Double jeopardy in leaky-homes bill

Photo / Natalie Slade

Auckland ratepayers might have to pay twice to repair the same leaky homes under the Government's proposed plan meant to protect local authorities from legal action.

The Auckland Council yesterday exposed the loophole in its submission to the local government and environment select committee, which is considering the Government's Weathertight Homes Resolution Services Amendment Bill.

The bill would legislate for the Government's plan to repair leaky homes, under which the Government would pay 25 per cent of the bill, local councils 25 per cent, and homeowners the remaining 50 per cent.

Those who opt in would not be able to take legal action against the council or the Government, but could pursue legal action against third parties such as developers or builders.

However the bill does not absolve councils from liability for existing legal action, in which third parties can still sue local authorities for a further contribution towards the repair bill.

"This exposes the council twice," Auckland Council's claims manager, Sally Grey, told the committee.

"Firstly, to the homeowner [under the plan], and secondly as compensation to the developer or contractor ... This is demonstrably unfair. Ratepayers would have to pay twice."

Committee chairman Chris Auchinvole said the "double jeopardy" was probably an unforeseen consequence of the bill, and the committee would consider it.

The total leaky homes repair bill has been estimated at $6.3 billion - assuming a 100 per cent take-up of the scheme - and up to 80 per cent of leaky homes are believed to be in the greater Auckland area.

At the end of February, there were 3301 properties with active claims in greater Auckland.

Ms Grey said a maximum of 12,000 new claims in Auckland could be made, though she expected less than half that number to lodge a claim because the package was not a silver bullet.

"Not everyone will have a house that fails and not everyone will want to lodge a claim."

Ms Grey said not all homeowners would be able to afford a repair bill, but the plan would open the door for many more homeowners to repair their leaky homes.

Robin Gorton, who owns a leaky home, told the committee that he was not at fault and he should not have to pay a cent. Asked if he could afford to pay the bill if he entered the Government's scheme, he said: "The short answer is 'no'.

"My wife and I still have a $163,000 mortgage.

"We can't sell it. We have to stay here and keep paying the mortgage until we die."

A 2009 independent report by PricewaterhouseCoopers into leaky homes in 2009 found about 42,000 homes had been affected between 1992 and 2005.

About 23,500 of those would be eligible to be fixed under the Government's scheme.

A 70 per cent take-up would cost the Government about $1 billion over five years.

ROTTEN LUCK

* 42,000 homes affected between 1992 and 2005.

* 80 per cent of all affected are in Greater Auckland.

* 330 1active claims in Auckland.

* $6.3 billion estimate of repair bill.