But wait, there's more

Harry Dillon of Reconstruct says the peak of leaky buildings is still two or three years away.

The real-estate brochure on John Gray's coffee table gleams with upmarket designs - modern townhouses and apartments with seamless cladding, sweeping balconies, and complex roofs.

Gray thumbs through the first four pages: "That's a leaker, that's a leaker, that's a leaker and that's a leaker."

These homes are not made with the cheap and nasty products of fly-by-night developers and cowboy builders. They are $700,000-$1 million homes in Auckland and Tauranga, with lap pools; designed and built by people who, however well-meaning, didn't know what they were doing.

Some are Mediterranean-style townhouses - but the Mediterranean design in the Auckland climate is not to blame, says Gray, the chairman of the Leaky Homes Action Group, and adviser to hundreds of homeowners. He points to some terraced houses with eaves and dormer windows which are just as problem-plagued.

The defects are obvious to the trained eye: lack of ground clearance, uncapped roof parapets, inadequate flashings around windows, cladding driven into the ground, handrails screwed into flat-top balustrades ...

Four years after the Herald exposed the country's homebuilding crisis, and two years after the Government changed the Building Act, leaky homes are still being built. It's a triumph of style over substance: homebuyers, like other shoppers, are suckers for style.

People know there's a use-by date with a dress, a pair of shoes, even a car, and, if something goes wrong, they can always take it back.

With a house - most people's biggest asset, retirement nest egg and security blanket - many still throw caution to the wind and rain. And it's far harder to get your money back.

It takes expert technical inspection to tell if a house is watertight. Even a building code compliance certificate issued by the council is not impervious. But many buyers still sign up without a thorough building inspection - and even these can miss the damp spot.

Reforms announced by the Government in the past month promise to raise standards on building sites and, when things do go wrong, make it easier for owners to repair their homes.

The three-year-old Weathertight Homes Resolution Service will be rebuilt from the ground up while those who work in critical areas on building sites will have to be licensed - and be liable for defects.

Council building inspectorates will similarly have to lift their game.

The reforms follow earlier changes to the Building Act, including the reintroduction of treated timber on external framing and the requirement to have ventilating cavities behind sheet cladding. In the pipeline are product certification, a review of the building code, changes to the Unit Titles Act (affecting multiple units) and a house warranty scheme.

So can homeowners once again look forward to making the biggest investment of their lives with confidence?

"We're one step up a 10-rung ladder," says Harry Dillon, manager of Reconstruct, one of the country's biggest house repair firms.

"I can show you [new] buildings that will leak in the future because the guys who are doing it are not educated.

"The peak of leaky buildings is still two to three years away."

Under current legislation, there's a 10-year limit from the time a house is built on leaky building claims, whether homeowners go to court or the Government's Weathertight Homes Resolution Service.

More and more homeowners are discovering they have a leaky home outside the 10-year limit.

Moisture and its bedfellows - moulds, fungus and decay - are insidious. Just one drip which keeps an area constantly wet can cause decay to spread well into the house framing - timber which was untreated after the National-led Government acceded to timber company wishes in the mid-1990s until the 2004 law changes. But it can take time.

"People's perception of a leaky home is pools of water on the floor and water dripping down the walls," says the action group's John Gray. "That's not the case."

Gray is the airline pilot who represented himself and six other owners against a bevy of respondents and lawyers in the Ponsonby Gardens adjudication last year, winning a $700,000 settlement. Now he helps other homeowners and has advised the Department of Building and Housing on both the Weathertight service reforms and occupational licensing. He has not yet convinced the Government to ease the 10-year limit on claims.

He attempts to console victims: "You are the lucky ones because you know you have a leaky home. Most people are none the wiser until it's too late."

The extent of the homebuilding crisis has never been quantified, despite that being a recommendation of the 2002 Hunn Commission of Inquiry. The official Government estimate is 15,000 homes. Industry sources say it's more likely 40,000 - most in the high-demand building areas of Auckland, the Bay of Plenty, Nelson and Queenstown/Wanaka. Christchurch, Wellington and Dunedin have their share.

The Weathertight service figures only hint at the scale and location of the problem. Since opening for business in early 2003, it has received around 4000 claims and resolved 500. New claims have dropped off as disillusionment with the service has grown.

Harry Dillon's firm is repairing 150 units at six sites around Auckland and he says not one owner is using the Weathertight service.

Most owners prefer court action - where they are diverted to confidential mediation and the outcome remains secret. But lawyers admit that those who enter mediation come out with less than half the money they need for repairs.

Countless others are in denial, fearing that conceding they have a leaky home will slash its value - or they are simply daunted by the system.

Still others don't know they have a problem.

A few are taking the money and running - emerging with less than the cost of repairs, they sell and pass the problem on to an unwitting buyer. With confidential mediation, the fact they have a leaky home is not recorded on the LIM report. And real estate agents simply don't ask if it's a leaker - if they don't know they are not obliged to tell.

The cost of the disaster is equally uncertain. The Department of Building and Housing has estimated $1 billion; industry sources suggest $5 billion.

The new loan scheme and strengthening of the Weathertight service is expected to give a better indication by drawing thousands more out of the woodwork.

"Claimants will be in a much better position," says Gray. "The full extent of the weathertightness problem with their house will be revealed, their house will be fixed and they will be under no pressure to take a mediated settlement. It will be in the respondents' interest to make a more meaningful settlement."

That's unless they are outside the 10-year limit or one of the unlucky thousands whose homes were signed off by private certifiers - who went out of business when their Government-approved insurance scheme collapsed.

Three years on, the bid to raise standards on building sites hinges on the insurance industry's readiness to back individual architects (design leads) and construction site supervisors (site leads). These individuals will be liable if things go wrong - not the developer or construction company. Gray says it's a big flaw and fears site leads will become sacrificial lambs.

Building Minister Clayton Cosgrove acknowledges that contract builders are vulnerable to employer pressure but says licensing will force them to stand up to developers and refuse to cut corners.

Cosgrove says it's "highly likely" insurers will provide a product to cover liable builders "because of the reforms and safeguards we are introducing".

He believes homebuyers will be happy to pay an extra few thousand dollars to cover the cost of an insurance indemnity scheme.

"What Kiwis have screamed out for is accountability and responsibility.

"My objective is that people feel confident they can get a decent builder and a home built right the first time and if they maintain it correctly they can sleep at night and have a good life."

Practitioner licensing is supported by the Master Builders Federation and the Certified Builders Association, who were consulted on the changes, although each has specific concerns.

Building inspectors, too, are expected to improve their oversight with new accreditation standards for local bodies.

But, says Harry Dillon, "you can legislate all you like but without education - from architects, to builders, product specifiers and certifiers - you are wasting your time."

Dillon sees the consequences of ignorance on the houses he repairs - such as builders who don't understand the science behind ventilating cavity systems, fixing horizontal battens, or driving cladding into the ground, so water can't escape.

"The level of knowledge [about repairs] in some areas is very poor." He cites a "very competent" Bay of Plenty builder who has little idea of decay and remedial systems.

"They are still building leaky homes right now," he says, citing an award-winning home which breached the building code.

To which Pieter Burghout of Master Builders responds: "We hear this but when we ask for specific examples we don't get them."

Dillon wonders where the qualified builders, council inspectors and assessors are going to come from to ensure the changes work. "How do you teach the educators that some of the things they taught in the past were not quite adequate?"

His firm is rebuilding a 200-unit apartment complex, costing millions, because of faulty capping on roof parapets and faulty waterproofing on decks. The owners are living beneath huge tarpaulins, entering their homes via scaffolding, enduring construction noise and dust while their homes are rebuilt.

"You can't tell the extent of the problem until you rip the cladding off," says Dillon.

"It was given code compliance even though there was insufficient ground clearance, elements not shown on the plans and many other non-compliant elements."

The owners decided to finance the repairs because their property values were rising. Auckland City ratepayers are likely, eventually, to foot the bill. But in some suburbs, owners can't afford the cost of repairs because the value of their houses has plunged.

"There's not a happy story comes out of this and it's tragic."

He welcomes the loan scheme - "anything that can get people out of unhealthy homes has to be good" - but doubts the building site licensing scheme will prove practical.

"Imagine the lead site person being personally liable for 10 years. You think they will sign the form - I wouldn't. It should be the person benefiting - the building contractor.

"Developers will always cut corners and employ the cheapest contractor they can. It's about maximising profit and minimising the spend. It's the culture in New Zealand which says 'take the cheapest price'."

He talks of rotting balconies four storeys up on a Parnell apartment block and says: "The Government will only take it seriously when someone dies."

Craig Follett, a specialist in plaster-cladding construction and repairs, says many of the problems can be traced to architects "doing fancy things. They look nice on the drawing board but they're impractical - rafters penetrating walls, relying on silicon to keep water out."

He says council building inspectors have much to answer for - approving houses that bear little relationship to the plans, missing obvious faults like lack of ground clearance.

Council inspectorates are under-resourced and many inspectors still lack the required skills, he says. He knows of apartment sites waiting 10 days for an inspection. "If you proceed you end up in the cart." Cladding, for instance, cannot go on until the ventilating cavity system is inspected.

"There are so many extra inspections required now and councils aren't resourced to do it."

Gray, an Airbus captain with Air New Zealand, agrees builder licensing does not go far enough.

"They've tried to use it as an umbrella to solve the problems of the industry but it hasn't been fully extended. You used to see it in the aviation industry where the pilot licence holder came under extreme pressure from the airline. If it happens in that area, where lives are at risk, it's going to happen in the building industry."

He wants certification extended to developers and building companies, with areas of expertise, lines of responsibility and reporting processes spelled out.

"There needs to be an organisational responsibility. Building companies and developers have to have something at stake as well."

He remains worried about the "staggering level of incompetence" in council building inspectorates.

"We're still seeing houses built without resource consent and without building consent. They still haven't educated the inspectorates sufficiently.

"When a person like me knows more about the building code than a building inspector there's something wrong."

But he's optimistic that the raft of changes, coupled with the reversion to treated timber, will produce fewer leakers and builders' fears about liability will ease.

His verdict on the reforms: "It's a big step up, it's very welcome, but we're not quite there."

For now, however, homebuyers' best defence is to be more circumspect. "Most people know they can't buy a car without an inspection yet they are happy to spend hundreds of thousands on a home without that level of inquiry."