Rot blitz will hit home prices

By ANDREW LAXON, MATHEW DEARNALEY AND FRANCESCA MOLD

Homeowners can expect to pay more for new houses as the building industry faces tougher regulations to stop the leaky buildings crisis.

A highly critical report by former State Services Commissioner Don Hunn concludes that a decade of so-called light-handed regulation has let homeowners down badly.

The report says this "major crisis" in the building industry must be met with stronger controls, which the Government and industry experts agreed yesterday were bound to push up costs.

Likely changes which could add thousands of dollars to the cost of a new home include:

* Compulsory registration for all builders.

* More council inspections.

* Project supervision for complex jobs.

* Greater use of treated timber.

* A compulsory wall cavity system for seamless plaster finish systems, known as monolithic claddings.

Finance Minister Michael Cullen said some of the changes would be introduced by law next year.

He defended a likely increase in "front end" construction costs.

"I think what emerges out of this is that the notion that there is some kind of nirvana of a low-compliance-cost world in which we can all live safely is simply not true.

"We expect houses to be built properly and not to leak within a short time of being built, and that creates compliance costs."

The greatest costs from law changes could be for timber treatment - $1500 to $4000 for a $250,000 house - and $1000 to $2000 for inserting cavities to allow water to drain between frames and cladding.

Changes to the Building Act could increase the number of local authority inspections for new homes.

The Hunn report says most people are better informed and better protected when they buy a used car than when they buy a house - for most New Zealanders the most important purchase of their lives.

It criticises the failure of successive governments to take control and regulate such a vital part of the country's social and economic wellbeing.

"A citizen's home may be his or her castle but it is much more than that, not least being the community's guarantee of an orderly and productive society," says the report.

"Housing is not just another commodity. It has a special call on the Government's attention and the regulatory framework must reflect this - it cannot be left to market forces alone, as influential as they will continue to be."

The report says the 1991 Building Act, which controls home building, introduced a hands-off approach to regulation which was typical of the laissez-faire approach of the 1980s and early 1990s.

That approach assumed an ideal world in which everyone involved in the building industry carried out their duties professionally.

"Such an ideal world environment does not exist.

"The industry is highly competitive, disparate in its structure, and lacks formal accountability, all of which has contributed to the systemic failure of the building industry with regard to this matter."

The report is especially critical of developers and builders who regularly liquidate their companies on the completion of each project to avoid claims and legal action from angry homeowners.

It says consumers do not have nearly enough legal protection.

The legal process is "too slow, difficult to access, expensive and time-consuming, and the power imbalance can, and does work, against the smaller homeowner".

The report criticises the Building Industry Authority and says it is questionable whether its many publications and seminars have adequately addressed issues such as the leak problem, "which appear to have been apparent for several years".

It repeats criticism of building inspectors and certifiers for relying too heavily on Building Research Association appraisals of products which often depended heavily on manufacturers' claims.

Auckland's principal building officer, Bob de Leur, who chairs a regional group of council representatives, said yesterday that a typical new home was likely to receive an average of about eight inspections, but those in the higher-risk category were receiving two or three more visits than before the problem was fully appreciated.

Meanwhile, it is understood that a Building Industry Authority plan to make treated H3 timber compulsory for outside walls in houses with monolithic cladding has been held up while supply lines are set up.

Minutes the Herald obtained under the Official Information Act show the authority approved regulatory changes last month, and planned to introduce them as early as next week, but there may have been too much demand for available stocks of treated timber.

* If you have information about leaking buildings,
email the Herald or fax (09) 373-6421.

Herald feature: Leaky buildings

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