The rising costs are compounded by stress and mental health concerns among some facing financial ruin.
Dozens of owners have stopped paying the body corporate levies, with nearly $20m now in arrears, incurring penalty interest of 10%, according to documents viewed by the Herald.
Those refusing to engage over unpaid repair costs have been warned they now face enforcement action and that apartments could be forcibly sold to recoup what is owed.
One person behind on their repayments said owners were in an impossible situation.
“If I had the money I would pay because I really want all this to end. But we are on the edge of survival. They’ve taken all my money.”
Meanwhile, Deloitte administrators have just signed a $43m finance deal with a specialist funder to cover a projected shortfall resulting from unpaid levies.
The first $20m tranche became available this week.
However, less than half the $43m has been committed by Lannock Strata Finance. While the Australian-owned firm has indicated it will front with the remaining $23m when needed, it could walk away from that undertaking if terms are not met.
The interest rate is “commercially sensitive” but in line with penalty interest rates charged to unit owners who are in default.
Third-party finance needed to cover levy shortfall
A January 16 progress report to apartment owners and the High Court, obtained by the Herald, gave an overview of the project from administrators Robert Campbell and David Webb.
The High Court appointed the administrators to assume control of the remediation project in July from the body corporate due to escalating costs and delays.
The report said administrators had secured control over the body corporate’s bank accounts and financial records, and completed a detailed review of the project’s status and financial position.
They determined that existing funds and scheduled levy receipts wouldn’t meet costs beyond October 2025.
“It was concluded that additional levies must be raised earlier than planned to maintain project continuity.”
Unit owners at the St Lukes Garden Apartments are being asked to pay even more in levies to finance the massive leaky building repair project following earlier cost increases and delays. Photo / Mike Scott
The project was earlier budgeted at $195m but blew out to $240m in 2024. However, the update says the new estimate is $246m, including contingency funding.
“Based on current estimates, including the unallocated contingencies assumed in the administrator’s forecasts, there is a potential requirement to increase the levies imposed on unit owners by $5.3m.
“We understand that this may be of concern to some of the unit owners.”
Nearly $150m had been spent on repairs, maintenance work and owner electives as of October. About $76m is still required to complete the project, which is expected to wrap up next year.
The report noted that figure could reduce if the contingency funding isn’t needed, or other savings are found.
Nearly $100m has already been raised through owner levies, but $19.7m is overdue and in arrears, the report said.
The project is now estimated to cost $226m. Administrator have just signed a $43m financing deal to fund a shortfall in repair costs. Photo / Mike Scott
Further levies of $35m are due to be billed to owners in the coming months.
“The administrators are aware that some unit owners are unable to pay their levies (in part or in full). To assist those unit owners genuinely unable to pay their levies, the body corporate has arranged a loan to bridge the funding gap.”
The loan will be repaid through collection of outstanding levies, with borrowing costs passed on to unit owners with levy arrears.
It was envisaged that owners will have further borrowing options once the project is completed and apartments are fully repaired.
Others “may choose to sell their units at increased values recognising the defects have been remediated”.
Administrators launch action over levy arrears
The report warns that recovery action commenced in November against unit owners who failed to engage with the body corporate over unpaid levies.
Those owners will be referred for “legal enforcement if necessary”.
“The administrators wish to reach a position whereby every individual unit owner with levy arrears has a consensually agreed action plan in place. If a consensual agreement cannot be reached, formal recovery action will be required.”
A group of 35 owners had been identified with outstanding levies totalling $5.4m who had not engaged with the body corporate or administrators to meet their obligations.
St Lukes Gardens apartments while under repair. Photo / Michael Craig
The administrators wrote to the group requesting payment by November 28 last year. Twenty-four owners responded and were now in discussions over payment plans.
The other 11 had not responded and collectively owed $2.4m.
“Appropriate documentation” was now being prepared for recovery action by a law firm specialising in body corporate law and levy repayment.
A unit owner in arrears told the Herald they had already lost their financial security and now feared they would lose their home.
“I’m waiting any day that they’re going to take everything away from me.”
They felt action looming against cash-strapped apartment owners was “unacceptable”.
“It’s terrible. People will pay if they have money. But people don’t have money because of the constantly jumping costs.”
They believed a Royal Commission of Inquiry was needed to assess liability and prevent the same disaster from happening again.
Lane Nichols is Auckland desk editor for the NZ Herald with more than 20 years’ experience in the industry.
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