Solution on leaky homes soon - PM

A proposed solution for leaky home owners will go to Cabinet to consider very soon, Prime Minister John Key says.

Previously councils greeted with anger a proposal where homeowners who drop legal action would agree to shoulder about 64 per cent of the cost of repairs and councils 26 per cent.

The Government would chip in 10 per cent. It would also guarantee loans to ensure owners had access to funds with lower interest rates for those on small incomes and the option of paying off through their estate for older people.

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.

Home owners found court and Weathertight Homes Resolution Service processes slow and costly with some losing all their settlements to lawyers.

Mr Key said this morning that progress had been made.

"It's taken some time to go back and forth."

He had seen a cabinet paper on the latest proposal and while it would not be part of today's meeting it would be discussed very soon.

A North Shore City Council report last week said the Government would benefit from a big GST windfall from work done on leaky homes, but Treasury said the work would have no overall impact on GST receipts.

Mr Key said the council report was flawed.

"The basic proposition he (North Shore Mayor Andrew Williams) is putting up is because you spend money repairing those homes the Crown will earn GST revenue. That is correct but what in reality happens is people spend money on that and not on other things so there's no expectation from Treasury our revenue will go up. We won't get extra revenue."

- NZPA