Springpark, Auckland's first proposed mass affordable housing project.
Springpark, Auckland's first proposed mass affordable housing project.
Receivers say they won't keep building Auckland's troubled Springpark housing project and say they will refund 142 depositors who paid $7.3 million up front for a new home.
The money, put forward to buy properties off-the-plans from Tony Gapes' Panama Road Developments, will be paid back by Christmas if investors complete the relevant paperwork in time.
"This is a very unfortunate situation and we understand that this may be a disappointment to the purchasers," said receivers Richard Simpson and David Ruscoe in a letter to purchasers. "Following a thorough review, we have determined that it is not viable to complete the project as planned as increased costs mean that Panama Road Developments Limited does not have sufficient funds available to it to finish the work,"
The news comes a day after Gapes, an Auckland property developer, said he was helping the receivers in charge of the huge affordable housing development and he was optimistic the project would succeed.
"I hope that's it's going to be finished," Gapes said yesterday.
Earlier this month, Ruscoe and Simpson were appointed receivers and managers of Panama Road Developments, working on the 140 residences near Sylvia Park.
The first stage of Springpark is a 173-residence scheme of which 140 places are started.
But that is part of a much larger 420-home terraced scheme, said to be the city's largest mass affordable planned new estate and with later stages sold to another party.
"The receiver is the only one who knows what's going on," Gapes said of the project on Tuesday. "They've come back to us and asked us questions and they seem to be asking the right questions and finding out about things. I think the receiver has sent a letter explaining what's going on."
PANAMA ROAD DEVELOPMENTS In receivership twice: • April 30, 2014: Stephen Tietjens (Accru Smith Chilcott) and Kevin Gillespie (Meranti) appointed receivers • June 26, 2014: Comes out of receivership • December 3, 2015: David Ruscoe and Richard Simpson (Grant Thornton) appointed receivers [Source: Companies Office]
Whether Gapes will take over the company once again as he did last year is uncertain.
Deposits of $6.5 million were taken on the first 140 residences and that money is held in a trust account.
The deposit is not the issue. It's the loss of capital gain that's the issue. All these first home owners can't buy a property. They've lost $200,000 because even if we get deposits back, we've still got to pay that much extra to be where we were before.
Angry buyers contacted the Herald complaining of the receiverships and saying they had wasted time waiting for the places to be finished, while Auckland house prices skyrocketed.
Auckland man John Bates has paid deposits on two places.
"We have four children between 33 and 41 years old. We have purchased one in our name for a daughter and the other for a son in his name. Now we have two children left with a deposit for two houses which is of little use as the market increases over the last 2.5 years since they purchased means they have been," the man said.
Springpark development Mt Wellington. Photo / Supplied
"The deposit is not the issue. It's the loss of capital gain that's the issue. All these first home owners can't buy a property. They've lost $200,000 because even if we get deposits back, we've still got to pay that much extra to be where we were before," Bates said.
Gapes said he had not received much response after the receivership was announced.
"I've had very little feedback at all," Gapes said.
Asked why the company had gone into receivership twice, Gapes said: "Both for very different reasons," but was reluctant to expand on that.
Another buyer complained to Housing, Building and Construction Minister Nick Smith, seeking that he intervene at Springpark and force Gapes to finish the project so contracts could be settled.
Charlotte Kirby Thomson, building and housing private secretary, told the buyer the Government could not get involved.
"This situation is a private contractual matter between each of the purchasers and the developer, so the Government doesn't have any scope to intervene in the situation. We recommend you pursue legal advice on the details of the contract to see what options you may have," she said.
