Government poised to stiffen rules on leaky homes

By ANDREW LAXON and VERNON SMALL

Homeowners could receive a guarantee on their house backed by a building industry fidelity fund under confidential plans being considered by the Government.

Other options in the leaky building package - which could be announced as early as Monday - include a beefed-up mediation and arbitration service and a new or increased building levy to pay for the home guarantee fund.

If implemented, the changes would fit neatly with an industry announcement last night pushing for the compulsory registration of all builders, subcontractors and other tradespeople.

Internal Affairs Minister George Hawkins confirmed yesterday that plans were under way for a new legal service that went beyond the Government's mediation plan, widely dismissed as inadequate because builders and developers could refuse to turn up or ignore its findings.

The Weekend Herald has since learned that a panel of experts, headed by leaky buildings inquiry chairman Don Hunn, is working on a range of possibilities, drawing on dispute resolution schemes from British Columbia and Victoria, Australia, and the Construction Contracts Bill still before Parliament.

Under the Victorian system - seen as the most likely option at this stage - the first step in building disputes is advice and conciliation.

If this does not work, an independent building expert assesses the work.

If builders are found to be at fault and refuse to make repairs, they can be deregistered, which puts them out of business.

If the dispute still cannot be resolved, it is referred to a tribunal. This would effectively lead to binding arbitration as a last resort - virtually the same process as National proposed and the Government blocked two weeks ago.

The Government is understood to be still considering whether parties should have rights to appeal against these decisions.

The guarantee scheme is designed to ensure a pool of money will be available to pay homeowners for repairs if builders or developers have gone under.

It would be paid for by a new or increased levy across the building industry and administered by an independent third party.

The guarantee would apply to the house, not the original buyer, so later owners would have access to it.

Compulsory registration for all tradespeople, including builders, now looks likely after a leaky buildings industry summit in Auckland strongly backed the idea.

Construction Industry Council chairman John Pfahlert said some builders would undoubtedly go out of business for failing to meet the required standards. But Building Industry Authority chairman Barry Brown added that most small-time builders would not be forced to quit - just restricted to jobs they could prove they had the ability to do under a new grading system.

For instance, "Bob the builder" would probably no longer be qualified to build a high profile, Mediterranean-style building on a clifftop because he would not have the right skills and backup.

He would still be allowed to build simpler houses using traditional, proven designs and building methods.

The summit also decided that the Building Industry Authority should work with the Consumers' Institute to produce a home-building guide within the next few months.

This might be either a standalone booklet or a pullout guide in newspapers or magazines. It would contain a checklist for owners.

Earlier, Mr Hawkins acknowledged that the Building Code might have to be changed to spell out more clearly how to prevent leaks and rot in buildings.

The minister said he expected to receive a report soon from BIA chairman Barry Brown on why chief executive Bill Porteous had not responded earlier to a string of detailed warnings about the crisis.

The Herald revealed on Thursday that in 1998 and 1999 the BIA received graphic pictures of rotting balconies, a six-page report matching the conclusions of last month's official inquiry and a plea to review the 1996 introduction on untreated timber from the chairman of the standards committee which made the decision.

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Further reading
Feature: Leaky buildings

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