‘Physically sick’: Family paid $500k for modular home they may never receive

Wellington doctors Kathryn Percival and David Pirotta are at risk of losing half a million dollars paid to a building company that hasn't delivered the house it promised. Photo / Mark Mitchell

Wellington doctors Kathryn Percival and David Pirotta should be spending their holidays and long weekends in picturesque Marlborough Sounds.

Instead, they fear they’ve lost more than $500,000 making progress payments on a house they now believe may never be built.

Auckland-headquartered builder Podular had promised to build the modular home in a factory and deliver it completed to the couple’s property within months of the build plans being finalised in August last year, they say.

It still hasn’t come. Now they worry the company may go bust before the house arrives – and that they could in turn lose a huge chunk of their life savings.

Podular director Charles Innes and major shareholder Ilan Gross failed to provide the Herald with comment by the time this story went to print.

But Percival said chasing down answers from the company has been “extremely stressful”.

She has been left to care for their four children virtually alone, while Pirotta spends every spare hour at his computer seeking what he describes as “justice” from Podular.

“We don’t really know what’s going on, haven’t had a straight answer, an apology - even an acknowledgment that it’s not going according to plan.”

They are one of six families the Herald spoke to, who describe being left in tears and feeling physically sick from the stress and “chaos” of dealing with delays by Podular and director Innes.

Collectively at risk of losing more than $900,000, they said they are speaking out to sound a warning about their experiences with Podular to other Kiwis.

Kathryn Percival and David Pirotta say they've spent all their spare time trying to get answers from builder Podular. Photo / Mark Mitchell

They include a single mum who worries she could now spend years squeezed into a caravan with her 10-year-old son after she said she paid $265,000 in progress payments to Podular for a home that was supposed to be finished last Christmas but still hasn’t been delivered.

Another couple said they are at risk of losing $150,000 for a Raglan home that also hasn’t been built.

Three other couples, meanwhile, have received homes but said they’ve either had problems with the finished build or are still unable to use the houses because Podular hasn’t given them the paperwork needed to get final council approval.

One of these couples claimed Podular built their bach’s foundations too low - a blunder they said has taken away much of their ocean view and damaged the home’s resale value.

The customers said they are now most concerned Podular could go bust before it builds the missing homes or fixes the problems with the existing houses.

Many also accuse Innes and the company of misleading them into making early progress payments by saying certain landmarks in the build process had been achieved when this wasn’t true.

‘Serious mismanagement’

While Podular didn’t provide formal comment, major shareholder Gross told the Herald he hoped to soon sell the company to overseas buyers, who could then take over the customers’ stalled house builds and finish them.

However, the customers said Gross had been telling them for weeks now investors were about to buy the company, yet they still hadn’t seen evidence for it.

Gross also sent an email to some customers in October – that the Herald has seen - in which he claimed the delays have been caused by “serious mismanagement”.

The mismanagement had forced him to step in and take over Podular’s day-to-day running, he wrote in the email.

“As a shareholder I see it as my responsibility that the business delivers on its promise,” he said.

“I made a critical error in assuming that our (former) management team’s experience in the building industry meant they had the skill set required to steer a fast-growing building company.

“Due to my mistake your project has been delayed and you have had to bear significant distress and frustration.”

Gross promised customers he would keep them better informed about their builds with “a detailed weekly update”.

However, the customers told the Herald they felt they had not been kept adequately informed since the email, with some saying they hadn’t even received the email or been contacted by Gross at all.

13-week builds a drawcard

The families said they chose to build with Podular for a range of reasons, including its reasonable prices and because director Innes seemed good to deal with initially.

Yet most appealing was the promised build speed.

“The biggest attraction for us was the 13-week turnover once [the build] had started,” Pirotta said.

Podular told customers it could build faster because it put the houses together using modular blocks at its factory sites.

Yet from the get-go, Innes and the company missed deadlines while still asking for payments, Pirotta claimed.

He said he was supposed to make his second progress payment to Podular only after it obtained the relevant building consents from the council.

However, the company tried to bill him before the consents had been obtained, he claimed.

Pirotta said he argued with Innes and eventually had his contract amended to say he would make the second payment but that Podular should fully refund the build cost if it didn’t obtain the consent within the following 12 months.

The consent was eventually obtained, but Pirotta claimed Innes still misled him by telling him the consent was gained before it actually was.

Pirotta said he tried to do his due diligence, including regularly checking online for negative reviews about Podular and going to its factory to check on the progress of a home he was told was his.

Repeated delays

Through it all, Pirotta said he maintained hope his house would be completed.

However, in recent months, he and other customers began to hear Podular owed money to some suppliers and employees, he said.

These fears also led the single mum – who didn’t wish to be named – to go on anti-depressants, she said.

Having been given a one-off inheritance, this was her only chance to buy a home and put down firm roots for her son.

“This was going to be the last place I live, it was gonna be my dream build,” she said.

Now - with the potential loss of $265,000 - her ownership dreams look in ruins, she said.

She doesn’t know if she’ll ever be able to move out of the caravan – which lacks a mains water connection and where her son sleeps on a hard bench seat – which she had been living in while her house was being built.

Kathryn Percival and David Pirotta worry Podular may go into liquidation. Photo / Mark Mitchell

Rotorua customer Tai Khau, meanwhile, said it took Podular between eight and nine months to complete a small two-bedroom home and put it in his backyard.

However, it’s now been a further year since the home was finished and Podular still hasn’t obtained council consent, he claimed.

It means Khau cannot rent out the home as he originally planned.

He claimed Podular has been continually evasive and when he calls it, he has to borrow friends’ mobile phones so the company doesn’t recognise the phone numbers, otherwise it won’t pick up.

Another customer said the long delays getting her home built in Raglan, west of Hamilton, had reduced her to tears.

She said her home had now been delivered but she claimed its foundations aren’t in the right place, her driveway isn’t completed and the house was damaged while being moved on to the property.

A sixth Podular customer told the Herald she ordered a bach from Podular for the Kaipara coast, north of Auckland.

“There are moments when I feel physically sick, absolutely physically sick and incredibly worried and stressed,” she said.

“You can’t sleep, it disrupts and occupies too much of your waking hours.”

She also faced long delays and hasn’t yet received her final building consents, she said.

But she also claimed Podular built their home too low, meaning they now only “glimpse” the ocean rather than being able to see down the coastline as planned.

“It is significant and that has a real impact on the property value, but it has an impact on our enjoyment too,” she said.

Percival and Pirotta, meanwhile, have been taking legal advice and worry they may end up with nothing.

Pirotta said if a builder had been building a home on his property and then went broke, at least he’d be able to take possession of the work that’s already been completed.

Yet that didn’t seem to be the case with Podular because the construction of their home had been taking place offsite.

“They seem to be able to get to keep my money and the building,” he said.

“To me that is completely asymmetrical and unjust.”