'Fair solution' to leaky homes crisis revealed

Details of the leaky homes crisis were first revealed in 2001. Photo / Martin Sykes

The Government has unveiled a revised plan to help people with leaky homes meet the costs of their repairs.

Building and Construction Minister Maurice Williamson said the Government will pay 25 per cent if local councils pay the same amount and homeowners pay half.

Homeowners will be able to apply for a loan guarantee underwritten by the Government, provided applicants can meet bank lending criteria.

However, homeowners that take up the scheme will forego their right to sue the Government or local councils.

"The Government wants to ensure we get a fair solution that will assist affected homeowners to move on with their lives," he said.

Mr Williamson said the scale of the leaky homes issue is equivalent to a natural disaster of huge proportions and it is having a considerable impact on the wealth and health of many thousands of New Zealanders and their families.

"Affected homeowners have been stuck in a complex and costly disputes process for too long with little prospect of being able to fix their leaky home," Mr Williamson said.

Despite the new deal, he said the Government did not accept any legal liability.

"There could be more than 80,000 people living in leaky homes, many of whom can't afford to sell or access money to get them fixed," Mr Williamson said.

Mayors spoken to by nzherald.co.nz today have welcomed the new deal.

Manukau Mayor Len Brown said the previous Labour Government would not discuss increasing the Government's share of payments but John Key should be congratulated.

"The first offer of 10 per cent was not a runner," Mr Brown said.

Asked what he thought the take up of the new deal would be, Mr Brown said he could not say.

He said the issue will be a big one for the new supercity council and working through the ongoing costs will be a "major job".

Mr Brown said he hoped the commercial banks would back the offer.

But there is a lesson to be taken out of the leaky home saga, he said.

"There has to be close regulations around building standards. The market is not a smart beast when it comes to assuring safety and wellness," Mr Brown said.

Rodney mayor Penny Webster also welcomed the plan saying in the past it had been: "It's your fault" and: "No, it's your fault".

"It needed to come to some sort of arrangement to put it behind us," she said.

Tauranga is one of the six worst hit councils around the country. Mayor Stuart Crosby said the Government's plan for sharing the cost is a marked improvement from previous Government schemes.

Mr Crosby said some of his constituents who have lost their homes to the leaky building syndrome get very upset.

"It's like bereavement when you're talking to them. It impacts on them both mentally and physically," Mr Crosby said.

He said the Government deserves credit for their work on the scheme because the previous Labour- led Government "would not even discuss" increasing its original proposal of 10 per cent.

He said, with about a 50 per cent uptake, the new deal would cost his council about $20 million over the next five years.

The previous Government offer before Christmas, rejected by mayors, proposed that homeowners should pay 65 per cent, councils 25 per cent and the Government 10 per cent.

Waitakere is another of the worst hit councils around New Zealand.

Mayor Bob Harvey said he hopes the deal will form part of the legacy left by Auckland's mayors before the supercity comes into being.

"It's one of the most troublesome, complex issues that any mayor has had to face with the destruction of lives," Mr Harvey said.

He said he applauded Auckland mayor John Banks and his Wellington counterpart Kerry Prendergast and their work in negotiating the numbers with Government.

"It is not going to save what has happened in the past but at least some people will sleep easy in their beds tonight because they haven't been able to do that in the last ten years," Mr Harvey said.

North Shore mayor Andrew Williams is pleased with the deal that will see the Government and local councils pay an equal portion.

He said he hoped the loans would give the struggling building sector a "shot in the arm" as they recover from the recession.

"I think there's a big lesson to come out of this. The reforms of the 1990s which deregulated and changed the building codes and they meddled an awful lot at Central Government level, they knew what was happening in Canada where there were problems but they went ahead," Mr Williams said.

He said the Government made the changes amongst some intense lobbying from the building suppliers industry.

The six worst-hit city councils are Manukau, Auckland, North Shore, Waitakere, Tauranga and Wellington.

Today's package was presented to Auckland Transition Agency executive chairman Mark Ford, Wellington Mayor Kerry Prendergast and her Auckland counterpart John Banks as the key representatives of those local authorities most affected by the leaky homes issue.

Local authorities have been invited to participate and asked to respond to the Government's offer by Monday 31 May 2010.

Mr Williamson said the eight major retail banks have been briefed about the financial assistance package and have indicated their willingness to work with the Government on the detail of the proposal.

"If, as officials forecast, 70 per cent of affected homeowners within the 10-year liability limit take up this package, the Government is anticipating its share will be around $1 billion over the next five years," Mr Williamson said.

Affected homeowners will need to make a claim under the Weathertight Homes Resolution Services Act to access the financial assistance package once it is launched.

Mr Williams said in July 2009, a PricewaterhouseCoopers report estimated that between 22,000 and 89,000 homes were affected with a consensus forecast of 42,000 dwellings that were likely to be leaky homes. Only a minority around 3,500 have been repaired to date.

Leaky homes saga - how the Herald exposed the rot:

May 26, 2001: A front page story in the Herald outlines problems with kiln-dried framing, saying a growing number of new homes are rotting.

* Houses rot as industry quarrels

May 26-June 2, 2001: The Herald runs a series of articles on rotting housing.

* Editorial: Let's be sure our buildings are safe

* How the rot set in new homes

* Homeowner fears rot may deepen

March, 2002: The Herald reveals that experts are investigating the 93-unit Summerfield development, in Grey Lynn, for leaks.

* Leaky buildings worry industry

April 13, 2002: A front-page Herald story says the cost of the damp crisis could reach $1 billion. It reveals for the first time that dozens of big sites - totalling thousands of homes - are affected. Toxic mould problems are revealed.

* Leaky-housing horrors put focus on standards

* Toxic rot crisis in new homes

* New home sprouted mould after a month

Over the next five months the Herald detailed specific problems at more than 10 major sites.

* Leaky buildings crisis costs councils thousands

* Major refit for leaky tower as investors head to court

October 10, 2002: The Herald reveals that the BIA was warned for four years about the problem, but had done little to solve it.

* Where the rot really set in