- A leaky penthouse in St Lukes is being auctioned with a $1 reserve, requiring significant repairs.
- The owner received $355,000 from a settlement but needs an additional $700,000 for repairs.
- Potential buyers need time and money, with a possible future profit of around $400,000.
A leaky penthouse could be sold for just $1 to a “reckless” buyer when it goes under the hammer this week.
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The apartment at 3A/12 Morningstar Place, in St Lukes, Auckland, is being sold with an ultra-low reserve – but buyers will need to have much deeper pockets if they want to take it on.
The Ray White listing on OneRoof warns that the property comes with challenges. “This spacious three-bedroom monster offers a rare opportunity for the brave, the adventurous or the just plain reckless. If that’s not you, do not read on,” it said.
The three-bedroom penthouse will be empty for about a year while the remedial work is carried out. Photo / Supplied
“Our seller is heading in only one direction – out of here.”
The St Lukes Gardens Apartments complex has been dubbed the country’s biggest leaky building, and even featured in a documentary called A Living Hell: Apartment Disasters, which aired last year.
It was built between 2003 and 2011 and has serious defects and leaks including cracking facades to dangerously substandard foundations.
A settlement was made with the apartment owners after they launched a $60 million claim against the council and other parties in 2016, but the amount awarded was not enough to cover all the costs.
Some of the residents such as the owner of 3A/12 Morningstar Place have decided to sell before the bills start mounting. Work is due to start on this block next month.
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Ray White listing agent Grant Elliott told OneRoof the owner received $355,000 in the settlement, which was only about a third of what he needed for his $1m share of the repairs.
While he paid $515,000 for the penthouse more than a decade ago, he was prepared to sell it for $1 if it came to that. “This owner has decided to sell it because he can’t afford to do it [the repairs] or has just chosen not to – I’m not sure which one, but he just wants it gone.”
Elliott said while someone might be able to pick up the apartment for $1 and would have access to the $355,000 settlement money, they would still have to stump up a further $700,000 to complete the project.
The first lump sum of $98,000 will be required on settlement and a further $394,000 would be required while the work is carried out, which could take about 14 months.
St Lukes Gardens Apartments complex is the largest leaky building repair project in the country. Photo / Supplied
On top of that an estimated $180,000 is needed to carry out additional “wash up” work.
The repairs could take several years to complete. However, once done, the new owner could be sitting on an apartment worth more than $1m.
Elliott said he had already received two offers of $1.50 for the penthouse, but the owner was holding out until auction day.
Last month, a smaller apartment in the same block sold for $17,500.
City Sales sales manager Scott Dunn, whose company sold a troubled four-bedroom apartment two years ago on Carrington Road in Mount Albert for just $1 in 2023, said some of these apartment owners were under a lot of stress both financially and mentally.
City Sales sold two un-remediated apartments in St Lukes Gardens Apartments last year. The sale prices were undisclosed, but Dunn confirmed they sold well for below $100,000.
Both vendors had been looking at the looming bills about to hit them and had decided to urgently sell them to cash buyers who would take on all the future responsibilities and liabilities.
A smaller apartment in the same complex sold in December for $17,500. Photo / Supplied
“Some people are in a terrible position where they can’t afford to sell – some bad stuff happens to those people, but some if they are lucky enough to be in a financial position where they can let it go and just forget about it – that’s what some people decided to do.”
It was such a massive complex (with a total of 280 units) that each block was in different stages of remediation and the value of the apartment depended on where it was in the repair process, he said.
“Some of them have huge, huge bills coming up and some of them are almost finished and won’t have any bills coming up.”
Dunn said only cash buyers could pick up these apartments as the banks generally wouldn’t lend on properties until there was a code of compliance certificate (CCC) for the entire complex.
Potential purchasers needed to go into these deals with their eyes wide open and consider the total cost they were buying into including a buffer for time blowouts and how long it would be sitting empty while the repair work was carried out, he said.
“At some point the bills are going to start to come in and the property won’t be making any money because nobody is renting it.”
Dunn said these cheap trouble apartments were usually bought by experienced cash investors, adding it was not uncommon to see real estate agents from different agencies buying them.
“They buy it for low, they factor in how much they have to pay for it and take a risk that when the property is finished which might be years away they are basically going to have a new property to sell, which should be more valuable.”
- 3A/12 Morningstar Place, in St Lukes, Auckland, goes to auction on January 30
