Govt still battling on leaky homes issue - Key

Local authority mayors have suggested splitting the costs of repairs between councils, central government and home owners. File photo / Herald on Sunday

The Government is still battling behind the scenes to find an effective leaky homes solution and it's too soon to talk about a possible hit to New Zealand's credit rating Prime Minister John Key says.

The leaky homes crisis followed deregulation of the building industry, where a resulting lack of rules meant problems with design and products left thousands of homeowners with ongoing problems.

Issues included flaws in design, product, cladding, workmanship, rules and checks.

The question of how to pay for repairs has been a difficult one for all parties involved and there was speculation at the weekend following a leaked report that the bill may be a lot higher than the $6 billion figure initially made public.

A proposal from local authority mayors suggests splitting costs between councils, central government and home owners.

If homeowners could not pay, the Crown would offer interest-free loans.

Mr Key said today the current system, working through a resolutions service, invited legal wrangling which slowed processes down and could end with cash from favourable resolutions going to lawyers.

"I don't think that is a good model.

"The Government is trying to work behind the scenes constructively with local government to come up with a long term solution that serves leaky home owners in a better manner and form than they currently are," he told Newstalk ZB.

Currently, councils were lumped with most of the costs.

Mr Key said it was unclear whether the huge bill the country faced would affect its credit rating.

Labour's building spokesman Phil Twyford said the party was waiting to see where the Government took the issue.

"The story that has been running over the past couple of days is basically speculation based on a leak," Mr Twyford said.

He said if the Government came up with a plan, Labour would look at it. "We'll wait and see what the Government has to say..."

- NZPA