Govt provision for leaky home financial assistance slashed by NZ$378 mln to just NZ$189 mln with just 3,544 homeowners now expected to get money

By Gareth Vaughan

A government commissioned report may have estimated there were up to 89,000 leaky homes in New Zealand three years ago, but the much publicised financial assistance package stitched together by the Government for leaky home owners last year is now expected to cough up just NZ$186.5 million for a mere 3,544 homes.

This is good news for taxpayers, but bad news for leaky home owners, with the Government's financial statements for the year to June, released yesterday, showing the Crown (read taxpayers') leaky home provision slashed by NZ$378 million, from NZ$567 million at June 30, 2011, to just NZ$189 million at June 30 this year.

Megan Martin, the acting deputy chief executive for service delivery at the Ministry of Business, Innovation and Employment's Building and Housing Group, told interest.co.nz - via a spokeswoman - that so far the financial assistance package has helped with repairs to just 30 households at a cost to taxpayers of NZ$1.3 million. Overall, 1,104 claims have been assessed with 885 claims, or 2,542 properties, deemed to qualify for the Government portion of the assistance package.

Martin says all up, the financial assistance package is expected to cost the Government NZ$186.5 million.

Treasury says the provision in the Crown accounts represents the Government's obligation to contribute 25% of agreed repair costs to eligible owners of leaky homes under the Weathertight services financial assistance package.

"The valuation of the provision takes into account claim experience which was previously not available, which is the main reason for the decrease in the provision since last year," Treasury says.

The scheme became available to homeowners from July 29 last year and eligible homeowners must lodge claims before July 29, 2016. On top of this, there's a 10-year limit for bringing a claim meaning a claimant's house must have been built, or altered if the alterations leak, within 10 years of the date of lodging a claim. Homeowners close to the 10 year limit have been able to “stop the clock” by lodging a correctly completed claim.

Leaky homes built in the 1990s excluded

However, to be eligible to lodge a claim the building work behind the leaking problem would have to have been done since July 29, 2001 when many leaky homes were actually built in the 1990s.

Treasury says the most critical assumption in estimating the Government's obligations under the financial assistance package is the number of eligible claims.

"As at June 30, 2012, after the first 11 months of the scheme, the actuary has estimated the number of eligible claims based on actual claim information and knowledge across the sector. This calculation projected that 14,721 dwellings would be eligible for the scheme (down 218 from 14,939 a year earlier)," says Treasury.

The second most critical assumption is the take-up rate for the scheme.

"It is assumed take up of dwellings will be 3,544," Treasury says, which is down 7,496 from the assumed take up of 11,040 a year earlier.

Treasury's third critical assumption is the assumed cost of repair per eligible home. The June 30, 2012 single dwelling estimate is NZ$336,741 and multi-unit dwelling is NZ$134,696. Prior to Parliament passing the Weathertight Homes Resolution Service (Financial Assistance Package) Amendment Bill in July last year, the Government had a wide ranging estimate for the average cost of repair, which ranged from NZ$27,500 to NZ$410,000 for stand alone houses depending on the level of repair needed, and NZ$16,250 to NZ$156,250 per unit for multi unit dwellings.

Up to 89,000 homes leaky, govt report said & an NZ$11.3 billion problem

A report by PwC, commissioned by the Government in 2009, suggested 42,000 dwellings were likely to be leaky homes and only about 3,500, or 8%, had been repaired. At the time of the PwC report it was estimated about 9,000 homes had fallen outside the 10-year liability limit. The 42,000 figure was a consensus forecast, with the PwC report estimating between 22,000 and 89,000 homes were leaky. PwC estimated the total cost of fixing 42,000 leaky homes, including repair and transaction costs, at NZ$11.3 billion in 2008 dollar terms.

The financial assistance package envisages the Government/taxpayers paying for 25% of the repair costs of fixing or rebuilding a leaky home, with local government ratepayers chipping in 25%, and the homeowner finding 50% of the cost with bank loans only possible for those who can meet standard lending criteria.

Homeowners signing up for the financial assistance package must agree not to sue their council or the government, although they're still allowed to chase compensation from other potentially liable parties such as builders, developers and makers of defective building materials.

Building and Construction Minister Maurice Williamson said last year the Government may cover between 15% and 35% of losses on loans banks make to leaky home owners under the financial assistance package, - if those loans go sour. The Government has also been running a leaky homes dispute resolution programme through the Weathertight Homes Tribunal since April 2007.

'More payments expected in 2nd & 3rd years of scheme'

Meanwhile, Martin says in its first year, the focus of the financial assistance scheme has been to help claimants "move through the process" to the repair stage.

"We expect to see more payments being made to claimants in the second and third year of the scheme as properties are physically repaired. Most homeowners who have existing claims prior to July 2011 have indicated they would like to be considered for the financial assistance package so they can, if eligible, have the weathertight issues with their properties addressed and fixed under the scheme," Martin says.

"To date, the Building and Housing Group and local councils have assessed 1,104 claims against the financial assistance package contribution criteria and found 885 claims, or 2,542 properties, have qualified for the Government portion of the assistance package. We are expecting more homeowners with weathertight issues to opt into the financial assistance scheme and in June of this year we completed an independent actuary review which estimated that 3,544 property owners will use it at some point in the future, costing the crown NZ$186.5 million," adds Martin.

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21 Comments

Great story Gareth.
cheers
Bernard

You are right there Bernard - interest .co.nz stands on the shoulders of one giant - that obviously excludes you Bernatd since seem to be semi-leaving.- so you are just balancing on one of Gareth's shoulders.

Are you sure you're not Wolly , 'cos that sounded 'like a right bunch of wally to me !

That's a low blow Gummy...a tainted Gummy Bear

A humble Gummy apology  Wolly  , for daring to impugn your good name , by associating you with Steph ........ oh shag ! ....... now Hulmey hates me gummy guts too ....
 
Bugger !          :-)

"This is good news for taxpayers"

Hardly! A whole bunch of numpties totally failed to grasp the very basic concept of caveat emptor, and relied on local government staff to determine if a property was built correctly or not, or worse, bought off plan without even checking out the builder. EPIC FAIL.

And now, despite personally buying several houses over the last 12 years and you know, doing some basic due diligence, like checking to make sure it didn't leak, my taxpayer and ratepayer dollars are compensating other kiwis for basically being greedy and retarded.

As you can tell, this doesn't please me.

This whole sorry tale sends out two very wrong messages - 1) you can be lazy, stupid, and greedy, and if it goes wrong you can get a handout from the government, and 2) if you think you want to have a crack at being a developer you can knock up something sub-par, fleece a load of gullible buyers, get past incompetent council inspectors (or buy them off), and then simply wind up the limited company and take your quickly-gotten gains away with you without fear of recompense.

Any wonder 40,000 of us crossed the ditch to (among other things) avoid paying anything towards this?
 

Did you finish your set , before hopping on the plane?
Silly question, of course, naturally you did!
 

Stan : You cannot escape governments and their meddlesomeness and bungling . You escaped New Zealand's current crop of wastral politicians , only to find yourself cradled in the socialist arms of Nanny Julia and kind Uncle Wayne in Australia .......
 
....... ultimately , there is no escape ....
 
You must learn to live your life well , in spite of the politicians .....

For once, Gummy Bear hero is right Stan....politicians are like bacteria..you can never rid yourself of them...many are downright dangerous if allowed to multiply...only a rare few have proved beneficial to humanity.

That's twice now you've used the words " for once , Gummy Bear Hero is right " ..... ..... so one of us must be a wally , Wolly ....
 
... looking forward to the Vice-Presidential debate between Joe Biden and Paula Ryan ?
 
Crikey , I was right .... and it's only October 11 .... wow , a personal best this year !

Goverments are greedy piglets suckling on the taxpayers teat until they have nothing but sore and chapped nipples.
Ron Swanson,  Parks and Recreation
Pawnee 

GBH - that last sentence of yours is very true !!  It's hard to achieve, living your life well, when the interference level is so high.
 
 

You are all correct - my thoughts are the same about having to fork out about $600 in tax last year to bail out a bunch of Queenslanders who are too stupid to understand the concept of 'flood plain' and even more amazingly, too stupid to understand why the defining feature of the style of house called 'a Queenslander' is the house being on poles about 10 feet off the ground. Gosh, I wonder why they used to do that?

I can only assume when Queensland calls itself The Smart State thery do so in a sarcastic self-depreciating kind of way. Although any State with a mining boom in their backyard who can still convince the Federal Govt to bail them out to a tune of over a $1 billion dollars might actually be smarter than I give them credit for.

Julia must have been stoked when she was watching the rain come down - the perfect God-given opportunity to buy a load of Queensland votes (with my non-voting tax dollars!).

Grrr.

...... if I can get me Gummified head around the provision , there's a 10 year limit on lodging a claim for government assistence ...... that is , your leaky house must've been built within 10 years of you lodging a completed claim form ......
 
As the act was set in place on 29 July 2011 , the 10 year limit extends backwards to houses built on / or after 29 July 2001 .....
 
..... why 10 years , is my question ..... why 10 , and not 8 , or 13 ?

In 2000 I had a house designed. Corrigated iron. Eves. Treated framing.
Designer looked at me strangely.
Part way through, the builder made an approach: Can I substitute insulclad for the iron?
Bugger off!!!!
This was before it all came out. I had a feeling that budget building materials were not the way to go.

While I hate to use the term "common sense" when you look at older houses they were developments over decades to survive NZ's climate and eq effects with minimal deterioration....So big eves, reasonable run off angles for the roof and wood weatherboards.  "common sense" should have told ppl building mexican style flat roof bungalows with complex shaped roofs, minimal protection on wall tops, internal features, internal drainage and using stucco that cracked rather than flexed was not going to end well.....but oh no ppl and architects wanted the "freedom" to design and/or reduce cost.....
So really thanks to giving ppl the "freedom"  we end up with over-priced, poorly designed and built crap..
ho hum.....
regards
 

In 2005, I could see the ass-covering coming, and cavity-walls are an ass-cover. Never been needed in history, go figure.
 
So I built to prove you could do several things; coolstore panels for the outer walls, have their own regime, no need cavity. Portal frame (I needed to address a snow-loading, used it to carry the mezzanine while it was about it) inboard of the walls (a la gymnasiums/halls), so no wet frame even if the panel was compromised. Untreaded macrocarpa for the portal poles and framing.
 
Caveat emptor is correct, but most folk are followers of the flock. It was a collective arrogance - we were somehow better than (above?) mother nature, beyond worrying about rain falling down.
 
 

I'll defend to the death (well, nearly) your right to build anything you like as long as it's not impinging on your neighbours right to enjoy his home and surrounds - you wanna built a house made out of paper-mache, or glass, or untreated timber, go right ahead, knock yourself out.

It's when you expect the government to bail you out for your lack of forethought and common sense that I get annoyed. I've seen some classics in my time - punters at Omaha building a house on a giant sand-dune and then expecting the council to stop the dunes shifting, or building a house on the flat paddock next to a river and expecting the council to spend zillions to stop the river flooding the property *shakes head in disbelief*

All valid points here but 2 issues I frequently think about here are :
1/ What have the 2 big building supply firms done to avoid their responsibility for supplying most of the materials?
2/ The fact that builders built these, then in response to the problem wrapped up their Limited Liability companies then just started up under a different name. 
Our Elected beneficiaries conveniently ignore these issues while volunteering to spend my tax $$ on leaky boxes. Grr.

Maybe it's the end of the week but most of the comments I read above, with the odd exception are poorly informed and appear to be using this column as a playground. As the owner of a plaster home, not classified as a leaker but I suffer under the stigma of 'leaky homes" I did my due diligence when I purchased the property some 7 years ago and thought I was purchasing a quality built home. What I have learnt since is the leaky home syndrome is multi faceted- we have and continue to have poorly qualified and trained builders, developers wanting to make an easy buck with no conscience combined with complicit councils with little in the way of checks and balances- not to mention the major manufacturers (who have remained relatively unscathed to date). The end result is the so called government/ council offering is a load of crock with so many flaming hoops presented that most home owner combatants give up- the only people benefiting the whole process is the lawyers and those remedial organisations supposedly offering solutions for a big price!! Life is short and the thought of spending so much energy, time and $$ for little net result can be over whelming for many of us and I'm not one for giving up or fighting for what is right!! No one wants to accept responsibility. It takes a huge amount of $$$ and energy to fight the bureaucrats.

Good to hear from you Ulander and commiserations. I wonder to what extent this govt scheme was set up to fail?