$1b 'down plughole' for leaky homes

A new Government report estimates 15,000 homes could suffer damage from leaks - 3000 more than the previous highest official estimate.

The cost of repairs on leaky buildings has also been revised upwards to around $1 billion - about five times the previous Government estimate and the same figure National MP Nick Smith was touting mid-year.

The figures are in a Department of Building and Housing paper to the Cabinet in June on the leaky buildings issue and possible new measures to deal with the problem.

The national manager of the department's Weathertight Homes Resolution Service, Nigel Bickle, said the 2002 Hunn Report estimated 6000 to 12,000 dwellings might fail, at a potential cost of $120 million to $240 million. Other non-Government estimates have ranged as high as $5 billion.

The paper, obtained by the Herald under the Official Information Act, said previous estimates from the Economic Development Ministry were a low scenario of 8000 "dwelling failures" - where buildings are damaged by leaks - and a high scenario of 12,000.

The paper said that after talks with several councils and others, officials concluded that the actual number of failures was likely to exceed the high figure and was put at about 15,000.

It said the average repair cost in Auckland was $71,000 for stand-alone houses and $52,000 for multi-unit dwellings. Based on an average repair bill of $70,000 per dwelling and 15,000 failures, the cost of repairs was about $1 billion.

But the paper said that was only part of of the cost. Other costs included legal, health and social costs, as well as the Crown's cost in running the service.

Figures on the legal, health and social costs were not given in the paper, but it said the Crown had allocated $17.6 million to run the service this financial year.

Dr Smith said the Government was guilty of grossly understating the scale of the crisis and responding inadequately to the plight of homeowners.

"These papers are a brutal boomerang to Helen Clark's statement that the leaky homes issue was a beatup by the Herald and that the Herald was well known for 'banging on' about issues of no substance."

Dr Smith said the crisis was spiralling out of control as shown by the 50 per cent growth in claims this year and when only 10 per cent of claims had been resolved.

Mr Bickle said 3765 claims were lodged as at November 17, of which 70 per cent were for dwellings in multi-unit complexes and a "consistent number" of claims continued to come in each month.

He said the paper's purpose was to give Cabinet advice on a review of the service and improvements that could be made to speed up the claims process for homeowners.

In July, the Building Issues Minister at the time, Chris Carter, announced a review of the service and its governing legislation was under way.

Mr Bickle said the department would report to the new minister, Clayton Cosgrove, before Christmas.

A director of building surveying company Prendos, Greg O'Sullivan, said his firm had not changed its view for years on the likely cost - which it put at $2 billion to $5 billion.

He said a proper study of the extent of the crisis was essential.

While the "number of claims was growing" it had yet to reach its peak.