deposits.
A six-monthly liquidator’s report released last month into Red Hills Road - the company behind the Massey project - said the company was “involved in a failed property development”.
It estimated $2.92 million was owed to creditors, while a further $500,000 was owed in tax to the Inland Revenue Department.
More than 60 creditors are listed as being owed money, including home buyers who handed over deposits to the company.
That includes Marc and Christy Tan-Pipe, who also put down a $175,000 deposit in 2021 for a new build home in the proposed Massey development.
However, when they couldn’t recover their deposit, they took the matter to the High Court, with the company behind the project eventually agreeing to pay staggered amounts to the Tan-Pipes.
However, Marc Tan-Pipe said he had received only about $40,000 in payments.
He believed claims by Constable that the project would still go ahead were “a load of rubbish” and said he and his wife were now living with his parents, with the loss of their deposit setting them back years financially.
Iqbal hopes the developers will find a way to return his money or complete the construction of his home.
But if they don’t, the loss of his deposit will not only be a big financial blow, but also throw the Napier-based family’s plans into disarray.
They had planned to move to Auckland so they could live with their high-school age daughter when it’s time for her to go to university.
