Some leaky-homes owners are being fleeced by "cartels" of lawyers, experts and builders, according to a briefing to council bosses.
A document given to the chief executives of the 14 biggest councils says a growing number of leaky-home owners come out of the claims process without enough cash for repairs once legal bills and experts' fees are paid.
The paper was presented as consultant PriceWaterhouseCoopers put the total cost of the leaky-homes crisis at $11.5 billion, in a report understood to be with Building and Construction Minister Maurice Williamson. This is more than three times higher than the previous estimate, suggesting it is based on the cost of having to repair all 33,000 homes constructed during the period when buildings confirmed to be leaky were built. Previous estimates were based on 12,000 homes.
The paper to council chiefs says the process for dealing with claims is creating a growth industry for lawyers and experts. "We are seeing a rise in the number of claims where the homeowner is being managed by a `cartel'."
These cases involve lawyers referring homeowners to their own experts, who in turn obtain quotes for repairs from preferred quantity surveyors and builders.
The paper lists examples:
A building expert estimated repairs to a house at more than $350,000. The house cost $160,000 to build and there was no evidence of the systemic failure inferred by such a high repair bill.
Apartment owners were levied $80,000 towards a $8-million fighting fund for building experts and lawyers. It appeared the cash was solely for fighting the claim and the council found "no clear evidence" the millions in repairs that were claimed were required.
A consent application for repairing an apartment building, including work on fire safety, was found on inspection by the council to be unnecessary.
The claims come as councils in the six cities most affected by the leaky-homes crisis Wellington, Auckland, North Shore, Tauranga, Waitakere and Christchurch consider options put forward by Mr Williamson on Monday.
He has made it clear he wants to move cash from lengthy and costly litigation to repairing homes, but has refused to say what the Government has offered.
Wellington Mayor Kerry Prendergast said the examples in the briefing document showed some leaky-home victims were being rorted. "There are people trading on the financial and emotional vulnerability of people who are in the unenviable position of living in a leaky home."
She said it was critical that councils and the Government found a way to ensure money was spent on repairs.
Building and Housing Department weathertight services manager Jeff Montgomery said it was not unusual for parties to a claim to present different estimates, although they were always independently assessed by the service.
He was not aware of anything like the examples cited.
- © Fairfax NZ News
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