Leaky home warranty announced

Maurice Williamson says the warranty system will guarantee that houses are fit for sale. Photo / Dean Purcell

A new-home warranty system has been announced as part of a shake-up of the construction industry to tackle the leaky-building disaster.

Building and Construction Minister Maurice Williamson says it will guarantee that houses are fit for sale.

Mr Williamson told the Building Research Association's Build magazine he was surprised at the enormity of the leaky homes saga and previously "had no idea of the magnitude". That had changed.

"The best estimate we have currently is that the repair bill will be about $3.6 billion - a huge number. We think that's about 20,000 properties."

Early this year, Mr Williamson announced a major investigation into the scale of the problem and the Department of Building and Housing led the weathertightness project taskforce. Its findings are yet to be released.

Now, Mr Williamson plans a radical shake-up of the leaky-building system, which he says is not working.

"It's just dreadful. We are going to completely revamp the whole process because the whole weathertight resolution process so far has seen huge chunks of money go into the hands of lawyers and litigation and tribunals and almost nothing going into fixing the rotting buildings," he told the magazine.

A new-home warranty insurance scheme is part of the big changes he plans to promote and he released some details.

"Why, on the most valuable asset you're ever going to buy in your life, wouldn't you want to have some sort of guarantee that it's fit for purpose and is going to function as promoted for many years?" he said.

"Everything we do from the new policy will be targeted to fixing the problem and lawyers won't like me at all because it won't be going to them." Last week, Mr Williamson said the Building Amendment Bill would reform the construction sector and reduce delays and costs.

The warranty could be through insurance companies or builder guarantees, but homeowners could opt out of taking the warranty if they were confident the builder was up to the job, the magazine reported.

Mr Williamson told the Building Industry Federation annual meeting in Wellington last month that the Government was taking a fresh look at weathertight issues and was committed to getting leaky homes fixed.

"The Department of Building and Housing has undertaken a comprehensive review of the approach currently taken to weathertight issues. Once the results are known, the Government will decide on the best option to address the problem," he said.

Auckland law firm chief Paul Grimshaw said he was keen to know more about the minister's plans. Grimshaw & Co is representing about 6000 property owners who are suffering after buying leaky houses. Many are in body corporates in large apartment blocks.

The High Court at Auckland is also handling leaky building cases on an almost-daily basis.

The country's largest leaky building claim is apartment block Hobson Gardens, Hobson St in Auckland's CBD. That twin-tower complex could cost $20 million to fix.

But John Gray, president of the Homeowners and Buyers Association, said Mr Williamson had severely under-estimated the scale of the problem.

Industry sector estimates that 80,000 houses and units would cost $5 billion to fix could even be a big under-estimate, he said.

"I think it might be higher than that."

He called for Mr Williamson to urgently release the national investigation into the scale of the problem, saying this would come closer to revealing the true nature of the systemic failure.

Local councils were the very entities driving up legal costs on leaky building litigation, Mr Gray said, fighting victims in court over payments.

"They're defending the indefensible."

Mr Gray said he was concerned to hear that Mr Williamson wanted to stop private litigation. This would deny people of their right to access the court system.

* Estimates

Maurice Williamson:

$3.6 billion, 20,000 properties

Homeowners and Buyers Association:

$5 billion, 80,000 properties