The initial sale by NZTA was based on a valuation that was effectively 13 months out of date. Photo / Jason Oxenham
The initial sale by NZTA was based on a valuation that was effectively 13 months out of date. Photo / Jason Oxenham
An Epsom home compulsorily acquired by taxpayers under the Public Works Act was sold back to the original owners then flipped twice in 40 days for an additional $475,000.
One of the on-sales occurred on the same day the New Zealand Transport Agency (NZTA) off-loaded the surplus property, netting an Auckland family an instant $150,000 windfall.
The next buyer pocketed a quick-fire $325,000.
Despite the huge profits, no improvement work was done on the heritage-protected house, which is known as Ravenswood and sits in the exclusive double grammar zone.
The initial sale by NZTA was based on a valuation that was effectively 13 months out of date.
The transactions raise questions about whether the government agency secured the best return on taxpayer assets.
However NZTA is defending the sale process and says making profit is not its focus.
"The Transport Agency is not in the business of property investment. In other words, property is not acquired or sold for the purpose of generating revenue," Auckland highways manager Brett Gliddon told the Herald.
Property records analysed by CoreLogic show the four-bedroom home at 58 Gillies Ave was compulsorily acquired by NZTA in 2008 from John and Penelope Jameson for $676,500 for use during the Newmarket Viaduct project.
The family had owned the house since 1991.
The property became surplus in February last year, triggering a formal process under the Public Works Act that saw it offered back to the original owners. Photo / Jason Oxenham
It became surplus in February last year, triggering a formal process under the Public Works Act that saw it offered back to the original owners.
But this dragged on for more than a year due to bureaucratic delays in registering a heritage covenant on the 1920s home.
A valuation obtained by NZTA in March was backdated to February 1, 2015, the date when the house became surplus.
It valued the property then at $1.2 million, which the Jameson family accepted.
A family spokesman told the Herald he and his wife initially planned to live in the house, but changed their minds and listed it for sale.
They on-sold the property on the day of settlement, June 30, for $1.35 million for an instant $150,000 gain.
"We had an opportunity to buy the property. We took that opportunity because we were entitled to buy it.
"We're all into making some money if we can."
He was unfazed that the next owner, Auckland real estate agent Stewart Hsueh, sold the house just 40 days later for $1.675 million, garnering an additional windfall of $325,000 and $475,000 more than NZTA received for the house.
"The market has improved again and they've decided to make money on it. So they've done what everyone else is doing in this market. Good for them."
Hsueh told the Herald he was part of a family trust that bought the property as an investment. Asked if he made any improvements to the house, he replied: "We did nothing," adding, "We know the market".
It is understood the latest owners, listed on QV as Changsheng and Chang Wen Lin, are renovating the property.
Gliddon said he was satisfied that due process was followed by NZTA.
Buyers were entitled to on-sell the house but must declare any profit to IRD.
"The Auckland residential property market has been very buoyant in recent times and it has not been uncommon to see significant increases in value over a short period of time."
It is understood the latest owners are renovating the property. Photo / Jason Oxenham
HOT PROPERTY 58 Gillies Ave, Epsom
• 1991: Bought by Jameson family for $290,000. • 2008: Compulsorily acquired by NZTA under Public Works Act for $676,500. • February 1, 2015: Property becomes surplus to requirements. • June 30, 2016: Sold by NZTA to original owners under offer back process for $1.2 million. • June 30, 2016: Sold by Jameson family to Stewart Hsueh for $1.35 million. • August 9, 2016: Sold by Stewart Hsueh to Changsheng and Chang Wen Lin for $1.675 million.
