Leaky home crisis sized at 42,000

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The Government has admitted that at least 42,000 homes are rotting from the outside in.

A long-awaited report into the leaky homes crisis was presented yesterday by Building and Construction Minister Maurice Williamson.

Despite there being an $11.3 billion bill for the problem, Mr Williamson said the Government had no legal liability and a rescue package could not be considered until next year.

The report, by PricewaterhouseCoopers, reveals that 9000 homeowners have no hope of any support to fix their leaky home because it was built more than 10 years ago. Under current rules, they are ineligible to make a claim.

The leaky homes crisis emerged after the early 1990s when new building materials were used and looser labour markets contributed to poor construction methods. The issues combined, leading to tens of thousands of homes and commercial buildings subsequently leaking.

The report found that previous reviews had significantly under-estimated the problem.

Findings included:

The total number of affected homes is between 22,000 and 89,000. The consensus estimate is 42,000.

Only 3500 affected homes have been repaired. Under existing policies, 69 per cent of the cost was being met by homeowners, 25 per cent by councils and 4 per cent by third parties, such as builders.

Many homeowners have not discovered they have problems because there are no visible signs. Others are in denial or cannot afford to face the problem.

Some homes have taken longer to show signs of leaking because they are in a drier climate.

"There is a view amongst the experts that the nature of damage and, hence, the cost of repairs is likely to be weighted heavily towards the severe end of the spectrum," the review finds.

"In this view, smaller and targeted repairs may temporarily resolve a visible problem, but experience to date suggests this will likely only postpone the underlying need for larger repairs."

The Government commissioned the report early this year and in August went into talks with local government to try to agree on a financial package of support. Talks broke down last month and the six-party mayoral group was reduced to two.

Yesterday, Mr Williamson said local authorities had told him they could not provide financial support.

"While this is disappointing, the Government believes that local authorities have a key role to play, and the door remains open for them to be part of the solution."

The Government had offered to fund subsidised bank loans to victims, with local government paying a fixed proportion of repair costs, Mr Williamson said. Despite the lack of agreement, an assistance package for leaky-home owners would still be taken to the Cabinet early in the new year.

"Central government has no legal liability for this issue. Nevertheless, we will act."