“I’ll never own a house again, but at least I can move forward and focus on healing.”
On paper, Stewart still owns her three-bedroom unit at the St Lukes Garden Apartments in Auckland.
However, she has no rights over the property and the Official Assignee has indicated it is likely to be lost in a distressed sale to repay Stewart’s significant debts.
She is not alone. Other unit owners also face financial ruin or are desperately clinging on amid exorbitant payment demands and a spiralling repair budget for what many believe is an unmitigated disaster.
Leaks were first detected at the 17-building, 285-unit complex in August 2013 – just a few months after Stewart paid $355,000 for her apartment.
Administrators have been appointed by the High Court to oversee the massive remediation project at St Lukes Garden Apartments. Photo / Mike Scott
That first water ingress triggered what has become the nation’s biggest leaky building remediation project.
A $70 million settlement involving Auckland Council was reached in 2019.
At the time, owners were told repairs would cost $85m, with completion expected by 2023.
But subsequent delays and cost overruns have resulted in the budget blowing out to more than $240m. Repair work continues today and is not expected to finish until the middle of next year.
The High Court has now appointed Deloitte administrators to oversee the massive project, secure external finance and try to bring the unprecedented work programme to an end.
Beleaguered unit owners – some of whom now face enforcement action for non-payment of millions in levy arrears – say they have been trapped in a torturous and prolonged nightmare.
They can’t move on as their units are worthless or unsaleable until the repair project is finished. But many can no longer afford the “fantastical” repair invoices that continue to arrive periodically from the body corporate.
The impossible situation has broken marriages, forced people from their careers due to stress, and left some owners homeless and without hope.
‘You could just see it slipping away’
Kim Stewart says she should be mortgage-free and saving for her retirement. Instead she was forced into bankruptcy by spiralling debt linked to the St Luke Garden Apartments. Photo / Tim Cuff
Stewart says she did everything right.
She already owned a house in Whangārei but decided to purchase a second home in the St Lukes complex, where she planned to retire.
Before settlement she commissioned a pre-purchase building report, which found the unit was “well built” with “no issues noted generally”.
She also sourced the body corporate minutes and Land Information Memorandum (LIM) report, which were both reviewed by her lawyer.
But despite conducting due diligence, she and other owners were still caught out.
After selling her Whangārei home, Stewart owed just over $100,000 on her mortgage. She was employed in the insurance industry and was well placed financially in terms of her twilight years and leaving a legacy for her children.
But that is no longer the case.
“It wasn’t until a couple of years ago we realised we’d lost everything. You could just see it slipping away but there was always that little bit of hope.
“How did I get from owning two houses to owing the bank?”
The Herald has viewed a copy of the latest invoice statement sent to Stewart from the body corporate. It’s peppered with repair instalments, some for six figures. It also features hundreds of late payment demands incurring 10% interest.
Kim Stewart’s unit was listed for sale with virtual staging after undergoing repairs as part of a $240 million remediation project at St Lukes Garden Apartments. Photo / Supplied
The total amount outstanding for repairs and late payment fees is just short of $700,000. She owes another $40,000 in standard body corporate fees.
Stewart said she initially tried to settle the tidal wave of demands but was soon financially overwhelmed.
“We would have to pay $50,000 and then we would have to pay $100,000 and then it just blew.”
She was forced to move out for three years while repairs were undertaken on her block between 2020 and 2023.
That meant paying additional accommodation costs while her mortgage, rates and body corporate levies continued to mount.
Caring for her granddaughter and autistic son, she moved to Nelson to be closer to family but ended up in emergency housing.
Kim Stewart says she should be mortgage-free but instead faces losing her St Lukes Garden Apartments unit in a force sale. Photo / Supplied
At one point, Stewart racked up $50,000 on her credit card, was borrowing from family, and switched her mortgage repayments to interest-only in a bid to stay afloat.
But her debt to the bank and body corporate quickly ballooned.
“They just kept putting 10% on it and it just compounded and compounded. I kept working for as long as I could to pay the bills. [Eventually] I couldn’t handle it anymore. It was just horrific.”
The stress became too much. She developed depression and anxiety, and was no longer able to work.
Unable to cope with the relentless payment demands, she filed for bankruptcy and was declared bankrupt in February last year.
She is now listed on the Insolvency Register. Deloitte is recorded as the main creditor with a $602,000 levies debt. After weighing Stewart’s financial situation, her bank has written off her home loan.
And while insolvency was an outcome the former professional never envisaged, she describes it as “absolute relief”.
“I could actually stop worrying.”
‘I don’t know how it goes from under $100m to $240m and climbing’
For years she and other owners had felt powerless. The body corporate called the shots and whenever the repair budget blew out, the committee would simply invoice owners for more money, Stewart told the Herald.
“We were just along for the ride.
“You’re already stressed to the max, and every week there would be a new letter, new bill or another demand. I still struggle with phone calls now. It got to the point where I couldn’t even open my emails. It’s just a constant kick in the guts of everything you lost.”
After repairs on her own apartment were completed in 2023, Stewart tried listing it for sale but there were no takers.
The area was a construction site, and prospective buyers were put off by body corporate minutes warning of “escalating costs”.
Stewart says unit owners were also pressured not to sell their apartments until the remediation project was complete as this could impact the value of other properties.
“They were telling us, ‘If you pay the bills you will still come out with something’.”
Some unit owners at St Lukes Garden Apartments face repair bills of up to $800,000 to fix their rotting units. Photo / Mike Scott
She now wishes she had got out after the 2019 settlement instead of enduring years of relentless pressure and payment demands that ultimately left her penniless.
Stewart believes she and other unit owners were lied to about how much the project was likely to cost.
They question why the complex wasn’t bulldozed and rebuilt, which some believe would have been far cheaper than the current estimated price tag.
“I don’t know how it goes from under $100m to $240m and climbing.
“I could have walked away and started again. But now I can’t start again. I’ve lost credibility. I’ve lost everything. It’s destroyed everything. I can’t even travel anymore because I’m bankrupt. It’s just had such a huge impact on our futures.”
‘They should have just knocked it down’
Carol*, another unit owner, faces similar financial pressures, but hopes to emerge with some equity when repairs are finished so she can sell the property and walk away.
“She’s doing everything she can to hold on to it but it’s getting to breaking point now,” her daughter Rachel* told the Herald.
Carol also bought her apartment before the weathertightness issues emerged.
She was also led to believe the repair costs would be manageable and mostly funded by the settlement proceeds, but is now struggling to finance the barrage of levy demands as costs continue to rise.
“Every few months they’ve got a new fantastical figure,” Rachel says. “It’s like, ‘We need another one hundred grand’.
St Lukes Garden Apartments is the country’s largest leaky building remediation project. Photo / Michael Craig
“They should have just knocked it down. They should have known it was going to blow out by massive proportions.”
Rachel says at one point her mother had just $10,000 left on her mortgage.
But she was forced to remortgage the property and will now have to keep working well into retirement to repay hundreds of thousands in debt.
Rachel feels owners were misled about the project’s cost and scope.
Though once valued at close to $900,000, her mother’s unit is now “not worth the ground it’s built on”.
Carol plans to sell her apartment as soon as the repairs are completed but it is unclear whether she will break even.
Her family fears the stigma of the complex’s rotten history will persist.
The emotional and physical harm suffered by owners is incalculable, Rachel says. She hopes her mother will soon be free from the ordeal “so she can retire and enjoy what’s left of her life”.
*Names changed to protect identities
Leaky apartments a ‘noose around owners’ necks’
Raj is a journalist in his 50s who owes more than half a million dollars and now fears losing his home.
He bought his apartment in 2011 for about $300,000 after selling another house in Massey to downsize for his retirement.
Stories about leaks began to emerge about two years later. By 2015 the situation had become a “full-blown disaster”, Raj – who asked for his surname to be withheld – told the Herald.
Panic set in as apartment owners learned their biggest asset was severely compromised and that repairs were then expected to cost around $100m.
Raj says he spent tens of thousands on legal fees before the repair instalments began to arrive.
But projected costs kept being revised upwards and the body corporate levy demands ballooned.
The excuses were always the same, Raj says.
“Unexpected expenses came up. It was completely unavoidable. Now you have to pay this much.”
St Lukes Garden Apartments is a 17-building 285-unit project built between 2003 and 2011. Photo / Mike Scott
He had to vacate his apartment for two years during repairs and was briefly forced to live in his car while borrowing from friends and family to pay levies.
At one point, Raj had his mortgage down to about $100,000. However, he had been forced to remortgage his home three times to keep up with payment demands and now owes the bank $405,000.
He owes another $150,000 in outstanding repair levies, which is incurring penalty interest, but is “maxed out” financially and even second-tier lenders have refused to lend him any more money.
“People who can’t pay will lose their properties. I face the prospect of losing the last 30 years of my hard work.”
Despite the debt he has incurred, Raj says his apartment is currently “worthless”. He hopes he can hang on until the complex is completed and is banking on the value of his fully-remediated home increasing “so I can recover something for my retirement”.
Stress from the decade-long ordeal has left him with serious health issues. He believes the complex should have been pulled down but claims the body corporate “did not listen”.
He described the St Lukes Garden Apartments as an “ever-tightening noose around their owners’ necks”.
The Herald reported last month on the plight of a couple who had just lost a High Court case against the body corporate.
The couple claimed various parties had knowledge of weathertightness issues when they purchased their unit in March 2013. But a judge ruled they had failed to prove their case and the couple could now face a six-figure costs order.
The repair project has been running for years, facing repeated delays and cost overruns.
Administrators are also demanding payment of $636,000 in unpaid levies amid threats of enforcement action and court proceedings if the couple don’t pay up.
They told the Herald they had lost everything as a result of purchasing a leaky apartment and could not afford crushing levy demands.
“This is an absolutely hopeless, most terrible tragic situation,” one said.
“They’ve destroyed us completely. They’ve completely destroyed our lives.”
Administrators respond: hardship stories ‘genuinely distressing’
In a statement, Deloitte administrators Robert Campbell and David Webb acknowledge the significant hardship owners and their families had experienced.
“The administrators have spoken with many owners and have heard directly about the financial, personal and emotional toll this situation has had on them. The circumstances described by many owners are genuinely distressing.”
The administrators say the situation arose from significant building defects dating back to the original construction, including weathertightness, structural and fire compliance issues.
“The remediation programme required to address those defects has been extensive and complex.”
That complexity is reflected in the duration of the project and estimated completion costs.
The High Court noted last year that cost increases since 2019 reflected unidentified defects, construction design challenges, Covid-19 restrictions, structural, seismic and code compliance issues, and rising building costs.
Since their appointment in July last year, the administrators’ role was to oversee the project’s progress and funding, pay creditors, recover outstanding levies and provide regular updates, “while acting in the best interests of owners as a whole”.
That process is subject to court oversight.
The administrators say they have tried to balance the interests of owners experiencing genuine financial hardship with the need to fund and complete the remediation works for the benefit of all owners.
This includes arranging a “a debt funding facility” to assist owners who cannot meet levy obligations. This will bridge the impact of unpaid levies and allow remediation works to continue while recovery and refinancing options are pursued.
“The administrators remain focused on completing the remediation project as efficiently as possible so owners can finally move beyond a situation that has affected many of them for years.
“They continue to work toward a resolution that protects the interests of the body corporate and owners collectively, while recognising the significant personal impact this process has had on many individuals.”
The body corporate declined to comment.
Lane Nichols is Auckland Desk Editor and a senior journalist for the New Zealand Herald with more than 20 years’ experience in the industry.
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