KEY POINTS:
A Bay of Plenty couple who bought two Auckland investment properties through real estate specialist Blue Chip Financial Solutions say they are owed more than two months' rent and are now so desperate they may be forced to sell their family home.
Kathy and Martin Faulkner say rent payments from Blue Chip associate Bribanc Property Group dried up in late October. Although they have been promised action, they say they might be driven to sell their Mt Maunganui home to meet mortgage payments on their Auckland investments.
Blue Chip, listed on the Australian Stock Exchange but with headquarters in Auckland, specialises in helping Kiwis invest in residential property.
"We aim to boost your income and allow you to enjoy potential capital growth without affecting your current lifestyle," the firm says on its website.
But the Faulkners say the properties are creating huge headaches. They say they are now owed more than $2000 rent.
In September 2005, they bought two units in Ireland Rd, Panmure, confident they could meet mortgage repayments because the rent was guaranteed for four years, locking in regular payments until late next year. All went well for two years.
But last year, weekly payments were altered to a monthly system, then simply stopped. All attempts to get the money failed.
The Faulkners paid $167,000 for each unit in Panmure, investing $334,000 in total. They were getting regularly weekly rent payments of $136.57 on each property, once Bribanc deducted expenses including its management fees, rates, insurance and other charges. Then the money stopped.
Martin Faulkner said the rent was now two months in arrears, yet the tenants were still paying Bribanc. Bribanc manages Blue Chip investors' properties.
Faulkner said he was extremely worried about the situation and the couple emailed the Business Herald in the hope of getting answers.
"How can they get away with this? We have a mortgage on these two properties and we rely on the rents coming in to pay for it. We have emailed our agent in Tauranga but the buck keeps getting passed. Can you shed some light on what is exactly going on with this company Blue Chip?" the couple asked.
They are considering having the tenants pay them directly and were planning to seek legal advice about their options.
The Faulkners are the latest investors to complain about Blue Chip, which drew fire last year for a variety of reasons including leaky units and late delivery of new apartments. Senior financial specialists are working with groups of Blue Chip investors in an attempt to sort out financial problems.
Property investment expert Olly Newland has been working for a number of investors.
Damian Piggin of Ray White City Apartments said a Sydney investor who bought an apartment in Auckland's Tetra House through Blue Chip was owed six weeks of rent. So he quit the investment, selling his apartment for $175,000.
Last month, Blue Chip investors told the Herald they were owed large sums in overdue rental payments and interest. One investor said he was due $10,000 and another who paid a deposit for a property three years ago said interest payments on that deposit had dried up.
Blue Chip has defended its position robustly, saying many of the issues are out of its control. Clients had been paid what had been agreed or expected, it was experiencing no cash flow issues and had sufficient resources to meet its obligations to investors, a spokesman said last month.
Jonathan Knox, Blue Chip's communications chief, said yesterday the year ahead looked "great" and the company had refined its product offerings and put new systems in place.
"I think all organisations experience issues from time to time," he said.
In September, Blue Chip said it would reorganise its business in New Zealand, farming out its operations to franchise holders in an attempt to slash overheads. The entire New Zealand business would be conducted through this franchise operation.
Blue Chip's shares closed yesterday at A36.5c. It listed on the ASX in 2006 and was trading above A$1 before its price slumped last year.
BLUE CHIP SAGA
Complaints from investors include:
* Non-payment of rent due on investment properties.
* Leaks and defects in apartments and townhouses.
* Long delays between paying deposits and getting properties.
