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Have your say: Should the government provide interest free loans for leaky home owners?
The chief adjudicator of the Building Disputes Tribunal, John Green, has called for the government to step in and offer low interest or no interest loans to allow leaky home owners to fix their rotting houses, Radio NZ reported.
Green, who has also been a mediator with the Weathertight Homes Resolution Service, told Nine to Noon disputes are expensive and often take years, and settlements are not usually enough to fix the problem. He said the Government should offer low interest or even no interest loans to allow homeowners to fix their rotting houses and argue about liability afterwards.
Green said the problem affected about 89,000 homes and is set to cost more than NZ$11 billion, so the state has a responsibility to take a lead role.
Prime Minister John Key has previously said cabinet was about to consider a proposal in the next week or two. He has previously argued for an interest free government loan to leaky home owners where payment could be deferred until the house was sold. Key said then that future house price inflation would ensure that home owners were not hurt in the long run.
Nine to Noon also spoke to an anonymous North Shore homeowner who had immigrated to NZ and bought a house in 2006. Within 6 months it started leaking through the deck into a bedroom, the British emigrant said. Eventually the leaky home owners decided to demolish and rebuild at a cost of NZ$450,000 to NZ$500,000, which was NZ$70,000 to NZ$100,000 less than the cost of the estimated recladding and rebuilding exercise, she said. This was paid for by breaking into a pension and taking on a second mortgage. She said the following:
"The government need to hold their hands up, especially when you listen to all the news out there at the moment. It depends on the circumstances. Our builder made big mistakes and lots of other people made big mistakes and maybe everybody who was involved in it needs to hold their hands up and help. I don't see why we should be responsible when we moved in within six months and its our problem. I mean...why should it be our problem."
She was then asked what would be the best solution for her.
"The best possible outcome is that we get our money back. The government needs to step up and support people like us and realise what an impact this has had on people's lives."
Related Topics
Earlier today I spoke with Paul Henry on TVNZ's Breakfast programme about the leaky building issue and argued that taxpayers generally should not be forced to pay en masse for a bailout for leaky home owners.
My view
I have a few concerns about an interest free government loan to leaky home owners.
Firstly, this is real money that is being borrowed and is likely to be borrowed by the government from overseas creditors. These loans to the government will carry interest. Someone will have to pay the interest on that debt and for a long time at current forecasts. That is a real cost to taxpayers at large in a couple of ways. It is likely to force interest rates up for anyone that borrows, given the potential for pressure on our sovereign credit ratings.
Secondly, the interest cost on this debt will be hitting taxpayers at a time from 2015 onwards when the extra healthcare and pension costs from retiring baby-boomers are likely to be driving up income and consumption tax rates for everyone. This is a debt that will be lumped on future generations to pay for the recladding and rebuilding of homes mostly lived in or owned by current generations.
Secondly, there is a big risk here that many homeowners will be able to game the system to extract low interest government money to invest more in their houses. We have all seen the unintended consequences of interest free student loans. In the end, a lot more debt will be taken on than is necessary.
Also, there are many who bought their leaky homes after 2002 when it was clear to anyone who could read a newspaper or could do a google search for "leaky homes" that many homes, particularly those built recently with monolithic cladding, were at risk. Some may have thought they were getting a bargain. Most will not have imagined that a government bailout was in the offing.
But there will be some now who buy leaky homes in the full knowledge that a bailout seems likely. They could buy a house cheaply, get an interest free loan, do up the house and flick it on for a juicy capital gain. It's amazing what a no-interest loan will do for investment appetites. Perhaps that's what the government is trying to achieve. If it can spark a fresh round of credit-fueled buying in the market it can aim to keep prices elevated for all home owners (and National voters).
Capital gains on land
Also, what about those homeowners who are sitting on large capital gains on their land since 2002? For example, Real Estate Institute of New Zealand figures show Auckland median section prices rose around 150% to around NZ$250,000 between 2002 and early 2008, while dwelling medians rose around 75% to NZ$445,000. Do they not have any spare capital gains to help pay for their rebuilds? About NZ$300 billion of capital gains were made from 2002 to 2008. At least two thirds of that was gains on land. A good chunk of that was in Auckland and its surrounds where most of the leaky homes are located.
Also, how many of these houses are actually owner-occupied? Should the government be compensating landlords for their decisions to buy townhouses or apartments that are now leaky? How much has already been claimed in tax losses on these properties? Is this fair on the tenants who have lived in these houses? They have endured the leaky buildings but the landlord gets the payout.
There will, of course, be those who genuinely had no idea they were buying a sponge when they bought a leaky home to live in during the late 1990s. There are no doubt many trapped in unhealthy houses that do not have the cash available to repair or rebuild their houses. Many of the banks have simply stopped lending on townhouses and apartments.
There seems a genuine case for someone to help them, given they received assurances by negligent council inspectors and now-liquidated builders. But how many are in this position? And should all 89,000 leaky home owners be lumped in with the most genuine cases? Remember, we are talking about a problem that is potentially worth NZ$23 billion. This could be like student loans on steroids and human growth hormones.
There may be a case for the government to help those genuine owner-occupiers who bought before the scale of the problem emerged. But it seems less than fair that those buildings, architects and building materials manufacturers who were ultimately responsible for the mess should get away with the biggest act of professional negligence in the history of New Zealand.
The irony is that the ultimate payee will be those graduating now with those student loans. They will end up having to service and eventually repay these loans for leaky buildings in 10-20 years in the form of higher taxes.
The obvious question I get is: so what should be done about it?
There is no doubt a problem with the legal process being swamped with cases and the Weathertight Homes Resolution Service seems to have failed. There is also a funding problem in that the banks have stopped lending, creating a logjam of houses that are unsold.
But there is a market solution for this. As long as there is no prospect of a bailout, prices can be found. Those who need to move out of their own houses or apartment should sell and crystallise any capital gains they've made on the land. They can then move on with their lives, albeit in a suburb and a house that was less than they planned. Those who buy then take on the risk and cost of recladding and rebuild.
Some may have loans that are worth more than their houses. This then becomes an issue for the banks. They are also no doubt hoping the government will use taxpayer money to fire up the housing market again with cheap money. They will then not be forced to take big losses on revalued loans.
The counterfactual
Would we be talking about a potential government bailout of a large group of unfortunate people if the people were not well-connected mostly National voters? What about all those people who bought dodgy cars in the last decade, particularly Japanese imports? Should the government compensate them for the big losses they incurred in depreciating values?
Or what about those people who worked hard for their student qualifications and now can't get jobs? Should the government top their salaries up to compensate them for recession? The unemployment rate for 15-19 year olds is currently 26.5%. They have been very unlucky in graduating into a recession.
At some point the culture of bailouts and state support has to stop. Otherwise the 10% of PAYE taxpayers (who aren't on Working for Families or receiving a benefit of some kind) who pay the net 76% of income tax will revolt? Whatever happened to Caveat Emptor?
Your view? I welcome your thoughts below.
97 Comments
Does any-one know if Australia
Does any-one know if Australia has a leaky home problem, as they have similar building products, cladding systems and building styles.
If so what have they done about it.
Oh dearie me , yet
Oh dearie me , yet again no one is to blame , no one will be held resonsible for their actions . Nanny State will hold your lily white hand and lead you down the primrose path of someone else's munny . We have lurched from one group of inept buffoons ( Helen Clarke's Labour Gumnut ) , to another , Shonkey John Key and the Dipton Maniacs . We are screwed ........... again , again , yet again . The blameless , no fault society .
And throughout the land the innoccent in their silent millions : the rate payers , the tax-payers , the small-business owners ; they will be forced to stump up for someone else's stupidity . And so it goes , in Godzone .............
I brought a leaky car
I brought a leaky car once. The WOF regulations didn't extend to x-raying the chassis to find the rust under the freshly laid paint. The regulations still don't, so the Govt must be liable as rust is a known problem in 1982 Coronas, (even too me when I brought it.) Not too much to ask for with the $35 fee surely.
In the absence of the
In the absence of the courage to execute on my second paragraph, then yes I think interest free loans should be provided.
One of the reasons the taxpayer is being left to carry this can is the ability of 'tradespeople' (mainly builders but also painters, plasterers, plumbers...) to form a company, deliver substandard work, then wind up the company and form another one with the same or similar name, same people, doing the same stuff. Now not all tradespeople do this, and I can't even say 'most', but there is a definite trend for that to happen.
Rather than applying the bandage, if the government had the courage to unwind through the company to put the finger on the actual builder or company principal to put these matters right, the cost to the taxpayer would be much diminished.
This is a variation on the theme of self employed persons hiding substantial income through companies and trading trusts and then claiming WFF and paying next to no tax.
Rouppe, I wonder why all
Rouppe,
I wonder why all these builders etc who wind up and reform can't be exposed. Sounds like something that Google would spot in a second with a decent database to crawl.
That gives me a few ideas.
Maybe it's time someone started documenting on public website exactly who (names etc) was responsible.
cheers
Bernard
"Leaky buildings are the result
"Leaky buildings are the result of cowboys shooting everywhere."
Solid manufacturing is also viewed as an important sponsor of Research and Development, leading to innovative and quality technologies that can give birth to whole new sustainable industries.
In NZ most everything is imported - knowledge and skill exported - what a mess.
Caveat: I haven't any direct
Caveat: I haven't any direct experience of this, so I am asking a real question:
When you get a builder to do work for you, doesn't it come with a guarantee?
If so, then who underwrites that guarantee?
Everyone knows that guarantees mean little if the guarantor goes under, and everyone knows that builders come and go regularly, so presumably most people get it underwritten by an insurance company?
If so, why are they not paying out?
Thanks,
Alan.
Bernhard why not public the
Bernhard why not public the good ones - the list is shorter - less work ? ;-)
Not a silly idea Bernard.
Not a silly idea Bernard.
I know of someone who bought a home that subsequently leaked. Paid good money to a builder to rebuild it. It leaked again......
Builder has liquidated his company, not for the first time apparently and still has a nice home and a launch both in a Trust. Refuses to accept any liability.
Those are the sorts of people the Govt should come down on like a ton of bricks.
Alan Says: Caveat: I haven’t
Alan Says: Caveat: I haven’t any direct experience of this, so I am asking a real question: When you get a builder to do work for you, doesn’t it come with a guarantee?
Alan, you then go on to wonder about insurance, and I'd actually been wondering a similar thing. There were floods in Whakatane a few years ago in a relatively poor area, and it occurred to me that some people would have suffered losses there. Presumably some of those losses were covered by insurance - is this never the case with leaky homes? Did the government assist anyone in that flood situation?
Is there possibly a discrepancy in how people are treated, depending on what sector of society they come from? I'm not assuming this is the case - like Alan, I'm just asking a question. I've long been annoyed by assistance given to farmers in every drought and flood - that has always seemed inequitable to me.
I had no idea most
I had no idea most of a house's value is in the cladding.
...I don't mean to state the obvious, but there is a fair bit of BS going on.
The problem here is the addiction everyone has to the government to providing a safety net - because of this consumers do not make an effort to verify what was received was what was expected and suppliers do not make an effort to deliver what is expected – the market had become inefficient.
Because of this, the government should actually do less rather than more - let the market fix the problems, sure some home owners will be disappointed but it will be better for society in the longer term.
Buyer beware....if they were thick
Buyer beware....if they were thick enough to buy a leaky home let the buyer wear it.
What a joke, this country is stuffed.
John Key is an idiot.
Can the last one out of the room snuff the candle out?
Leaky buildings ! Obviously rate
Leaky buildings ! Obviously rate – and taxpayers are forced to pay billions listening to Bernhard on TVone this morning.
Question to professionals:
Here in Kaikoura a big development is planned right on the waterfront (wharf) with Council approval – great !
Who’s liability is it when the complex is damaged/ taken by floodwaters under the influence of climate change ?
..and how many other private houses, commercial and infrastructure’s complexes near the seashore built in the last few years throughout the country come under the same scenario = council approval/ consent ?
In a few years time do taxpayers/ ratepayers pay billions for the stupidity of councils again ?
When does you, from the younger generation facing those bills wake up and jump from surf- boards onto politics is my next question ?
Bernard Hickey says: Whatever happened
Bernard Hickey says: Whatever happened to Caveat Emptor?
Exactly Bernard, but we now seem to live in a society where private losses are socialised.
Good work Bernard encouraging constructive
Good work Bernard encouraging constructive public discussion of this serious issue.
The government financial support needs to be an absolute last resort - for those in a hopeless situation. Others with the financing capacity (including assets convieniently parked up in Trusts etc) should be required to sort out their own problems.
Property "consumers" need to be encouraged to expect better standards from builders and regulatory authorities.
Hugh Pavletich
@Hugh: I just don't understand
@Hugh:
I just don't understand why there is a 'standards' issue though.
Clearly something in this chain didn't happen, but this is the way things should go to my thinking (never having done this!):
1) I want something built so I get a 'lead contractor'.
2) Lead contractor takes my money and delivers what I want. They guarantee it, and they are underwritten by a proper insurance company.
3) Lead contractor deals with architect (who obviously talks to me too!) and pays them.
4) Lead contractor gets all the permits etc, and builds to meet those (or to higher spec that is specified by suppliers, builder or architect).
5) Lead contractor sources all materials, builds to architects specs, and delivers to me.
If it leaks, I sue the lead contractor. Their insurance company deals with the claim, and pays me. They can then go after the builder, suppliers, architect, council, government - anyone they like.
This is just a normal, bog-standard way of doing just about anything.
So what went wrong?
Alan.
"...for those in a hopeless
"...for those in a hopeless situation." You'd be surprised ( or maybe not!) re what can be made of any, hopeless or not, situation if free government money is on offer, Hugh! Block of flats next to me; they were doing their own thing to make good, and have stopped; because they might get a bail out.
So are we also doing
So are we also doing bailouts for those that lost money with shonky finance companies as well? Surely a lack of government regulation was at least partly to blame there as well?
While we are at it why not also extend on this bailout policy to cover cars that turn out to be lemons, mobile phones that break just outside of warranty and bad haircuts? Lets build on the role of government to make sure they regulate all markets so that none of us ever lose money on any investment ever? How good would that be?
The sheeple seem to forget where the money is coming from, like somehow government money is free money. I'm really not happy as a young NZer about my tax money being used to subsidise interest free loans for existing home owners while I myself am locked out of the housing market due to affordability. I pay enough tax already. Call me selfish but I don't like giving money to bail-out those that are better off than me. As the goverment failed to regulate the credit boom and control house prices over the last decade can I also get a bailout in the form of an interest free home loan please? Surely that would only be fair?
Are they at least going to means test this? I'm even less keen on bailing out millionaires for repairs on their mansions or those that have made massive capital gains out of property over the last few years (take it out of the profit from the investment I say).
Bernard I saw you on
Bernard
I saw you on TV1 Breakfast this morning discussing the leaky building issue and I have to say that I was amazed at how uninformed you are on this matter. It is disappointing when someone of your profile appears to speak authoritatively on a matter they obviously know very little about.
We do not have time to enter into a long debate with you on this matter as we are flooded with genuine leaky home victims looking for help and we are trying to help develop meaningful solutions to assist these people……however here are a few quick comments:
You imply that Central Government has no responsibility for this sorry mess - that is simply not true. We would be happy to supply you with a copy of the documents prepared by the Building Industry Commission back in 1989/1990 which lead the then National Government to introduce the 1991 Building Act. The problem here was that they selectively picked the bits they liked out of what was intended to be a comprehensive package and in the process left out important aspects like a home guarantee scheme, product accreditation and effective enforcement. (See doc attached on this). We are certainly not suggesting that central Govt is the only one with responsibility but they do have a case to answer.
You also implied that anyone who purchased since 2002 have only themselves to blame. This is also a totally naive and incorrect view. There are very few circumstances we see where the owners of a property have purchased with knowledge in order to make a quick buck (as Paul Henry suggested). Many have purchased after obtaining pre-purchase building inspections which have given the property a clean bill of health only to find that problems were festering behind the walls. (If you want an issue to go after this is a good one – the field of pre-purchase building inspection is totally unregulated and owners are making million dollar decisions on their flaky reports.!) A large number of leaky home owners are immigrants to NZ who have arrived in the country with no prior knowledge of the leaky home problem. There are all sorts of different circumstances but to suggest that anyone actually understood the extent of this issue back in 2002 or knew that a property had significant problems but still went ahead an purchased it knowing that it would probably lead to financial ruin is ludicrous.
The idea that owners have had significant capital gain on their properties and so they should use some of this to fix their homes doesn’t work. The issue for many people is access to finance to pay for repairs and the fact that they are sitting on an asset with greatly diminished value as a result of the leaky problems often means they can’t borrow. And any capital gain that an owner may have enjoyed has most likely now dissolved if they have a plaster clad home even if it is not leaking!
Your comment that people in Gore struggling to pay the rent will be funding owners in Herne Bay who choose to get their homes re-clad is way off the mark. No one is choosing to spend hundreds of thousands of dollars on their homes – this is a requirement to get them back into a safe and healthy condition……..and the problem is New Zealand wide. Any thought that this is an Auckland problem is wrong. We are dealing with problems all over the country.
Also, you make no mention of the millions of tax payers dollars being quietly spent by the Government to repair schools, public buildings and Housing New Zealand developments all suffering from the same problems. Is this acceptable to you????? It’s not to me – if there is one owner in the country that I would have thought should have known how to go about building a quality product it’s the Government – clearly that’s not the case.
This problem does not just hit the wealthy, although it is those who are more well off who are going about sorting their problems out now. There are 1000’s of houses in poorer suburbs throughout Auckland and the rest of New Zealand inflicted with leaky homes problems and the owners have absolutely no way of addressing their issues – these will become unsightly, unhealthy slums in the future if we do not come up with a meaningful way of resolving this issue.
This problem is going to cause a loss of wealth no matter which way it gets cut. The focus needs to be on addressing the issue as cost effectively as possible by getting cost out of the system and getting homes fixed as quickly as possible – the long term cost to the country as a result of the health issues alone will be enormous if we don’t get on with it.
The most disappointing aspect of what you had to say this morning is that you did not offer one meaningful suggestion as to how this problem might be resolved!
We are realistic. We know that the home owner is going to end up carrying a large amount of the cost for this problem however the only way to move forward is to stop pointing the finger or coming up with inane arguments as to why one party should contribute and another should not and to start developing solutions which will ultimately see the problem fixed.
Here’s a starter for 10 – Problems: there is a significant cost introduced into the litigation process where a property has already been repaired related to arguments around the extent of the repair – every respondent party ends up around the mediation table with their own lawyer and own expert arguing that the home could have been repaired for much less than it has actually cost. Solution: Agree on the scope of the repair prior to undertaking the work and then provide for inspection throughout the repair period so that the appropriateness of the repair can be checked as required. Result: Reduced expert costs and faster resolution at end of process as no time spent arguing about scope and cost.
And another – Problem: There is a major problem getting repairs underway for multiunit complexes as every owner needs to come up with their share of the funds before work can be done. Solution: A loan fund established on a commercial basis so body corps can borrow to fund repairs. Once the property is repaired and any litigation resolved the owners can then repay the residual amount owing (after settlement funds have been used to repay the commercial fund). In the worst case scenario an owner may be forced to sell their unit however at least now the value of the units has been restored so they can get market value for it. Result: Time taken to get leaky complexes repaired shortened by up to 3 years, positive impact on the building industry (we are aware of over $200m of building work stalled because not all owners can find funding), better results in litigation against responsible parties (as amount claimed will be based on actuals), significant positive impact of owners involved (you would not believe the stress levels created when you own in a leaky complex and can do nothing because others in the complex can’t fund – you now have joe public home owners making decisions as to whether others in their complex should be bankrupted because they can’t come up with the money).
And there are many more where those ideas came from. Sadly Maurice Williamson does not really seem interested in meaningful ideas.
Roger Levie
Home Owners & Buyers Association of NZ
Foxtrot Oscar.
Foxtrot Oscar.
Everyone will go for the
Everyone will go for the 'solution' according to their circumstances. I take it BH does not have a leaky home, I wonder if he might be taking a different line if he was suffering having one? On the other hand, is there anyone out there with a leaky home who is going to stand up and say 'my bad luck and I don't expect any government help'?
Just wondering?
God, I'm so sick of
God, I'm so sick of this subject! Your home leak? well TOUGH! your problem, NOT mine or any other tax payers. Buyer and builder beware. Welcome to the world where life ain't fair, EVEN for home owners. Next time people do your homework and choose an architect (cause they are the morons who created leaking homes) more wisely.. Take your issues to court like the rest of us, The government is not a charity
If government go this route
If government go this route then seeya, I'll take my business overseas. I'll be f...ed if i will pay for someone elses financial disaster with MY taxes.
@Hugh P. For a start
@Hugh P.
For a start builders and other trades people have to relay on good information about building materials.
So, who analyses/ test and then classifies quality standards and right use of building materiel manufactured or imported to New Zealand before selling ?
http://www.baustoffchemie.de/en/
Totally agree with all Roger
Totally agree with all Roger Levie proposed. Finally a voice worth listening to.
It's time to stop blaming and start fixing. The first step would be a very public apology to the people of NZ by the Government of NZ.
Kevin Rudd apologised to the Aborigines for decades of abuse. Solutions and (costly) resolution followed.
It's time for John Key to step up to the plate and take NZ's biggest disaster on the chin. Then and only then will acceptable solutions be found. Yes they'll be costly, but that's the only reason this issue is the elephant in the room.
Maurice Williamson does have a role to play in all this. He is the perfect puppet if John Key decides to continue to avoid the elephant.
This whole problem is a
This whole problem is a product of greed and corruption,the developers were building with this cheap crap to make huge profits,councils were signing it off knowing it was crap and the suppliers fletchers and hardie etc new they were supplying crap.So I say all these people the politicians, mayors,inspectors,ceo"s,directors,architecs,builders etc should have personel liability and all their assets should be seized and sold to pay for this disaster before touching 1c of tax payer money.But I know hell will freeze over before that happens,they will keep all their ill gotten gains and the tax payer will just have to bend over and touch their toes.
This debacle is an absolute
This debacle is an absolute disgrace and borders almost on corruption in my view.
The blame lies with the previous Government when they abolished the proven established apprenticeship scheme and the likes of Government Bodies ie BRAANZ and others that approved the building methodologys and cladding.
Then we can look at the council and their building inspectors who passed each phase of the building process.
Talk about looneys running an asylum.
Now no one wants to take responsibility for this humongous problem which we haven't even started to see the worst of yet.
15 years ago I broached my concerns to a Council when I was asked by a home owner who was building and using a particular type of cladding if I would put on my builders hat and oversea the building work.
My concerns were not only with the exterior cladding and construction methods but also the vitually gallons of fill that was being used where in previous good building practice flashings were installed.
I queried how such a fill would react to NZ's UV light and how could a 30year guaranttee be given by the manufacturers when it had only been in use a few short years.
It was appalling workmanship and doomed to failure from day one.
Like Cave Creek incident when push comes to shove noboddy will take responsibility.
In Christchurch because we do not have the same weather hummidity as the North Island we have yet to see the worst of it and only now is evidence and a clue to the likely scale of the problem emerging.
I see as I travel around the city and know what to look for the evidence starring one in the face, but unfortunately many of the property owners are in denial.
I am also pedicting that some owners ,now that the new Real Estate Acts 2008 places more emphasis on agents to ask property owners to sign a declaration as to the owners having any knowledge of dampness and construction problems with their property to state it in writing.
We may see some of these problem homes placed on Trademe for sale by their owners and without involving any agents.
I also of the view that behind the scenes insurance companies will be dictating to their clients ie Councils, BRAANZ, BIC and so on to own up to nothing, say nothing and in the first instance deny everything.
And while I agree with much of what Roger Thompson says I do think it is deplorable when say an elderly couple have sought the services of professionals to advice them ,and then engage a master builder to construct their home.
During through all the various stages they are signed off by council building inspectors only to find a few years down the track they have a home that for health reasons cannot be lived in, can't be sold because no bank would lend on it and the owners do not have any spare money to fix the problems and everyone else associated with the problem in denial.
Through no fault of their own and using sound business practice they find themselves in a position that nobody wants to no about.
Quite franlkly it stinks.
An then we wonder why some in our society are lacking in values?
I was about to go
I was about to go off on a rant but Jimbo pretty much nailed every point I wanted to make. I'll bet ten bucks that if the government starts giving out interest-free loans there'll be tales of people rorting the system hitting the media within three months. Will they give a loan to repair the Hilton? I heard it's a bit leaky. How many leaky rentals do the Nats own?
I guess Justice for one
I guess Justice for one doesn't suffer with a leaky home. Easy to wash your hands of the problem in those circumstances. Is there someone with a leaky home that would agree with Justice and be prepared to accept their fate ??
Tax the sh*t out of
Tax the sh*t out of all property investors I say,make them pay after all its all property related!
Justice you show your ignorance
Justice you show your ignorance of the real problem when you state architects are responsibile for the problem.
What an attitude. I wonder what you would say Justice if your doctor treated you with the same attitude.
How do you feel about the Government giving money to help the victims of the Haiti earthquake and the recent Samoa tragedy?
Or is that a different charity?
Tax the hell out of
Tax the hell out of all the tenants too as they live in properties.
Can we have a debate
Can we have a debate to find out more about the reasons, why that's happening before blaming someone ?
For a start builders and other trades people have to relay on good information about building materials.
So, who analyses/ test and then classifies quality standards and right use of building materiel manufactured or imported to New Zealand before selling ?
http://www.baustoffchemie.de/en/
...and more questions to professionals:
...and more questions to professionals:
Here in Kaikoura a big development is planned right on the waterfront (wharf) with Council approval – great !
Who’s liability is it when the complex is damaged/ taken by floodwaters under the influence of climate change ?
..and how many other private houses, commercial and infrastructure’s complexes near the seashore built in the last few years throughout the country come under the same scenario with council approval/ consent ?
In a few years time do taxpayers/ ratepayers pay billions for the stupidity of councils ?
When does you, from the younger generation facing those bills wake up and jump from surf- boards onto politics is my next question ?
I see no reason why
I see no reason why I should have to bail out those who have decided to play the Real Estate lottery of recent years especially property investors who have plundered the hard working PAYE Kiwi. I agree with BH. Just another rort waiting in the wings
Muzza - tenants probably pay
Muzza - tenants probably pay more tax than most property investors, they also pay rent and don't expect a refund at the end of the year. Tenants pay up front and property investors should be happy to have good tenants
Labour/National no difference has no
Labour/National no difference has no one worked this one out yet?
It strikes me as odd
It strikes me as odd that the whole focus is on the home owners, ie buyers of a faulty and misleadingly advertised product, rather than on the producers of the said product.
Don't get me wrong, I don't particularly want to subsidise anyone (!) but in other industries when one manufactures a faulty product, the product (or whole range of products) is recalled and the entire financial cost is borne by the manufacturer, not by the people who bought the products (they generally get a voucher/refund/replacement with non-faulty product etc). Eg a children's toy that turns out to be unsafe, a car that speeds up out-of-control without being asked to, a food item that ended up having way too much of something dumped in it and therefore is unsafe for consumption etc.
So why is it different in this case? Sure a leaky home may not have a model number, but it is not just an isolated item seeing the dozens of thousands of houses concerned. Although I don't think a full govt bail-out is the solution, I do feel sorry for the people caught up in this sorry mess. Why on earth aren't the responsible parties forced to share the burden of the cost? And by "responsible parties" I don't mean the end-consumers (ie home owners) who bought the faulty product (ie leaky house) but the people who made such a pathetic products (which I suppose encompasses a number of people from designers to building inspectors to builders and cladding manufacturers). How come they can get away so easily with this and in the process ruin many people's lives? Why should taxpayers have to pay for them?
Bernard, putting together a public database is a brilliant idea. No name suppression allowed please.
Oh and sometimes buyers of
Oh and sometimes buyers of faulty products even get an apology on top of the refund. Not the "oooohhh, well, caveat emptor, you should have had that baby sling/milk powder/soft toy/car/can of tomatoes/"insert your choice of faulty product here" analysed before using it, you irresponsible consumer"!
It's ironic that people tend
It's ironic that people tend to blame the trades people and architects for leaky homes. In allot of cases these people only work to the specification of the developer who's main concern ofcourse is to build bigger more cheaply.
If you want to sort the issue out in favor of the current owner sue the developer.
Though I don't think it is that easy.
I still pay taxes in
I still pay taxes in NZ. And my considerable amount of money there has been in a bank deposit for many years. I didn't buy property and I didn't chase after finance company interest rates during the late 90's.
I'm not surprised that those who decried my 'lack of financial acumen' now are demanding that my taxes are used to support their bad calls. It's all about privatising profits and nationalising (socialising) losses.
Each time I go down to NZ I go to the races; last time I sadly made a loss on the night as none of my certainties did as they should. That's not my fault. I hope that next time I'm down, John Key's government has someone at the exit gate of Addington Park to refund my money.
"Caveat Emptor?" Indeed, except....then why
"Caveat Emptor?" Indeed, except....then why have Council inspectors? I paid the WCC a small fortune in inspectors fees to check over my work when I renovated part of my house. Yet I am a degree qualified building services design engineer and my theory is/was backed up with decades of work and city and Guilds (British tradesman) qualifications...oh and I also had to get a NZ qualified structural engineer to look over my design, supervise it and I had to pay his fees and pay for PS certs to give to the council so they could I assume offload the risk to the professional....so what exactly did I pay for?
I could except "Caveat Emptor?" if I didnt have to pay for it...twice....
regards
Leaky homes is (no pun
Leaky homes is (no pun intended) a watershed moment for all of us. It is our event-specific rationale for socialising the cost of creating an oligarchy of our very own. The US and Europe have a head start on shifting the burden of debt onto that majority of taxpayers who lack the wit or capital to slip the taxman's noose. Iain will agree, I'm sure, that our goose is truly cooked when the government puts the second part of the plan in motion.
@Bernard As much as I
@Bernard
As much as I respect your opinion, I have to respectfully disagree with you on this one.
I’m a stanch Libertarian, but I have to umbrage with your efficient market hypothesis (BTW - EMH is a myth). If this where hurricane damage would you make the same argument? Would you let the market settle the issue if there was an earthquake the in the center of Auckland and caused $11billion in damages? I will remind you that Katrina and Haiti where both man made disaster but I haven’t read anyone on this forum that YOU or anyone one else would refuse to help victims in those disasters. Would refuse to help and let the market sort it out? In fact if you have given ANY monies, clothing, etc to disaster relief recently you have effectively mooted your entire “responsibility” argument. At heart, Humans are essentially a cooperative species and the sum is always greater then its parts. We always get more done cooperating then we ever do separating into responsibility camps.
Back to NZ. Anyone can Google that NZ is ripe for a large earthquake or even tsunami...if those Katrina size natural disasters happen do we argue that the homeowners knew better and the market will sort it out or do we pull our heads out and fix it? I also take umbrage that some how Auckland is the only epicenter of this disaster. I’m sure that the majority of recent home building happened in Auckland but not all…so don’t think just because your south of the 41 degree parallel your safe.
This type of disaster, man made or otherwise, transcends markets. This is a singularity where ALL laws of economics will break down. Markets are created in these situations not destroyed. The overall market impact to the entire economy will more then offset future debts. Yes there will be those who game the system, but that is much cheaper then litigation. Also, I will remind you that there are already laws on the books against scamming the government.
This all just illustrates the
This all just illustrates the developing problem in our society - greed and loss of morals.
The fact that one group of people expect others to cover for their mistakes is morally abhorrent.
The facts as I see them.
1. Starting in the 90s (at least this is when these boxes started to appear), people bought substandard buildings because they were cheap and they wanted to avoid saving for something decent. A friend bought one about 1997 and I was horrified - some people just refuse to see what is in front of their eyes. It was waterproofed with polystyrene, plaster and paint. It then leaked.
2. The people who built these have managed to get out of being liable for their work.
3. The people who knowingly bought these things are trying to get out of being liable for their ill considered purchase by getting others to give them money.
4. This is little different to buying a rusty car or lending to one of the finance company ponzi schemes? Should the more responsible amongst us be make good their losses too? The oxygen sensor failed in my car a couple of months ago, should I ask my neighbours to buy me a new one?
It is about time we turned back the clock on this and people started taking responsibility for their actions.
Isn't it ironic that normally
Isn't it ironic that normally by now we would of had three different types of enquires on an issue like this.To my knowledge there has been a Royal Commission or any other inquiry-I suppose that would place liability to some degree at the Government's feet and they sure as hell don't want that.I can see Key helping out the leaky home owners to some degree. So many p*ss stained monolithic homes and apartments in Auckland. I read there is $20 billion of leaky homes nationwide out of a stock pile of $200 billion. So 10% of these homes are leaky so that will reduce supply even more...I wonder what effect this will have on demand of non-leaky homes and prices??
For those of you who
For those of you who reckon the burden should be shared, the fairest way is a retrospective capital gains tax (incl all company directors of now purposely liquidated companies/ and beneficiaries of trusts), so all that benefitted financially from property since the start of the leaky homes episode should share the responsibility of fixing the problem.
Either that, or line up alongside the other 3rd world countries and get bailed out by the IMF. ;-)
Caveat Emptor. Its an issue
Caveat Emptor. Its an issue that victims need to sort out through the courts with a class action against BRANZ, Councils (and their insurers), particularly James Hardie Panels and individually against any shonky builder.
While everyone stands around waiting for the government to step in no one is looking for an affordable solution. You cant tell me in this day and age that there is not an affordable fix available that some bright entrepreneur could come up with and make a fortune.
Staggers me that the fix is often more expensive than re-building. Is there no way a house can be recoated, flashings retro fitted and a small pump (think HRV) creating the missing air circulation.
@Elley & Troy, I seem
@Elley & Troy, I seem to recall you are from Europe (France, Elley?) and the US respectively, Troy. What are the population sizes of Europe, France and the US? In comparison we are a small town, and a "cosy" one at that, as Bernard described NZ yesterday in relation to Brian Gaynor's critisism of an individual director of GPG. What kinds of "cosy" things, more easily, go in smaller cities, regions, counties, states in the likes of France, Europe, the US? It's a scale effect, and probably strongly correlated with varying degrees of cronyism, don't be so surprised - welcome to our town, enjoy the views.
"Also, there are many who
"Also, there are many who bought their leaky homes after 2002 when it was clear to anyone who could read a newspaper or could do a google search for “leaky homes” that many homes, particularly those built recently with monolithic cladding, were at risk. Some may have thought they were getting a bargain"
We are Stuffed Says:
"Buyer beware….if they were thick enough to buy a leaky home let the buyer wear it."
Exactly you hit the nail right on the head....except I would edit you statement to
"Buyer beware….if they were thick enough to buy OR Build a leaky home let the buyer wear it."
Anything after that...they should have done their homework.
It was headlines back in 2002, clad and no eaves, yet they continued to build them in spite of long term experienced tradesman builders saying not to.
I think their could be a case for owners who have built and still own/occupy for a low interest loan if built previous to 2002.
We built extensions on to our home, part has no eaves, but constructed in a manner like was done in the 1950s....on the advice of our builder to the architect.
We did our homework...
Why should we pay the extra at the time to build in such a manner, then pay again to compensate those who who where stupid enough not to read a news paper or do their homework?
The ultimate responsibility when building doesnt lay with the councils, architects or builders, but the owner who does the final approval of the plans and gives the go aheads....AND the person who subsequently buys a potentially leaky home.
THAT IS WHERE THE BUCK STOPS...pun intended.
steven - sorry, you were
steven - sorry, you were only paying off the keystone-cops, if you were paying off the real mob you'd at least be getting some 'protection'!
This is just another example
This is just another example of homeowners and property investors willing to take the upside of investing in property and being completely unwilling to accept any downside.
"You can never lose in bricks and mortar" goes the saying. These houses should have been built with bricks and mortar and we would have been in a far better situation.
Troy, are you for real?
Troy, are you for real? A staunch libertarian demanding a govt bailout. I appreciate that you are in this awful situation, but really comparing it to Katrina is a weak argument. Your subsequent arguments become straw man like. Leaky building an act of god I do not think.
Why not make suppliers (builders, developers, architects) personally responsible, make them sign up to a code similar to the finacial advisors act. No more hiding behind companies and trusts.
In regards to this particular issue, I cannot see why a taxpayer bailout is required. As for 28y/old now 29, nail on the head, less supply of housing will mean increase in house prices for sure.
Two excellent post from Roger
Two excellent post from Roger Levie and Max Percy (Max, if you drove around Auckland looking at the signs of damp on mono clad houses, you would be horrified).
Bernard - instead of repeating your rant, why don't you write a well balanced article about the problem? Also, owners of mono clad houses are not sitting on capital gains, try selling one of those houses now.
For those posters crying out for a class action - the building materials that were used were all approved and legal. So, how do you take legal action against a lawful product?
A better suggestion would be to boycott buying CHH products until they make a meaningful contribution to the problem.
These are what we should
These are what we should have been building:
http://images.google.co.nz/images?hl=en&q=straw+bale+building+pictures&u...
@Jacko, yeah French but NZ
@Jacko, yeah French but NZ citizen for a few years now and I certainly enjoy my beautiful mountain views from my beautiful, leak-free, mortgage-free home on this beautiful morning.
My question was, why are the people responsible for this mess not the ones having to pay? Ie, not the end-consumers, not the taxpayers, but the developers/builders/whoever else built and sold these faulty products. Although I am not affected and don't care that much either way (whatever the govt does with my tax I won't get to have that money anyway), I can't help but feel a bit sorry for the people whose lives have been ruined.
The point I was trying to make is - why are faulty houses treated in a different way to other faulty products, eg as mentioned above cars, contamined food products etc. As Steven pointed out above, home owners pay councils a whole lot of money to supposedly get a "house WOF". A house may not be wrapped in a pretty plastic packaging but the way I understood it, a LIM report/code of compliance certificate/building report are basically the equivalent to the various EU/US "compliance" stamps you can see on the packaging of pretty much any item you buy, while an optional valuation by a registered professional would be the equivalent of the barcode or price tag of the said item. I guess what I am saying is where does the "caveat emptor" argument stop? If one had to check, take apart, analyse every single item they ever buy we'd spend our entire life doing it! Not to mention even the smartest of us just can't possibly be an expert at everything. Hence the need to sometimes delegate. OK, that's something I'm really crap at but I'm working on it. Do you check the type of fuel you put in your car at the station is the correct one for your car? If not and it blows up, would you expect people to tell you "too bad, caveat emptor, take your fuel-type analyser next time" or would you expect the petrol station owner/supplier to be held accountable? Could someone please tell me where the difference is? I promise I am not that thick so if you do explain I should get it.
And finally, although I am of course incredibly intelligent (where's the "wink" icon when I need it?) I am not so arrogant that I would say I know for certain I would never have possibly got caught in buying a leaky home and that people who did must ALL be stupid/greedy/mentally retarded etc.
PS: no leaky homes in France as far as I know. And construction is solid masonery (no earthquake issue) so I suppose even if they do leaks they don't rot!!
And these: http://images.google.co.nz/images?um=1&hl=en&
And these:
http://images.google.co.nz/images?um=1&hl=en&tbs=isch%3A1&sa=1&q=rammed+...
Read these articles to get
Read these articles to get a better understanding of the issue.
http://pc.blogspot.com/2009/11/leaky-homes-part-1-myth-of-deregulated.html
http://pc.blogspot.com/2009/11/leaky-homes-part-2-whats-going-on.html
and remember - all houses
and remember - all houses let water in. It is how that water is dealt with that is the key.
I'm amazed that more of
I'm amazed that more of these places haven't gone up in flames.
Who on earth would want
Who on earth would want a house with monolithic cladding? Most of the leaking houses are in wannabe upmarket areas.
If anyone is going to
If anyone is going to get gouged on this, how is it not the people who made a profit builing and selling these houses?
If my taxes (and my daughter's taxes, and her childrens' taxes) are going to be poured into a government scheme, I'd prefer it to be something like education or R&D, not shoring up property prices; alas, Labour and National are interested only in not upsetting that part of the vote which is balls-deep in property.
And to solve the problem
And to solve the problem of recycling old bottles :
www.agilitynut.com/h/otherbh.html
And here is where the
And here is where the money could have come from...If...THEY...had not wasted it.
Just add it to the LIST...of wasted funds.........at our expense.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10636760
Brown-knows....or is that brown-nose.....everything....and Nick-ed....yer money.
All gorn...and all gormless.
LUCKY we have deep pockets.....EH...NEW ZEALAND...
Wakey Wakey.
@Fairfax Fist off I never
@Fairfax
Fist off I never asked for a bailout. When have I ever asked for a bailout? All I said was that the Government can borrow monies more cheaply then anyone else in NZ. I’m all in favor of low interest loans that need to be paid back eventually. And the litigation will drive the price up from $11 billion to somewhere north of $25 billion when it’s all said and done. That is $25 billion that only benefits lawyers and bureaucrats and being a Libertarian I NO NOT like the idea of $10+ billion going to bureaucrats. If you prefer a market solution, like I do, then get this out of the court system where it will only wallow and fester.
As for your attempt to make it seem my argument is somehow a “straw man” I will remind you of Jacko’s recent comment that this is a problem of scale. So if you take an $25 Billion problem with 90+ thousand families effected in a country of 4+ million and some how think I’m making a “straw man” argument then you sir are suffering form logical fallacy fatigue.
Fair point Troy...no reason the
Fair point Troy...no reason the govt could not arrange for low interest loans...trouble is the rotting buildings range from minor problems to bulldozing jobs. It would need a whole new beaurocracy to do the managing and we all know what a bloody stuff up the govts made of the problem so far.
Better to have a bureaucracy
Better to have a bureaucracy that is contributing to building something then a bureaucracy simply pointing fingers. All regulation is prone to capture…I just want one that is contributing to GDP.
@FFS - I did read
@FFS - I did read the leaky homes blog (quite a while back) and I don't believe it answered my questions regarding why the people responsible were not made personnally liable for the faulty products/services rendered.
Oh well, it seems my question "where does the “caveat emptor” argument stop?" and the other ones will remain unanswered. Strange, seeing there are many smart, opinionated people who also excel at argumenting their points, posting on here.
@Elley, you ask, why are
@Elley, you ask, why are the people responsible for this mess not the ones having to pay? IMO, one possible reason is, because cracking open whatever structures and shelters they have and are using to protect themselves, (if at all possible - difficult) and making them pay, would probably add some unwelcome pulling pressure on the rug under the floor of our national ponzi scheme (property/housing), essentially the same reason why government wants to bail this issue. So they are between a rock and a hard place (the banks) so to speak. I think it's been the same with the deposit GG scheme, while the banks themselves are stable, but if particular finco's flop (maybe an SCF or so?) it's more unwelcome tension on that rug. Add in some cronyism and incompetence, and hey presto.
@Troy, my scale comment was about comparing NZ to the scale of smaller entities in larger countries, where stuff like this can happen, http://www.rollingstone.com/politics/story/32906678/looting_main_street (Posted by Waymad on todays Ten at 10.) There are similar shades and dimensions involved. The smaller, closer, "cosy" things are, the easier such problems can occur. I sympathise with your situation, if there were no rules and regs, sure you'd/we'd all become much more adept at judging what was in the packet before opening it. But when the label implies a degree of quality, which you've paid for in taxes, who could blame you for not being as critical in evaluation of what's in the packet before you open it? Although many Kiwis have been hit with this problem, for immigrants there maybe a cultural issue here as well; where coming from a non-first world country you'd expect this kind of issue to be better governed in NZ, as it's supposedely a first world country. Or, if coming from a first world country you might expect similar standards of government applying to this country. But sorry, we are not a first world country now and so it would pay to actually double check what's in the packet before opening it. We have great views, but don't trust our labels. I hope you can get fixed up, good luck.
It's a curly one alright.
It's a curly one alright. My first gut reaction to this was "if somebody buys a house that turns out to be leaking, surely that's tough bananas?" Why should the government have to fork out for it, or even look to provide special loans to cover it?
Then again, I thought back to when my wife and I (from the UK) first started looking to buy a property. My wife particularly had been horrified by the state of most traditional weatherboard homes (no insulation, single glazing, no heating, damp etc...) and was much more interested in looking for a "newer, cleaner, warmer, more sustainable" property.
So we rented one for 6 months - it was a beautiful executive home just West of Auckland, only a couple of years old. We seriously started looking at buying one. Then we had 2 squalls blow across and we were horrified to see water coming in through the front door and pouring through the light fixtures in the living room and kitchen. Then we started noticing the dark, damp patches coming through on the exterior plaster cladding and realised that virtually the whole development was the same.
We ended up buying a nicely renovated 1960 weatherboard property a few minutes down the road, insulating it to the gunnells and sticking an HRV in to eradicate the damp. It's great!
HOWEVER. We could VERY easily have been tempted to purchase that leaky home, and neither my wife nor I are completely stupid. There's no way we could have afforded to get it fixed up. I don't know what we'd have done, to be honest.
So I do feel really sorry for people who have genuinely been suckered in. It must be a nightmare. Even being given a favourable loan to help get it all patched up is not really much consolation. People often rely on their property to act as a foundation for their retirement. Fat chance of that, if you've had to effectively pay twice for the house due to replacing the cladding.
So I wouldn't be against there being some form of "last resort" scheme provided by the government. However, it would have to have some stringent criteria. If people can help themselves in any way, they should do that first.
@Elley The problem is that
@Elley
The problem is that I have never seen such distain and wide spread social reciprocity for something that the data clearly shows is a man made natural disaster.
Everyone who builds a house,
Everyone who builds a house, pays a percentage of the building value to BRANZ
Building Research Levy
The Building Research Levy Act 1969 authorises the levying of building contractors to provide money for research into improved techniques and materials for use in the building industry.
Therefore surely they have some accountability in this. This is why when you now build a house, it's cladding system is totally over engineered, with a cavity. Your old state houses don't have special cavities, and they don't leak.
Also the other party is the manufacturer of the materials, who provide special building details for their products, to show how they should be used. If they were built in the way that was specified by the manufacturer, and they still leaked, then surely the manufacturer has at least some accountability. There is one main manufacturer of this monolithic cladding,l but it doesn't seem anyone is going after them.
@Mozart It is not actually
@Mozart It is not actually replacing the cladding that costs, but fixing the structural issues caused by the water to the structure, under the cladding. Replacing the cladding itself is relatively cheap, compared to rebuilding underlying problems, and redesigning the roof and flashings to prevent it happening again.
How would an extra $23bill
How would an extra $23bill be considered against our sovereign credit rating? Would this in turn affect those low interest loans?
It is quite clearly not a natural disaster, was my point earlier, but a cluster stuff up, which I would suggest was driven by the two emotions cliched greed and fear.
My point is that while there is a lot of sympathy for people in this situation, I struggle to see why the majority should fund the solution?
I dont necessarily believe that the end owners should bear full responsibility. There simply must be recourse to get compensation from builders, architects, suppliers. Just like the finacne company debacle where the directors are in court, and a host of regulatory changes are afoot...
Maybe I am just bitter at having to sit through all of those dinner conversations and property shows that say "you can't go wrong in property".
Leaky homes could actually increase
Leaky homes could actually increase property prices as they are effectively removed from supply. The government should have done something during the height of the recession in lieu of a stimulis package - wonder if anyone mentioned it at the jobs summit.
Why not use all of
Why not use all of these beneficiaries that we have lying around currently doing nothing, and put them through proper courses that will give them the appropriate skills to fix these kinds of problems. There must be thousands of people in this category.
We already pay these people to do essentially nothing, so why not continue to give them the same amount of money to fix these problems with leaky homes. This work of course would all need to be supervised by suitably qualified people (if they actually exist) to ensure that the problem does not occur again.
The companies that provided these shoddy products, i.e. dryframe timber and other sub-standard building materials should be forced to provide all of the necessary replacement material free of charge or face being Nationalized or bankrupted. If Nationalized, all future profits from the enterprises would be ploughed back into fixing these problems. Any further costs related to the correction of this problem should be extracted from the building companies and insurance companies.
Any residual costs could then be provided to the homeowners at a reduced interest rate partially subsidized by tax-payers.
The net result would be a significanty reduced bill to the tax-payer as a result of this stuff up, blame apportioned to the materials companies, builders and insurance industries and an army of qualified tradesmen.
This would of course be hard to manage, but would cost far less that the 25 billion dollars being talked about here.
@Jacko, thanks for the explanation.
@Jacko, thanks for the explanation.
@Mozart, agree with everything you said.
To me, it seems clear that the people who allowed leaky houses, aka faulty products, to be built should take responsibility.
On the other hand, if that is not going to be the case and instead of being dealt with privately it is dealt with through taxes (ie govt bailout), in what way is that different to some of the other things our taxes are used for? I mean, I don't own a leaky home, but I also don't smoke, don't drink, don't do drugs, don't over (or under) eat, don't sleep around, don't gamble and don't do anything criminal or illegal (yes I am very boring). Yet I am pretty sure my taxes are partly used to pay for healthcare and prison to treat or rehabilitate those people in society who do take part in these things and who it can be argued brought on themselves the consequences of their behaviour. In other words in their case "we fund the solution" to use Fairfax's words. In what way are leaky home owners any less deserving (for lack of a better word)?
I think the government bailing
I think the government bailing out leaky home owners, by possibly giving out interest free loans, is just another example of how NZ favours house investment, over all other forms of investment. If they are bailing out home owners due to poor government policies, then they also should be bailing out finance company investors, for the same reason. Some of those finance company investors are also leaky building owners, so have been hit by two major gov failures. The problem is solely that NZ as a country can't afford to pay out, as if they do, then something will need to be cut. eg education and/or health
Also a lot of people have purchased leaky buildings, knowing they were leaking, but got them very cheaply as a result. They will then end up benefiting from all this.
@Elley You’re bringing up a
@Elley
You’re bringing up a point that I have been trying to convince people on this board. The leaky home issues falls into that unique area that is covered by the social contract with government. Would you trust a “private” military protecting NZ? As much as I like limited government, there are just certain duties in which only government can fulfill. Most of these involve extreme long term infrastructure. Granted government is not always very efficient, effective or flexible; however government doesn’t have shareholders to answer too…so losses are not an issue. I think recent US history has clearly illustrated the perils of privatizing and deregulating everything. There are just a few core fundamental services that only Government should and can take responsibility for. Joint Government/Privatization ventures do work if the contracts are entered into properly. The internet is one such example.
Disaster recovery is one such social contract where Government is the payer of last resort. We can argue and point fingers until the cows refuse to come home, but that is not going to get the problem fixed today, when its cheaper.
Why should the government pay
Why should the government pay when it was the councils that signed off the buildings???
Good for you Dogma...glad to
Good for you Dogma...glad to see somebody thinks govt isn't another word for circus.
Wally, I also would much
Wally, I also would much rather the responsible parties paid up. However it seems they won't (liquidated/fled overseas/declared bankruptcy/changed their name and wear a wig/whatever). IF the govt decided to do a bail out what I am wondering is, in what way is it different to all the other (not-so-deserving) people taxpayers fund? Also nobody still has answered how far should we take the "caveat emptor" thing.
Robby, sorry but I don't buy the comparison with people who've lost a lot of money in finance companies (except maybe in the case where people knowingly and purposefully bought a leaky house, if that is possible, and therefore gambled with their or their bank's money). Anyone knows that the reason why finance companies offer higher returns is that there is a certain degree of risk involved. Same with shares on the stock market, we all know that as much as we might study the performance of one particular stock or company, at the end of the day it is very difficult to predict where its value will go (or else we'd all be super-rich). On the other hand, Jacko was right on the money when he pointed out "if coming from a first world country you might expect similar standards of government applying to this country". Well, of course. I have never, ever heard that buying a house was "risky" in France. Sure, you might buy one with more or less potential depending on the area you go for, but you expect it to last for a lifetime in 100% of the cases (and it does). Trouble is, it seems that people in this country seem to think it's quite OK to build a house that will only be good for 10, or even 25 years. I personnally find that amazing (and a 7-year MB warranty? I mean seriously...). So maybe it's down to culture and maybe those who've been most affected by this are immigrants who arrived/bought at the wrong time???
@ Elley I would agree
@ Elley
I would agree with the cultural analysis. There seems to be a deep rooted "Haka" mentality in NZ. Basically "if I don't know who you are then get out of my way. But if i do know how you are then you can have the shirt of my back". It’s very schizophrenic. You can witness this mentality in play while driving around Auckland. Motorist hate ALL non-motorist and would just as much run over a pedestrian then give right of way. That is why you have to have all the insane rules to governing right of way. If you don’t tell them what to do they will just run you over. Just watch what happens at a four way intersection when the lights go out. LOL!!
So I’m not surprised when I read that people here would rather turn there back on what should essentially be the safest invest a person can make with little or no sympathy. “GET OUT OF MY WAY! WHY SHOULD I CARE?!” Unless of course it effects them personally then BAM they are very sympathetic. It’s a sad day when Stocks, CDO’s and CDS’s are considered safer investments then the Housing-roulette game here in NZ.
@Elley and Troy, the same
@Elley and Troy, the same type/shape of problem runs through the issue BH describes here, http://www.interest.co.nz/ratesblog/index.php/2010/03/29/have-your-say-s...
Re. your comparison to failed fincos, in many cases the label deliberately obstructed information about the quality of the thing in the packet, and the regulator did .... yep, same as the people/regulators we fund with our taxes to avoid issues like the one being discussed here - yep, bugger all. My view is, if regulators can't do their job, then let's not have regulators and reduce my taxes (rates) accordingly so I can spend on a consultant to do the job I thought they were supposed to be doing - that is provide a foundation for confidence in a product, investment, venture, house, whatever. However, we are where we are and so lets see them perform. As I said, enjoy the views, but beware of our lables, just because we are so, so 'pure', don't get conned into actually believing that, because even the stuff and products we market as 'pure' are increasingly at risk of being less and less 'pure' by the day.
@Jacko, thanks. It is sad
@Jacko, thanks. It is sad to see that pretty much everything and everyone in pretty much every sector and at every level is corrupted. Maybe I should stop reading the blogs on this site after all, it's too depressing. Having one's head in the sand might not be that silly. There may well be an even bigger imminent GFC, complete economic collapse or other disaster but at least I'll enjoy life in blissful ignorance in the meantime. Well, it might be too late for the "blissful ignorance" bit!
@Elley Anything you buy or
@Elley Anything you buy or invest in has risks. Thats life. However we have policies and government organisations in place to protect citizens, from failures in both of these situations. In the case of finance companies, we had the securities commission, who have basically admitted now after the fact, that they didn't have the resources or policies to do much about these finance companies Therefore changes have now been made after the horse has bolted. Most people who invest today in finance companies are infact protected by the government guarantee, and some have been paid out by the tax payer for those that have failed since it was setup. It is those that missed out on this gg coverage, solely due to timing, that have missed out.
Also finance companies were not offering much more of a percentage return on the investment, than a traditional bank, but investors were led to believe that they were safe and withstand all conditions asnd it was very low risk, and many used credit ratings that were confusing. A BB+ sounds like a good rating, but it isn't actually investment grade if you read the fine print on the credit rating agencies website.
Also remember that many people invested in finance companies , from advice by their financial advisors. If you can't trust a professional in the area, such as a financial expert, who can you trust.
When you buy a house, you hire a building inspector to pick out the problems with it, however many failed to pickup problems. Some had professional indemnity insurance, but many didn't. But it shouldn't be left to the tax payer to bail these people out. Instead the gov should be going after these building material companies and developers who have built on the cheap. I don't really blame the builders, as they are just provided with instructions, and they do what they are instructed to do. Some however have made construction mistakes, which have led to the failure, but that would not be the majority. As a building professional myslef, I can easily pickup whether a building is at risk of being a leaky building or not. Often the flashings around the windows and doors are a telltale sign.
You are also incorrect about the lifespan of a building. Infact all buildings in nz under the NZ building code, the current design life is a minimum of 50 years. The 7 year warranty you refer to is a private organisations warranty period for picking up and fixing building defects, and has nothing to do with expected lifetime of the building.
@Jacko Well said. Yes we
@Jacko Well said. Yes we pay taxes for these organisations to work for us, and to protect the citizens.
@Rob, well said too, Instead
@Rob, well said too, Instead the gov should be going after these building material companies and developers who have built on the cheap.
@Elley, why do you think gov won't follow Rob's suggestion?
Must get back to that crony, whoops sorry, cosy wee place we all call home.
@Rob "it shouldn’t be left
@Rob "it shouldn’t be left to the tax payer to bail these people out. Instead the gov should be going after these building material companies and developers who have built on the cheap." I couldn't agree more but they don't seem to.
Having just built a new home (wide eaves, traditional roof etc yet my poor husband gets to be sent in every roof area on every rainy day coz I'm a tiny wee bit paranoid about the leaky issue), it is great to know that a building is supposed to last longer than what I thought. My comment was based upon what several of the tradespeople we talked to told us, including some very experienced "old school" builders (not the actual building company). Maybe they were being melodramatic but I don't know. I shall wait and see whether our house is still standing in a few decades (I know, that's a lot of trips in the roof).
@Jacko - I am not
@Jacko - I am not an expert whatsoever on the topic but if you mean why don't I think the gov will "go after these building material companies and developers" my understanding was that this wasn't going to be done or had already failed (due to said companies being able to declare bankruptcy and the actual people behind them being able to get away with it due to having set up "smart" structure to protect themselves from personal liability). If the gov does do this and actually managed to make them pay that'd solve a lot of (all?) problems (use of tax payers money issue + leaky home owners issue). But we wouldn't read about the burden being shared between the govt/council/home owner in the papers if the aforementioned companies (or their directors) were going to be made to pay, would we?
@Elley, even getting past any
@Elley, even getting past any funds sheltering, it's hard to bale up y' mates, especially if baling up said mates means other mates/voters/supporters get a serve too, eg. the banks and other property owners, as assets get sold down to fund compensation. I don't think it is as easy as it looks, hence the messy, inequitable solution being proposed.
The whole state of affairs
The whole state of affairs sounds like a classic case of socialism for the rich. You know the rest. Personally I think if money must absolutely be spent, then fix just the apartments and leave the McMansions to rot.
Thank you for this very
Thank you for this very informative article of yours. You have explained everything well. I appreciate that you shared this to us.
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Regarding the Have your say:
Regarding the Have your say: Should the government provide interest free loans for leaky home owners? | interest.co.nz topic, Home inspection services can provide you with valuable information on your desired home. When buying a house, there are many details that the potential owner has to know-from its wiring and plumbing to the roof.
What about taking a class
What about taking a class action against James D Hardy for there misrpepresenting their low maintanence weather tight product? under the consumer guarantees act?