Central and local government share the blame for leaky homes so should share the cost

OPINION: The Home Owners and Buyers Association is dealing with the problem all over the country, writes John Gray.

Commentator Bernard Hickey has recently been in the media claiming the leaky-homes crisis is the "first shot in an inter-generational war" between baby-boomers and Gen Y, saying the costs of the crisis are generated by rich boomers but Gen Y-ers will be the ones picking up the tab. This only serves to confuse and hide the real issues.

Hickey implies that central government has no responsibility for this sorry mess. That is simply not true. The National government of 1990 introduced the 1991 Building Act following recommendations from the Building Industry Council.

Unfortunately, because of misguided ideology, the Government picked bits out of what was intended to be a comprehensive package and left out important aspects such as a home-guarantee scheme, builder- licensing and effective enforcement. It instead pursued deregulation of the industry and devolution of responsibility to the territorial authorities (councils).

We are not suggesting central government carries all responsibility, but it played a central role and thus has a case, at the very least a moral one, to answer.

In spite of the crisis becoming much more visible in the public consciousness, those who bought a leaking home since 2002 are not at fault for buying it. Many obtained pre-purchase building inspections that gave their homes a clean bill of health, only to find a multitude of problems later.

A lack of competencies in the pre-purchase inspector ranks also means that those who took steps to protect their interests were often badly let down and financially crippled.

A lot of leaky-home owners are immigrants who arrived with no knowledge of the problem. 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 and bought is ludicrous.

Then there is the suggestion that owners have had significant capital gain on their properties and so they should use some of this to fix their homes. Unfortunately for leaky-home owners, sitting on an asset with greatly diminished value as a result of the leaks often means they have no capital gain and in many cases the value lies close to or less than land value. Some are even worse off in that their home is on leasehold land in large in- fill housing complexes.

The suggestion that people in Gore struggling to pay the rent will resent having to fund owners in Herne Bay re- cladding their homes is way off the mark. Any thought that this is just an Auckland problem is wrong - the Home Owners and Buyers Association is dealing with problems all over the country. And if we accept that local and central government played a major role in this disaster then we are all collectively liable.

This problem does not just hit the wealthy. There are thousands of houses in poorer suburbs with leaky home problems and these will become slums if we do not come up with a solution.

This problem will cause a loss of wealth no matter which way it gets cut. The focus needs to be on removing costs from the remedial 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. Any solution must recognise the importance of our housing stock as the most fundamental element of our country's infrastructure and that which provides for the most basic needs of our citizens - safe shelter and security.

There is also the practical side of how we will get all these homes fixed. We hear nothing on implementing systems and processes or providing a platform for good builders to get involved.

The need outstrips the construction sector's capacity to respond. The number of houses that can be repaired each year is low. The Institute of Building Surveyors, for example, has only about 18 weathertightness remediation certified members.

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Real financial support will mean the creation of an enormous economic stimulus that will put affected owners in a position to effect repairs that will preserve and create jobs in the construction sector, retain skilled construction workers in New Zealand to cope with the future demand on the sector to provide new housing, and impart new and valuable skills that will serve New Zealand well in meeting the demands of future renovation and repairs.

We do have to acknowledge that the problem is a mammoth financial burden for the Government to contemplate, but the response will be a "slow release" - the $23 billion is not required overnight.

The association has long proposed the following:

* Low-cost loans with appropriate levels of means testing and an option for loans to be suspensory. The scheme must allow bodies corporate to borrow to fund repairs for multi-unit dwellings and dramatically speed up the process currently being held up by owners who cannot afford repairs.

* Establishment of a well-articulated remedial standard so good builders can fill the shortfall and the industry can respond to the demand for repairs.

* The insurance industry needs to be persuaded to change its policies with regards to not providing insurance cover to builders doing remedial work, which drives many good builders away.

* Building consent authorities need to work with owners and agree on the scope of the repair before undertaking work, then provide for inspection throughout the repair period. This will reduce costs and provide faster resolution.

* Banks need to take an active role in finding solutions because owners' problems will soon become banks' problems.

* Councils should stop spending money fighting citizens through the courts or Tribunal to defend the indefensible and focus resources on ensuring these houses are fixed properly, and team up with the owners to seek recovery from other parties responsible for the building defects.

* Establishment of a not-for-profit materials supply chain for leaky homes only to minimise costs to qualifying victims, and the country.

* A drive for education to the consumer and building consent authorities (and trade) sectors on the building process - something that has been lacking from government departments and is creating a vacuum in which building work is undertaken that will lead to secondary failures.

Sadly, Building and Construction Minister Maurice Williamson does not really seem interested in meaningful ideas or even meaningful talks with those affected. As a result, there is a risk of developing a solution in isolation that will be unlikely to achieve the objective of restoring value to the affected homes, and ensuring that they are safe and healthy for the generations to come that will live in them.

John Gray is president of the Home Owners and Buyers Association, a non-profit group providing support for homeowners and people buying homes.