Housing

Council leaves whistleblowing homeowners out in the cold

A group of first-home buyers who blew the whistle with Auckland Council on a questionable affordable housing development practice have been told they won’t be eligible to get any compensation, even if the council wins a legal case against the developer.

But other home buyers who didn’t complain - or who simply followed up after the original complaints - could each get tens of thousands of dollars back.

In a crazy Kafkaesque turn of events, the original whistleblowers are penalised by the very fact they were the first to raise the alarm. Council argues the Resource Management Act stops it acting on allegations more than six months old.

But the whistleblowers say the reason the six-month deadline has passed is because the council took so long to investigate their concerns.

The case involves Auckland-based developer Imperial Homes, which according to its website is building houses all over the city.

The particular development being investigated by the council involves 20 affordable homes at Scott Point, near Hobsonville.

The homes are small, the gardens even smaller, but they are cute and cosy. And given the present crazy Auckland housing market it can’t have been difficult for Imperial to get people interested in a free-standing, three-bedroom house for $636,000 - the upper limit for “affordable” properties that size at the time.

But there was a major catch. Although the council-approved plans showed all the (mandated) things included with any new house - a driveway, a fence, some landscaping, a letterbox - Imperial Homes had other ideas. The developer told buyers that they had to pay extra for anything outside the four walls of the house - up to $48,000 extra.

And they had to pay it into a separate, but linked, Imperial Homes bank account.

Buyers felt they were paying twice for their driveway, their fencing and a patch of lawn: once in the price of their house, and a second time via the separate payment.

A sorry story

Newly weds Shelley and Jonathan Jansen were two of those buyers. They are also the only couple prepared to have their names in print talking about Imperial Homes. Others are too nervous.

The Jansens bought the last of the 20 Imperial Homes properties at Scott Point, but only after an on-again, off-again saga that saw them homeless, sleeping on friends’ couches, paying thousands in legal fees, and dealing with what they felt was sometimes intimidating behaviour from Imperial Homes.

And like other buyers, even paying the extra thousands didn't give them a completed property. When the Jansens moved in, there was no front fence, and no landscaping. To get council sign-off on their new houses, many buyers had to complete the work themselves.

The Jansens' driveway and landscaping, pictured soon after they moved in. Photo: Jonathan Jansen.

Jonathan and Shelley had to organise the front fencing, the letterbox and the landscaping themselves to meet council consent requirements. Photo: Jonathan Jansen.

The couple were one of several Scott Point buyers who ended up complaining to council about Imperial Homes.

Newsroom understands council investigators have interviewed many of the Scott Point buyers and taken away documents, statutory declarations and other information. Buyers have signed statements about what went on with Imperial Homes and council is thought to be close to launching legal proceedings against Imperial Homes.

That sucks. They are the ones that kicked this off. They were really proactive.

But ironically council investigators have not talked to the original whistleblowers. In fact those original complainants haven't heard anything - excluded because of the six-month limitation period.

“That sucks,” Shelley says. “They are the ones that kicked this off. They contacted us and told us about the ‘variations’ being bad. They were really proactive.”

Council didn't act soon enough

Imperial Homes didn't talk to Newsroom for this story. But in a statement for a previous story, the company's lawyer Andrew Fletcher of Evans Bailey said the council knew about the additional payments - and didn't query them.

"At least two months before the settlement of each individual transaction, the agreements for sale and purchase were forwarded to the Council. There has been full transparency with Council and all relevant details have been supplied to Council a long time before any of these transactions were settled," Fletcher said.

"In all cases, our solicitors either received no reply, or no meaningful reply from Council before the transactions were settled. If Auckland Council had a genuine concern about the transactions, then surely that concern would have been raised when the information was supplied to it and not several months later, predominately after the transactions had actually been settled.

Fletcher argues the Scott Point purchasers "willingly entered into agreements for sale and purchase and independent contracts relating to provision of landscaping and other matters after having the benefit of full independent legal advice. In many cases a very robust process was followed by the purchasers’ solicitors before the purchasers committed themselves. There can be no question of bullying.

"Imperial has taken the allegations of non-compliance very seriously and at all times took all practical and reasonable steps to comply. In all cases, the purchasers have agreed to pay the additional sums for items. They have done so voluntarily and after receiving appropriate and robust independent legal advice. The affordability criteria have been satisfied."

"Nothing they could do"

Newsroom catches up with one of the whistleblowers at a cafe in Hobsonville. We’ll call her Sam - she doesn’t want to use her real name in this article because she’s scared of what Imperial Homes might do.

Sam and her partner bought one of the first Imperial Homes properties at Scott Point - in stage one of the development. She and a small number of other purchasers had concerns about the process early on, she says.

“We contacted council in July 2018. Our intention was to stop the same thing happening to buyers in stage two. We sent council an email telling them about the extra amounts Imperial was charging and the fact the landscaping and other stuff wasn't compliant. We knew people were going to be charged more for stage two.”

They were right. Imperial upped its charges for “extras” from $14,000 at stage one to $48,000 for stage two homes.

The council didn’t reply to that first email, Sam says. But in September a larger group got together and lodged a formal complaint.

They were incompetent. It took them months to start investigating.

The trouble was it was only in February 2019 that the complaint got passed to the investigations team, she says.

She says she was told the September complainants were able to be heard within the six months limitation. However council lawyers said the buyers who had written in July had missed the boat.

And although Sam and the others protested that their first email went unanswered, it made no difference, she says.

“It's a Catch 22. Because they technically knew about our problems in July they said they couldn't do anything."

"They were incompetent. It took them months to start investigating, despite the fact we and other homeowners were in frequent contact and they were well aware of what was happening in stage two."

But that delay meant the original whistleblowers' complaint was out of time.

"It never got escalated to the right person, and we are being penalised for that."

Sam says a group of homeowners has filed a complaint with the Ombudsman over the council's handling of the Imperial Homes situation.

Auckland Council’s regulatory compliance manager Steve Pearce didn't talk to Newsroom, but said in a statement that “section 338(4) of the Resource Management Act 1991 prevents councils from taking enforcement action any later than six months after they first knew about the rule or law being broken”.

If this is the case, it could mean more Imperial Homes buyers will miss out, as the council has not yet taken any legal action.

Pearce wouldn’t comment on any allegations of council mishandling of the complaints about Imperial Homes, or on the complaints themselves, except to say that “we have ongoing investigations underway”.

Were the eligibility criteria met?

Sam also believes Imperial Homes breached Auckland Council rules governing who can buy affordable housing in the Special Housing Areas - and that council should have been checking eligibility criteria.

The rules limit the listing price and the total household income of people eligible to buy a house. They also insist it has to be a buyer's first home, and new owners have to live in the house for at least three years.

Sam believes some of the statutory declarations would-be Imperial Homes buyers signed around eligibility had adjusted criteria - and the council should have been able to see that.

“Some have the house price omitted and the wrong income cap."

In addition, some people understood they were allowed to rent out their house, and Sam believes some people were earning too much to qualify. She says one house has been empty for over a year.

She is angry the initial whistleblowers who alerted Auckland Council to what was going on at Scott Point have now been blocked from being involved.

“We’ve spent all this effort to try to stop the breaches of the legislation, and we are the only ones being penalised.”

Pearce wouldn’t talk about any issues to do with the statutory declarations, saying only they are legal documents and must be accurate.

“It is a crime to make a false declaration.

Information such as income information of purchasers “is not something that is readily available for council officers to view”, Pearce says.

“As such, Auckland Council does not routinely interrogate statutory declarations where there isn’t any obvious reason for concern.”