17 May 2010

Govt seeks council support over leaky home repairs

10:15 pm on 17 May 2010

Taxpayers and ratepayers could face picking up half of the repair costs for leaky homes under a proposal outlined by the Government.

Prime Minister John Key says the assistance package is a financial lifeline for people stuck in the dreadful bind of owning a leaky home.

It is estimated that tens of thousands of homes were built that are not watertight. Due to problems with their design, building materials and construction, these homes leak when it rains.

The Government has increased its offer to owners of leaky homes, saying it is now prepared to pay 25% of the repair bill - a proposal it says will cost it $1 billion over the next five years. Previously it had offered to pay 10%.

Under the new deal announced on Monday, the contribution from local councils stays at 25%.

The homeowner would pick up the other 50% of the bill, with access to a government-guaranteed bank loan.

The Government assistance will only go ahead if local councils support the move.

Homeowners would have a choice to take up the financial assistance, or pursue their case through the current disputes system.

One estimate has the number of properties eligible for the scheme at 22,000, but Building and Construction Minister Maurice Williamson says if there are more, they will be catered for.

Owners think they can do better - lobby group

A spokesperson for a home owners lobby group says most people he has spoken to will not be taking up Government's latest option.

The president of the Home Owners and Buyers Association of New Zealand, John Gray, says on first look the package may seem like a good effort, but people he has talked to think they can do better.

"Generally, the majority were saying that they wouldn't take it. They see they have an opportunity to get more than an adequate recovery, or certainly a greater recovery than 50 percent, against the councils and other responsible parties and it's still worth their while to pursue litigation."

Mr Gray says homeowners are still expected to stump up 50%, and in most cases they are going to have to borrow that money.

"Sure, the Government's providing a Government guarantee, but clearly where people don't have equity, or don't have jobs, that is going to be a real issue if they're going to have to meet the standard bank lending criteria.

"We think on that account alone it may well fail for those who really want to look at this seriously."

Mayors supportive

Auckland City mayor John Banks is confident local government will agree to take part in the Government's proposal and has already spoken to other mayors in the region.

Mr Banks estimates the same cost for local government in Auckland could be about $1 billion.

Wellington mayor Kerry Prendergast says her council agrees in principle with the assistance package and believes it is the Government's best offer.

Mrs Prendergast estimates the cost to her council, with 200 of about 4000 possible leaky homes settled, to be between $120 million and $240 million.