Cost of fixing houses 'out of control'

The cost of fixing leaky homes through lawyers and building experts has got out of control, says Home Owners and Buyers Association president John Gray.

"When you get a remediation job and it's costing in excess of what it cost to build the house, there's something wrong. I know of at least 40 cases where they've repaired but if they'd stopped and looked at the costs, it would have been cheaper to have knocked it down and rebuilt it from the slab."

He expected his organisation, which has about 8000 members and 2000 cases on its books, to be involved in about 10 demolitions in Auckland this year, including some big multi-unit buildings.

Mr Gray said many other cases were chewing up money without even getting to this point. Some home owners walked into his office after spending up to $200,000 in legal fees and getting nowhere.

"In effect they're in a worse position, both financially and in terms of their remediation project, than they were before they started."

The Government's latest report on the problem, Weathertightness - Estimating the Cost, says the average leaky homeowner who needs a full reclad spends $300,000 to repair the house, plus a further $110,000 on non-repair costs, including $75,000 on legal fees.

Overall legal fees make up 15 per cent of the repair cost and average $20,000 per claim for all stand-alone homes. "It is not uncommon that the legal costs can equal the cost of repair."

The report says industry opinion is that legal costs have increased significantly in the past five years, especially on bigger claims, and there are an increasing number of remediation experts. For an average house, their fees can range from $10,000 to $50,000.

Consultant Louise Cosgriff said the cost of repairing leaky homes was far too high, mainly because councils insisted that building surveyors had to supervise the work.

She believed experienced builders were capable of doing the work but were shut out by the narrow tender processes adopted by some surveyors.

Building surveyor Russell Cooney, a member of the report's expert advisory group, said fear of litigation had pushed costs up considerably.

"If you don't want to have any potential risk in the future, then you basically have to do a Rolls-Royce job, particularly now that the insurance companies and others have really closed ranks on the industry.

"In the present legal environment you cannot blame companies for acting in that manner."

But he said costs were also rising because builders found so many other problems when they opened up leaky homes, from structural engineering problems to missing insulation.