The housing rot sets in

For thousands of New Zealanders, the dream of a new home is turning into a sodden nightmare. ANDREW LAXON and EUGENE BINGHAM.

Doug and Lyn Nielson lay awake at night in their new inner-city apartment in Marion Square, listening to the sound of falling rain.

When it grew too loud, they got out of bed, grabbed a couple of old towels and stuffed them hard up against the wall to catch the leaks.

It was the last thing the couple had expected when they bought the $330,000 three-storey unit in the heart of Wellington's Cuba St district.

The 40 muddy-grey, loft-style apartments were built around an inner courtyard on top of a three-storey car park in 1996. The following year they won a regional architecture award, but the owners were already finding problems.

"Within about three months of moving into a brand new apartment we got water damage on the inside of the stairwell," says Doug Nielson. "There was mould and rot and the carpet was sodden."

Doug Nielson says it took the developers, Ebert Construction, three or four attempts to fix the problem. Their bedroom wall was so water-damaged they could have punched a hole in it.

At number 31 Bernard McBride found rain leaked straight through the ceiling of his bedroom and through the lights of the bathroom. Nails were starting to come out of the walls and ceilings.

"When you started to look closely at the finishing, it was appalling. The gib was starting to buckle and the paint job was atrocious. The architraves were starting to crack, there were cracks in the roof that were becoming quite noticeable."

The Weekend Herald understands that a report by an Auckland-based building repair specialist, Prendos, found that leaks in some apartments were so bad that entire wall linings had to be replaced. Many apartments were infected with a dangerous mould known as stachybotrys - not well-known in New Zealand, but linked in several American legal disputes to a range of health problems, from chronic tiredness to bleeding lungs.

Marion Square residents have now taken legal action against Ebert Construction. The chairman of the body corporate, Judith Manchester, confirmed the case was heading for the High Court. Ebert Construction did not return calls.

In Ponsonby, the owners of one three-storey 1990s-built terraced house on Rose Rd called in the lawyers when a double bed fell through the floor of a downstairs bedroom.

"The bed was shortly followed by the washing machine," said lawyer Phil Sheat. "When the [owners] took up the floorboards, the whole underfloor area was saturated and completely rotten."

Sheat said other houses in the block shared similar problems, as water had attacked the buildings' substructure. "One [of the houses] is particularly badly affected and perhaps if this hadn't been discovered, it may well have led to the whole structure being condemned."

The Rose Rd body corporate is taking its case to the High Court at Auckland next week, suing the builder and the Auckland City Council.

Sheat said the body corporate would allege that substandard workmanship was carried out and question whether the council exercised proper oversight of the building process. The council and the builder are fighting the allegations.

Marion Square and Rose Rd are the latest examples of a leaky-building crisis gradually seeping into public view. A few industry insiders have known about the problem for years, thanks to crusaders such as Prendos consultant Philip O'Sullivan, whose "Dr Rot" columns in the trade press warned that modern construction methods were creating leaking, rotting houses. Last year the Herald ran a series of articles revealing the causes of the problem, but no one seemed to know how many of the 20,000 new houses built each year were affected.

In the past few weeks that has changed. Last month the Building Industry Authority, the Government body responsible for enforcing building standards, announced an inquiry to determine the size of the problem. Industry sources say the answer is thousands of new homes - including dozens of multi-unit developments.

A building and dispute resolution expert, Steve Alexander, of Alexander and Co, says he knows of 49 new leaking buildings in Auckland, including 10 multi-unit developments. He estimates 560 units are affected.

Robin Wakeling, a building materials biodeterioration expert at the Forest Research Institute in Rotorua who sees the worst examples sent by building repair experts such as Prendos, says hundreds of new houses already have problems but he expects to discover thousands in the next few years.

On the rural hinterland hugging Auckland's eastern suburbs, the Botany Downs shopping centre, the country's largest retail development, looms over the intersection of Ti Rakau Drive and Te Irirangi Rd.

Just behind it lies a 153-unit development once described by the Auckland Regional Council as a vision of future housing areas. Called Sacramento to reflect the Spanish-Californian theme, the development's $150,000-$243,000 homes were pitched at first-home buyers and couples looking for a comfortable condominium lifestyle.

The developer, North Shore-based Taradale, specialises in these projects. By the time Sacramento was built, Taradale already had several showcase sites, including the 105 houses at The Grange and the 61 terraced houses and apartments at Vista Rosa in Mt Albert.

Sacramento followed the style of Vista Rosa, but on a much greater scale. It is one of the largest housing developments in the country, complete with mission-style belltowers and archways, communal barbecue area, swimming pool, gym and tennis court.

Now Sacramento has been struck by the leaky building blight. Owners considered legal action but have decided as a group to deal with the problem - for now - by talking with Taradale, which has assigned Peter Fitzsimmons, an independent director on the board of Taradale Property, to manage the problem.

"We are as dismayed as the owners are with what's occurring because we are proud of Sacramento," says Fitzsimmons.

He says the problems at Sacramento will affect one or two other Taradale developments, but emphasises that not all sites were built the same way.

According to the company, the problem has been caused by a failure of the jointing system holding the exterior cladding to the frame.

Last year, as a temporary measure, Taradale and the two main construction contractors squeezed adhesive sealants around the joints and anywhere else there was a risk of water getting in.

Fitzsimmons says the company and the builders were working on a way to fix the problem long-term, but have decided to wait to see if the Building Industry Authority inquiry comes up with a standard answer. .

While owners believe the issue has dragged on too long, Taradale believes it has moved quickly. In some ways it had no choice.

"Sacramento is very prominent. One of the things in this business is that you can't hide," says Fitzsimmons.

Last month the Weekend Herald revealed leaks in another high-profile Auckland housing development, the 93-unit Summerfield Villas on the old Sleepyhead factory site in Grey Lynn, which was finished only last year.

Marketing manager Jeremy Dyson says every unit in the $32 million block is being checked and so far nine out of 17 older homes have been affected, with rot spreading 15cm into the sodden timber frames. He blames the problem on inadequate flashings (metal coverings designed to seal joints) on the parapets placed at every second or third unit.

Why do so many new houses leak? Experts disagree on the details but generally agree on the main factors involved - design changes, new building materials and falling standards of workmanship.

Until the 1980s most New Zealand houses had pitched roofs, with eaves to keep out the rain. They were usually made of weatherboard, brick or perhaps stucco on an open, ventilated timber frame.

The houses leaked but water had room to drain away or dry out inside the walls. The timber framing was treated for borer, which made it more resistant to rot as well.

Over the past 20 years - and especially the past five to 10 years - most of these conditions have changed. Mediterranean-style houses with flat roofs, no eaves and floor-level decks and balconies tend to let more rain in. New water-resistant, but slow-drying, stucco and fibre cement claddings, combined with compulsory insulation from the early 1980s, give this water nowhere to go in the tightly packed wall cavities.

Some argue the real cause of the problem is abolition in 1996 of the compulsory use of treated timber, which means wooden frames in new houses rot much faster.

Others say the worst problem is sloppy builders who do not seal these new materials properly.

Adrian Bennett, chairman of an industry weathertightness group set up last year to tackle the problem, says the new claddings are not the problem.

"By and large it's not the materials, it tends to be the junctions between the materials," says Bennett, who is also the weathertight buildings manager for the Building Research Association of New Zealand (Branz).

Whatever the reasons, the effects have been dramatic and are getting worse. Two years ago a survey of pre-purchase building reports on Auckland houses found 60 per cent of the 287 houses inspected had some leaks. More alarmingly, half the houses built since 1990 leaked and these houses had more leaks at a higher failure rate than the older houses.

The highest failure rate came from stucco. Prendos' latest study into 1990s multi-unit housing, which found average repair bills of $32,000 in houses with problems, suggests the problem is getting worse.

Another potentially serious problem is the health effects of mould in new homes, which can cause problems such as asthma and flu-like symptoms. The worst is stachybotrys, a fungus that produces poisonous spores.

In New Zealand, stachybotrys was rare a decade ago. But in the past year scientist Elizabeth Ebbett, of the Auckland laboratory Biodet Services, estimates she has seen between 50 and 100 samples.

Stachybotrys needs very particular conditions - plenty of cellulose material to grow on (wood, paper, carpet backing), and plenty of water. The area has to be saturated for a long time.

New Zealand building repair expert Steve Alexander, often called in to investigate leaks in new buildings, says he regularly finds stachybotrys.

He says it generally does not become a health hazard until builders move in to repair the problems, knocking down walls and setting the toxic spores airborne.

In America, since the mid-1980s large-scale outbreaks of illness in areas with mouldy homes have been attributed to stachybotrys. Sick families have even taken lawsuits against landlords.

Most seriously, in Ohio, doctors have linked bleeding in the lungs of 45 children over the past seven years to the presence of the fungus. Sixteen of the children died. Research into the exact causes of the deaths continues, but all of them lived in homes where stachybotrys was found.

While stachybotrys-related health problems have not yet led to the courts in this country, our courts are already experiencing a steady trickle of leaky buildings cases.

The growing question is: who will pay? Alexander says he knows of one three-year-old $1million central Auckland property where the cost will be six figures.

"There has been severe timber decay and we're having to take off probably 75 per cent of the cladding and perhaps rebuild 25 per cent of the outside walls and decks," said Alexander. "Some of the timber framing had no structural integrity at all - you could break it with your fingers."

If the worst predictions are right, many New Zealand homeowners could end up like Malcolm Fort, whose multi-level Mediterranean-style Devonport dream home has turned into a nightmare.

Water leaked from the balcony straight into the main bedroom and poured in through the back wall. Similar leaks have rotted the timber framing of the garage.

Builder Dempsey Morton says the 14-year-old house has had three owners and was sold before completion, but has offered to contribute to the repair bill, which Fort puts at $12,000.

Fort says he's fed up with the endless repairs.

"I bought this house by the beach and here I am spending all my time fixing bloody botch-ups. I've spent two years - virtually all my spare time - doing jobs."