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$40m Peppy Grove party pad
Party's over: The locked-up site. Picture: Simon Santi/The West Australian

The property known as the Taj Mahal on the Swan has been labelled a safety hazard and an "accident waiting to happen" as teenagers turn the abandoned mansion into a party house.

Youths regularly trespass on the partially built Peppermint Grove house to host parties, according to neighbours, including a noisy event on New Year's Eve.

One resident said the unfinished home - offered for sale for $40 million about three years ago - was a potential deathtrap because its sweeping, three-storey staircase does not have any balustrading.

Peppermint Grove Shire Council confirmed complaints about the safety of the youths but said it was powerless to address the problem.

Shire chief executive John Merrick said the site fell under the control of the Australian Taxation Office, which has a freezing order in place over owner Radhika Oswal's $186 million unpaid tax bill. The case could last years.

Nearby residents have called for someone to take responsibility because they are fed up with noisy and potentially dangerous parties that lasted into the early hours of the morning.

"It's not a case of if someone gets hurt, it's a matter of when," a resident, who declined to be named, said.

"That place is an accident waiting to happen."

Tennis coach at the adjacent Peppermint Grove Tennis Club, Troy Hargreaves, said he sometimes saw children as young as 10 years old climbing the fence.

Mr Hargreaves said they played hide-and-seek or skateboarded in the empty building.

He said the late-night parties held by teens was a regular "talking point" at the tennis club.

Mr Merrick said the council had continued getting complaints from locals who believed the unkempt appearance of the home "downgraded" the area.

Some residents in the exclusive riverside enclave have long been opposed to the property's ostentatious design, based on the Vaastu Shastra principles, and are now irate at the overgrown weeds and building materials strewn across the site.

However, Mr Merrick said the greatest concern was for safety. "It is a derelict site and you have got people going in there, as people are likely to do, and it's a dangerous situation," he said.

Construction of the home, which has seven domes and six bedrooms, began in 2008 on the 6600sqm, $23 million superblock that was once owned by Warren Anderson.

Mrs Oswal had expected to spend $45 million on construction, which would have made it Australia's most expensive home at about $70 million once complete.

Construction stopped in 2010 when Mrs Oswal and her husband Pankaj's ammonia empire collapsed, and the pair said they would accept $40 million for it.

The pair, who could not be contacted yesterday, have signalled they will not return to Perth.