Insurance plan to beat leaks

By ANNE GIBSON and ANDREW LAXON

New home buyers face paying up to $10,000 extra for insurance cover against leaks or rots in their houses.

A group of top Auckland property developers said yesterday that anti-rot insurance could be the only way to give buyers peace of mind.

But the Auckland Property Group's suggestion was ridiculed as a waste of money by Consumers Institute chief executive David Russell.

"Isn't this a gross indictment of the building industry and design industry of New Zealand that they are essentially admitting that buildings are going to leak?

"They should be ashamed of themselves."

The Auckland Property Group is made up of big developers who do about $400 million worth of building in Auckland each year.

Its members include Metropolis developer Andrew Krukziener, Tim Manning of Taradale Properties, Nigel McKenna of Melview Developments, Jim Speedy of Covington Group and Kerry Knight of law firm Knight Coldicutt.

Spokesman John Parker, of Parker Brothers, said the building industry needed to offer a new type of guarantee for buyers, as insurance companies did not generally cover leaky buildings.

The group proposed that developers take out defects liability insurance.

The reinsurance firm involved would demand certain design specifications and a high standard of workmanship.

"We're scouting for the big firms in Australia, and estimate this could add as much as $10,000 to the purchase of a new unit," Mr Parker said.

"But then at least buyers know they won't have a leaky home or unit. We believe buyers will pay that premium for the peace of mind."

Mr Parker also confirmed Herald reports that growing numbers of angry leaky home owners are planning legal action.

He said the body corporates of many Auckland apartment blocks which leaked were suing developers, materials suppliers, building materials manufacturers and builders.

The litigation involved millions of dollars.

Mr Parker said the group wanted to improve design to combat the leaky buildings problem, which some experts believe could affect up to one in 10 new houses, particularly in high-density residential developments.

"We are looking at designing our own system to ensure plastered buildings don't leak and getting the Building Research Association and the Government to enforce the new rules."

Mr Parker said the leaky building problem was caused by many people at many stages in design and construction and developers were only partly responsible.

"We need to look at faulty workmanship by builders, poor design by unqualified architects who don't have the technical experience in waterproofing, the failure of the Building Research Association to identify suppliers of products and systems which are likely to fail and the use of untreated timber in exterior walls without a supporting system to compensate for it."

The Building Research Association's weathertightness manager, Adrian Bennett, said the association had not found any faulty products. Problems occurred when they were applied incorrectly or in unusual ways which the manufacturers may not have intended.

Mr Bennett described the $10,000 guarantee proposal as a back-door approach to the problem and questioned whether insurers would want to take on the risk.