Leaky homes: $600m and rising

Ratepayers face a soaring leaky buildings bill as the costs to councils rise.

Six of the worst affected local authorities, including Wellington, now estimate their future leaky building liability at as much as $600 million and rising.

A report by the auditor-general says the full liability is "potentially much greater". Some have estimated it could rise to as much as $2 billion for councils.

An Oriental Pde apartment block is the latest casualty, and its owners are tackling Wellington City Council and the developers over a $4m repair bill. The owners of the 14 apartments, valued at about $2m each, say the building has been plagued with problems affecting the roof, balconies, cladding and other areas.

However, one of the developers says he cannot be held liable because the company through which he was involved no longer exists.

There is mounting pressure on the Government to intervene as the cost to ratepayers from the leaky building crisis rises a high-powered group comprising councils, the Treasury, Economic Development Ministry and other officials is assessing the number of leaky homes still in need of repair and the size of the total bill.

Experts have put the total cost of fixing leaky buildings at between $5b and $14b.

Wellington Mayor Kerry Prendergast said she expected news on "major solutions" from the Government in August.

Building and Construction Minister Maurice Williamson refused to comment but the Government is known to be looking at whether councils, and ratepayers, are bearing too much risk, particularly when builders and developers use shelf companies. The Government is also looking at home warranty insurance, to protect those who build their own homes. But that will not protect homeowners caught out by shoddy building practices in the 1990s and who may be running out of time to register leaky building claims under the current system.

While owners have six years to file a claim once the damage happens or is discovered, there is a statutory 10-year time limit on claims being lodged from the time of construction or renovation.

Registered Master Builders chief executive Warwick Quinn said changes to the building codes six years ago meant "we hope we've seen the last of the problem".

"We've got this period of time where we had leaky homes. With the current changes to the code they've been pretty much rectified."

But there was still a lot of uncertainty around how many leaky buildings built before those changes were yet to be discovered.

There have been 5767 leaky home claims for 7126 properties lodged with the Weathertight Homes Resolution Service including 354 properties with active claims in Wellington.

Wellington City Council has disclosed its "known" liability at about $26m but has not disclosed its potential future liability for commercial reasons.

The Dominion Post