Leaky homes are back in focus ahead of Saturday's election; Nick Smith has asked officials to look at extending the 10% equity Welcome Home Loan scheme to leaky home owners; RNZ running series on the issue

The leaky homes crisis is back in focus ahead of Saturday's election, with a series of reports by Radio NZ highlighting the continuing plights of many home owners struggling with remediation costs.

Building and Construction Minister Nick Smith says officials are due to report back next month on whether the government could extend its low-equity Welcome Home Loan scheme to cover those still affected and facing exceptional circumstances.

The scheme allows for 10% equity mortgages for borrowers who otherwise wouldn’t be eligible for them due to circumstances including their earnings. The loans are guaranteed by the government.

RNZ on Monday highlighted the plights of several Manurewa families at risk of losing their homes because they were unable to make initial down payments to their body corporate of more than $100,000 for repairs.

One townhouse owner said her bank had turned down a request for funds. They’re looking at a repaired house valuation of $465,000 and a mortgage that they’ve already had 10 years of $489,000.

Another report Tuesday highlighted how some homeowners on the North Shore were facing recladding bills of $270,000 and who were not eligible for council or government help. One advocate said there had been suicides from the pressure imposed by leaky homes.

People had been forced to sell their apartments or risked being sued by their body corporates if they were unable to pay their share of the remediation costs.

An advocate said these homeowners had taken their plight to Northcote MP Jonathan Coleman, asking for the government to offer no-interest loans for repair work, which homeowners would repay when they sold their homes.

Coleman had sent them on to Building and Construction Minister Nick Smith, who was reported to have said the government was looking to extend a loan scheme to these owners. Asked for clarification on this, a spokeswoman for Smith said he had asked MBIE officials to look into whether the government’s Welcome Home Loan scheme for first home buyers could be extended to leaky home owners.

The scheme would allow for these people to access 10% mortgages, but they would still be faced with regular finance costs from the eligible banks allowed to issue Welcome Home Loans. Read the full statement from Smith’s spokeswoman below:

Support for owners and occupiers of leaky homes was extended in March 2016 to ensure assistance is available for families affected by leaky homes who otherwise would have been unfairly excluded: https://www.beehive.govt.nz/release/leaky-home-support-extended

In the six years this scheme has operated it has helped nearly 4000 homeowners repair or start repairing their leaky homes and eased the cost of the burden of repairs for owners.

The Government has contributed $73.16 million to remediating leaky homes so far, with a further $22.49 million approved.

The Minister has looked into several examples of people affected by leaky homes and wanting assistance with the cost of repairs. In each example, the properties had appreciated significantly, giving sufficient equity to repair their homes while still retaining equity.

The Minister has asked MBIE to explore the use of the loan guarantee scheme, called Welcome Home Loans, to assist in exceptional circumstances, both for buildings requiring earthquake strengthening under new legislation and also for people who may be struggling to raise mortgage finance for leaky home repairs. This does not have the Government paying the cost but means homeowners can raise the finance to have their home repaired without losing it.

Officials are due to report back to the minister next month on these potential extensions of the Welcome Home Loan scheme.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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9 Comments

Leaky homes never seem to cease. There's still recent commercial work that is leaky as well. I find it concerning that there's still poor design being carried out.

If the Government is thinking about interest free loans they should also think about all the elderly that are struggling to come up with money for earthquake strengthening their apartments in Wellington. People on fixed retirement income can't just come up with large lump sums. Delaying works for decades might fit within a risk model but if a disaster occurs and people die everyone will become an expert and say people living in these buildings should have been given assistance.

I can certainly understand the need but it'll be a bit of a crazy world if we have a housing crisis young people are being told to "just deal with" while asking the government to provide financial assistance to older folks who already own their own home.

One instance the government is complicit - the other instance is an act of god

Old people conveniently die and the government gets the money back from their estate. Young people just go on and on.
Seriously the leaky home disaster hits everyone and families with kids worst of all. I would be highly irritated if a government failure wrecked my retirement (e.g. health issues including those created by leaky homes that were approved by my council) however I would be absolutely incandescent with a rage that knew no bounds if a similar issue affected the long term health of my grand-daughter. And that rage would be just the same if she wasn't the most magical baby ever born which she just happens to be.

...I would be absolutely incandescent with a rage that knew no bounds if a similar issue affected the long term health of my grand-daughter. And that rage would be just the same if she wasn't the most magical baby ever born which she just happens to be.

Nawww...that's really nice :) That last part, I mean, more than the horrifying scenario.

Yes, I've rented two new build homes in the last few years, both had leaks. I've been involved with two new commercial buildings too, and both leaked. Each took months to track down the source of the leak, and at least one of them still leaks. So not a good look really.

Buying any property involves some risk. A standalone house or an apartment can suddenly have problems but the difference is with the former the owner decides what to do and when to do it but with the latter you are in the hands of a Body Corp. So if you buy an apartment make sure you have reserve funds available just in case something goes wrong.

And wait for the next batch, the ones built in the last 4 years including as we speak.

If they're still leaking, then why do we bother paying all this money to councils? NZ houses are a joke. Metal window frames, not air tight, thin walls etc.