Leaky homes deal just one option - Key

Owners of leaky homes don't have to take up a "short cut deal" if they don't want to, Prime Minister John Key says.

There has been criticism of the proposal, revealed in a leaked paper published by the New Zealand Herald newspaper on Friday.

Under the proposal, homeowners who drop legal action would have to agree to shoulder 64 per cent of the cost and councils 26 per cent. The Government would chip in 10 per cent.

Without a deal, the councils would be liable for most of the cost for cases settled in court or through the Weathertight Homes Resolution Service.

The leaky homes crisis followed deregulation of the building industry, where a resulting lack of rules meant problems with design and products left thousands of homeowners with ongoing problems.

Issues included flaws in design, product, cladding, workmanship, rules and checks.

The cost to the country was estimated at $11.5 billion.

Mr Key said people could continue to use the Weathertight Homes Resolution Service and the courts rather than take up the "short cut deal" but he said some leaky homes victims had paid more than won in legal fees.

"So sometimes winning is losing," he told Breakfast on TVNZ.

He said there were 44,000 people living in leaky homes who could not sell their house or borrow to fix it.

"We'll guarantee them access to funds," Mr Key said.

Elderly people who could not afford repayments could leave the debt to be repaid on their estate he said.

The key for leaky home owners was to get access to funds so they could move on, he said.

Local councils and leaky home owners have said the proposal left too much a burden on them and the government should contribute more.

- NZPA