Philip O'Sullivan: Hard to repair flawed system

The Weathertight Homes Resolution Services Amendment Bill is out for public comment. As I read it, I am reminded of the many patch repairs I see on leaky houses.

The Weathertight Homes Resolution Services Act was rushed through without proper consideration and based upon low estimates of repair costs. Now we have the Amendment Bill, with consultation but no real idea of the size of the problem.

We estimate leaky buildings will cost this country many billions of dollars. The Department of Building and Housing's figures have been far too light as they are based on WHRS assessors' estimates, whereas our figures are based on actual costs.

Housing New Zealand reports that it has identified 141 potentially leaky homes out of 6530 units that met the criteria linked with Leaky Building Syndrome. Compare this with the Department of Building and Housing Determinations on Code Compliance for weathertightness where most houses are rejected.

The problem extends well beyond houses into commercial and institutional buildings. Other common defects such as leaking showers and structural faults fall outside WHRS jurisdiction.

So is the proposed amendment a good solution? The underlying principles should be to ensure repairs are done properly, that money be spent on repairs rather than lawyers and experts and that those responsible should pay. Unfortunately for owners, they will have to contribute the biggest share as they own the problem.

Once the assessor's report is complete and the claim is accepted, an owner should have two pathways - choosing either a compensation scheme, or to carry on with the current approach.

But how would a compensation scheme be funded? I have always maintained that in the end it will be the homeowner, the ratepayer and the taxpayer who will pay. Councils are already paying, and have become the unwitting insurer for the building industry.

The Government has clearly been part of the problem. The Building Industry Authority approved untreated timber. It persisted with stucco plaster without a cavity until the Auckland City Council finally banned it. Then we had the insurance debacle where building certifiers' runoff insurance was required, but it acquiesced when it could not be provided.

There's a notion within government circles that "those liable will be found and they will pay". While this may have some popular appeal, it will never provide the amount of money needed, nor it is fair on builders who were given dodgy claddings and untreated timber to use.

It is time for the Minister, Clayton Cosgrove, to go into bat both for the homeowner and the building industry.

What I propose is a partial compensation scheme where Government, councils and those who appear to be responsible jointly contribute 50 per cent of the repair cost. The owner would pay the other half. Any owner taking a case through the courts or WHRS would be fortunate to net 50 per cent of the repair costs, once legal and expert costs are deducted.

Government would need to be a significant contributor, but given that GST and the income tax take form a substantial portion of the repair cost, effectively there would be no cost to Government. It would not erode the tax base, as this would be seen as a temporary, but necessary, measure.

Owners would have to spend their money first, and then compensation would ensure that the work is properly completed. Assessors could become involved in the repair process and this would lead to better assessments and estimates in the first instance.

If the owner, or one of the potentially liable parties turns down the compensation approach, then the traditional pathways remain open.

The bill, while an improvement, is just a patch on a flawed system that will continue to fall well short of expectations.

* Philip O'Sullivan is the director of Prendos Ltd and credited with bringing the leaky building problem to the attention of the industry.