Editorial: Leaky homes 'rescue' leaves many stranded

A 10-year deadline would now mean if the work dates before May 2000, an leaky home owner is on their own. Photo / Martin Sykes

Take an $11.2 billion problem, wave a taxpayer-funded wand to change the rules and, presto, the problem is now just $4 billion, and falling. Yesterday's "rescue" package for the tens of thousands living in leaky homes that need costly repairs is a classic of its kind.

Many homeowners will now see their bill for repairs effectively halved - a quarter paid by taxpayers, a quarter paid by ratepayers - and the rest of the money made available through Government-guaranteed bank loans. That will be a relief to them, and who could argue with the need to help resolve the horror that has afflicted lives and families?

But many other owners will get nothing. That is because a 10-year deadline would now mean if the work dates before May 2000, an owner is on his or her own. The Government acknowledged yesterday that 6000 owners had fallen out of contention while the package was negotiated. A further 9000 cases were too old before the process started. Just 3500 houses have been repaired. Of the 42,000 houses estimated by a PricewaterhouseCoopers report to be affected, just 23,500 would now qualify. The rule change and the bill to the public is contained.

It is likely to be early next year before details are finalised, with further owners' claims dropping beyond the 10-year deadline unless they have a weathertightness claim lodged with the Department of Building and Housing. They might miss out if they don't move fast. By enforcing the 10-year deadline, authorities resolutely limit their exposure. PWC offered an alternative - 15 years - but that was rejected.

The leaky homes crisis was thrust into public awareness by a Herald investigative series starting in 2002. The numbers of leaky buildings being built fell from that time as demand for the failed cladding, timber and practices dried up. So the remaining number of affected owners is likely to be overly weighted from the 2000 to 2002 period. More become ineligible by the week.

Central government estimates it will contribute around $1 billion over five years, the same as councils. Owners will pay or take loans on offer to the total value of a further $2 billion, for a total of $4 billion.

Some will find the Government contribution overly generous, as a Court of Appeal ruling found the Crown had no liability because its flawed building department did not have sufficient "proximity" to the actual house leaks. We have argued here before that local authorities so poorly regulated and managed the building practices that they should take more responsibility than central government. Yet their exposure has stayed around a quarter of the cost, while the negotiations leading to this package have seen the Crown up its contribution from a proposed 10 to 25 per cent.

A further injustice against leaky homeowners is confirmed in this package. Councils will not contribute at all in cases where outside, or outsourced, building certifiers have signed substandard work. In these cases homeowners may still take the central government money but will have to borrow up to 75 per cent of the repair costs. The outside certifiers, most of whom are now out of existence and unable to be pursued, were doing the work previously undertaken by council inspectors. Councils outsourced the work and, with legal views in their favour, are offloading the responsibility. Legal or not, it is wholly inequitable.

National inherited this mess from a Labour Government which did not act swiftly or comprehensively to protect the rights of afflicted citizens. Yesterday's package is the first time the Crown has put serious money on the table and committed councils to do the same. But in truth it addresses just two-thirds of the problem.