What price an affordable home?
For two first-time Auckland homebuyers, the purchase price came with some added extras, reports
What makes an “affordable house” a house? Is it just four walls, a floor and a roof, or the other bits and pieces many new home buyers expect — paths, a driveway, fences and some landscaping?
When Jonathan and Shelley Jansen decided to buy an affordable home, they assumed the price would include the extras. Their builder, however, had a much more narrow definition.
In November last year, the couple thought they were just about to move into a new home in the Scott Point development near Hobsonville on Auckland’s North Shore. They were young, planning their wedding, their first house, their life together.
After months of looking and missing out on affordable housing ballots, they had been excited to finally find a small house in their price bracket.
Instead, they found themselves sleeping on friends’ couches, struggling with thousands in legal fees — and worried they might have paid a $63,600 deposit on their new place for nothing.
“Affordable home” in this context doesn’t just mean a cheap-ish property. Under the Auckland Council’s Special Housing Area rules, affordable homes are for first-home buyers on low-tomedium incomes. They must cost no more than 75 per cent of the median Auckland house price. For a threebedroom house that’s $636,000 max.
The house the Jansens had their eyes on was being built by Imperial Homes. The company has entered the affordable homes market with gusto, with its website listing offices in four Auckland locations and designs on the Hamilton market.
And as the Jansens were about to discover, Imperial Homes’ definition of a “house” is pretty much just that — the building.
Imperial wanted to charge the young couple the maximum $636,000 for their three-bedroom affordable home. But the deal also involved a further $48,000 for extra features — “variations” the company called them.
Not a spa pool or fancy fittings, but basics.
The council-approved plans, which the Jansens didn’t see until later on, are very specific, showing an exposed aggregate driveway, two hedges, a patch of lawn, permeable fencing, some shrub planting and a letterbox all being part of the house being consented.
But these were many of the things that Imperial Homes saw as “variables” — the driveway, fencing, some landscaping and a laminate floor the couple didn’t want.
Their lawyer raised red flags about the extra money, which the Jansens say Imperial wanted paid in cash through a separate company. But the deal appeared to be “no extra money, no keys”, and the couple were desperate for a house.
It had all started so well. In October last year, just as the couple felt ready to give up on ever finding an affordable home, Shelley saw a house on Trade Me she thought looked promising.
“It was way better than we expected. Super-small and on a half section, but it was freestanding, two storeys, little backyard, close to being finished. It was an amazing opportunity.”
The couple met the new home
consultant for Imperial Homes. “We told her we’d been struggling and she said ‘This house can be yours. I think you deserve this house, we’ll sell it to you’,” Jonathan says.
The Jansens say the consultant told them up front about a separate invoice of $44,000 for the driveway, fencing and some landscaping, but at first they weren’t too worried. They were housebuying novices and the whole thing seemed like a good deal.
But more wily professionals didn’t think so.
“The first thing we did was send the paperwork to the bank manager to get approval for the mortgage. He said it was strange; he’d never seen anything like it,” Jonathan says.
Their lawyer, Emaleigh Walker from McVeagh Fleming, was sceptical too.
“She said the things being billed as variations were just a normal part of what you get when you buy a home. She said you can’t have a house without a fence or a driveway.”
Jonathan believes the couple were being asked to pay extra for stuff that was already included on the plans and should have been part of the purchase price of the house. “I heard [councillor] Chris Darby equate our situation to buying a meal at a restaurant and being asked to pay extra for cutlery. I’d say it’s more accurate to say it’s like paying for a combo from McDonald’s, then being asked to pay extra for the fries and drink.”
Walker suggested the Jansens add a 15-day due diligence clause into the contract so they could find out a bit more. But Jonathan says Imperial was reluctant to put in a due diligence clause, so their lawyer talked again about red flags. She advised them to pull out of the deal.
But they had fallen in love with the house. Jonathan says they agreed to scratch the due diligence clause, but asked to see the plans for the house. Imperial agreed, but Jonathan says they didn’t receive anything extra.
“So we signed it — we really wanted it. But I was worried about the way it was $44,000 in cash and to a separate company. It was niggling at me.”
Then the consultant contacted them again. Jonathan says Imperial told them it was upgrading the flooring from carpet and tiles to laminate because they knew the couple had a dog.
Thanks but no thanks, said Jonathan. They’d stick with the carpet and tiles, which they reckoned were worth more than laminate anyway.
“[She] called three hours later and said someone else was interested in the house. Another family had come in and talked to the director directly, she told us, and those people were happy with the laminate flooring.
“She said the company had already ordered the laminate and she sent us a new quote — up from $44,000 to $48,000 to incorporate the $4000 ‘upgrade’ to laminate.” It was frustrating, but by now they really, really wanted the house. They signed the quote and the contract and Imperial countersigned. They paid the $63,600 deposit and were told they’d be in their own place by the end of November.
Shelley joined the Hobsonville Point community Facebook group and asked to meet anyone else who’d bought in Scott Point. Good to get to know the neighbours, she thought.
On the Facebook page, the Jansens chatted to people they hoped would be their future neighbours, and began worrying about what they had done.
“We heard of people who had got a message from council saying their house didn’t meet resource consent guidelines,” Jonathan says. “They needed a masonry wall at the front, or stained wood for the surrounding fence, or certain native shrubs. But
This process has been completely transparent and has been advised to the purchaser prior to entry into the agreement. Statement for Imperial Homes
they had none of that.” To meet their resource consent these new owners were told they needed to have extra work done — potentially thousands of dollars’ worth.
The Jansens were given the number for an Auckland Council compliance officer to talk to.
“She said she couldn’t talk about Imperial Homes, but that we should request public information from council.” They got a pack with plans and information about the house — the first time they’d seen it all.
Armed with the original plans, Shelley and Jonathan went back to their lawyer, who told them the driveway and fencing were definitely part of the main property they were buying, and that they shouldn’t be paying any extra.
“We got to the final inspection. We went into the house. [The consultant] said the council had passed the final inspection and we could move in the next weekend.” But when they showed her the original plans from the council and said they wouldn’t be paying the extra $48,000, things started to get unpleasant.
“She accused me of hacking their company system [to get the plans] — we even got a letter from their lawyers accusing us of defamation, intimidation and blackmail. And she kicked us out,” Jonathan says.
Instead of the couple paying the rest of the money they owed and moving into their new home, everything stopped, he says. “I got through to the council and they told me they couldn’t issue the code of compliance that we needed to complete the deal because they needed a final set of documents from Watercare.
“We knew the documents had been issued by Watercare, but Imperial wouldn’t reply when we asked for them.”
Council said there was nothing they could do.
Meanwhile, the impasse left the couple homeless.
“We tried to see if we could stay in our Massey rental, but they had found new tenants. From November until just after Christmas we slept on people’s couches.” They finally rented a house in Avondale, but it was like living in a construction zone.
“We had a dog which could only go outside on a leash. We had our wedding coming up. We had spent $10,000 on legal fees we couldn’t afford. It was like being in a movie.”
Imperial Homes firmly denies the company did anything wrong. Asked to respond to questions about Imperial Homes, the company’s lawyer, Andrew Fletcher, said he was not authorised to give an interview, but issued a statement from the company.
It said the definition of a “dwelling” in the Housing Accords and Special Housing Areas Act 2013 was “a building or part of a building that is suitable for residential purposes and that is intended to be occupied exclusively as the home or residence of not more than one household”.
Therefore “the relevant criteria for assessment of the cost of a dwelling is the cost of the building alone”.
“The relevant price of an affordable dwelling is not the price based on the outcome of the resource consent requirements which have been independently imposed by council. It is the price of the dwelling.”
Fletcher said the agreements with the Jansens made it clear there would be an additional charge for landscaping and other items.
The statement said: “In every case the purchasers’ solicitors approved the agreements which included transparency in relation to the price of the dwelling and in relation to the independent landscaping cost.
“This process has been completely transparent and has been advised to the purchaser prior to entry into the agreement.”
The Jansens agree the process was transparent, but they don’t agree with the extra payments.
National’s housing and urban development spokeswoman Judith Collins isn’t happy either. She was approached by the Jansens, and separately by another couple who had also bought a house from Imperial Homes.
“It’s extraordinarily odd,” says Collins. “In many years as a lawyer I did a lot of acting for group builders and I’ve never seen anything like it. It’s the oddest contract I’ve ever seen.”
Collins says the properties are being built using the provisions of a Special Housing Area (SHA). However, as she said in a “please explain” letter to Andrew Fletcher in December last year: “the ‘side-deal’, being worded as it is and yet not included in the main Agreement for Sale and Purchase, could well appear to be a way to increase the value of the sale but to bring the property into the value limits of the SHA requirements.”
Collins says she was concerned enough to send information about Imperial to the Housing and Urban Development Minister Phil Twyford.
But she didn’t hear anything.
“If Phil has done nothing, it’s very concerning. He should have asked MBIE or the housing people to come back to him. I wonder how prevalent this is and why council didn’t do anything about it until [media reports meant] they had to.”
Tom James from Twyford’s office says Collins’ letter was passed on to Building and Construction Minister Jenny Salesa. And Salesa’s office says the first port of call should be the Auckland Council.
At the council, a letter dated November 20, 2018 from senior compliance monitoring officer Laura Scaife to Imperial’s solicitor Fletcher, puts the ball firmly in Imperial’s court.
“It is my view that the work described as a ‘variation for the landscaping and driveway components’ was in fact an integral element of the consented development,” Scaife wrote.
“We have sighted evidence for numerous properties where it appears your client has effectively been charging homeowners more than permitted under condition 13 and the consent notices for this subdivision.”
This appears to contradict a statement from Imperial this month, where Fletcher said the council was kept informed of all the transactions and didn’t raise any issues.
“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,” Fletcher said in the statement.
“The affordability criteria have been satisfied. We have invited Auckland Council to provide us with a legal opinion to the contrary. To date they have not done so.”
Auckland Council’s regulatory compliance manager Steve Pearce says he can’t give many details about whether Imperial broke the rules because the matter is “subject to an open and ongoing investigation”.
But he says consent holders are ultimately responsible for complying with the obligations of their consent and council uses a “graduated enforcement model”.
“This means where possible we will firstly help people to comply with the rules. This is done by giving advice, issuing warnings, as well as giving consent holders the opportunity to rectify a breach.
“In cases where the illegality is significant, or when our requests are repeatedly ignored, we will take action, including through the courts.”
Jonathan and Shelley have finally moved into their Scott Point house. They say that out of the blue last month they were contacted by an executive at Imperial Homes, who seemed keen to find a way out of the impasse.
The two sides met and agreed a price for the extras. It wasn’t 48,000, but it wasn’t nothing either.
Desperate to move out of the construction site in Avondale and into their own place, they paid the agreed price for the extras. They say they have since spent their own money on landscaping.
They couple say the past few months have taken a toll, and they have decided to speak publicly to help other young couples and families.
“The council wasn’t going to do anything until they got into trouble . . . it’s going to happen to many more people.
“It’s important people realise this isn’t a case of being overcharged for some nice features . . . it sets a precedent that builders can just charge whatever they want and that defeats the entire spirit of Affordable Housing.”
In many years as a lawyer I did a lot of acting for group builders and I’ve never seen anything like it. It’s the oddest contract I’ve ever seen. MP and lawyer Judith Collins