Taxpayers face $777m bill to help fix leaky homes

Mayors of Auckland, Waitakere, North Shore, Wellington, Christchurch and Tauranga have met with Building and Construction Minister Maurice Williamson. Photo / Dean Purcell

The Crown expects to pay $777 million to leaky home victims in the next two decades, lumbering the country with colossal bills.

A secret Government discussion paper this month being circulated to metro city mayors shows the state expecting soaring bills.

The figures show how subsequent governments and generations of taxpayers will need to set aside money to help victims fix thousands of rotten, collapsing, damp and decaying houses.

These are "indicative" figures only and the fix-up bill could be much higher. But even the $777 million is only 10 per cent of expected house repair costs for those eligible under strict new criteria the Government is planning to set.

The latest figures are based on the assumption that the Crown will make only a tiny contribution to the crisis and target older victims on lower incomes.

To get the state's 10 per cent, victims will have to pay 64 per cent and councils - now being stung for millions, sparking insurance issues - will pay just 26 per cent.

Mayors of the six worst-affected areas, Auckland, Waitakere, North Shore, Wellington, Christchurch and Tauranga, have met Building and Construction Minister Maurice Williamson to hammer out the deal.

The leaky building crisis was this year estimated in a secret PricewaterhouseCoopers report commissioned by the Department of Building and Housing to cost the country $6 billion to $11.5 billion.

Waitakere Mayor Bob Harvey said yesterday it might take ages to strike the new deal with Mr Williamson and nothing would be released immediately. "The proposal as put to us by the Government will be the subject of a telephone conference next week and right now it is nothing more than a suggested proposal. It's work in progress."

The latest figures and new scheme from Mr Williamson's office shows how the Crown expects to be paying $482 million to victims of rotting homes by 2014-15. But it also plans to limit assistance, aiming it at those aged over 65 earning less than $76,000. Elderly victims could opt to repay state loans from their estate.

Homeowners will also have to agree not to sue to get the deal, limiting liability of councils now paying the most.

The Government expects 50 per cent of eligible victims or 15,500 homeowners to claim under the new deal by 2014.

The Weekend Herald understands the Government was planning to make public details of the deal yesterday.

However, Mr Williamson refused to comment and has made no official statement since August.

Victims are disgusted with the proposed 10 per cent state deal, saying they would be worse off under the new scheme than under the existing system.

Wilna White, a British migrant who bought a leaky Whangaparaoa house and won $173,000 of $475,000 claimed, dismissed the state scheme in Mr Williamson's discussion document.

Lawyer Paul Grimshaw wants victims to abandon any state deals because they can win 100 per cent payment through private litigation.

THE BILL

In the next 25 years, rotting homes will cost taxpayers:

$258 million: housing assessments and support to claimants or victims.
$238 million: interest bill subsidies to help victims pay loans.
$185 million: suspensory loans for victims over 65.
$96 million in a universal loan guarantee scheme.

Total:

$777 million state assistance, 10 per cent of repair bill.

Source: Discussion document, Maurice Williamson's office