Key confirms new leaky homes package

The package is expected to apply to leaky homes built between 1992 and 2005. Photo / Herald on Sunday

The Government will today present a new package to local authorities on how to divvy up payment of the billions it will take to repair thousands of leaky buildings, Prime Minister John Key confirmed today.

Mr Key told Newstalk ZB the package would be "significantly" more than the offer the Government made before Christmas, and which mayors rejected.

At that time, it proposed that homeowners should pay 65 per cent, councils 25 per cent and the Government 10 per cent.

Details will be announced at 4pm by Mr Key and Buildings and Construction Minister Maurice Williamson.

It is a pre-Budget announcement, suggesting it is a done deal, as Thursday's Budget has been finalised.

Mr Key told Newstalk ZB the sums involved had gone up "significantly" compared to the last offer.

"It's the best offer we can do."

Under the package homeowners would be able to get homes repaired quickly. However, they would have to give up their right to sue the council. Mr Key said homeowners who had sued had often had any gains eaten away by legal fees.

The Weathertight Resolution Service process had not been effective.

"New Zealanders will be able to see whether we've been fair or not because in my view we have...

"I think what you are going to see this afternoon is a genuine and real step forward from the Government in an attempt to fix their problem - a recognition that they have relied on others and we need to try and help them through this," Mr Key told TVNZ's Breakfast.

"We are working really hard, in an environment where Crown Law still says the Government has no liability, to say how do we help those potentially 89,000 homeowners who are stuck in a leaky home, who can't borrow because the banks won't lend to them,"

The problem was comparable to a natural disaster where the Government would be expected to step in.

"In this case I think it is of that magnitude."

A Government source told the Herald last night:"We are putting our best cards on the table, and we hope mayors will come to the party."

Auckland Mayor John Banks and Wellington Mayor Kerry Prendergast will be briefed on the package at the the Beehive before the public announcement.

The two mayors represent a wider group of mayors whose cities are worst affected by the problem. Those cities are Auckland, Waitakere, North Shore, Tauranga, Wellington, and Christchurch.

Mr Banks would not comment last night other than to say that he and Kerry Prendergast had been negotiating the deal for 12 months.

"There has been a lot work gone into this and we are very pleased that the Government has engaged with local government through Kerry and myself."

The package is expected to apply to leaky homes built between 1992 and 2005.

It is not clear whether the Government's cost will be in low-interest loans or grants but it is said to be different to the previous offer.

That involved councils contributing a fixed percentage sum to the repair costs and the Government underwriting the remainder as a bank loan with subsidised interest rates.

A condition of any package is expected to be that leaky home owners accepting help would not be able to sue the council.

A Herald investigation in 2002 alerted the public to the building disaster, which stemmed from National's relaxation of the building code in the 1990s, opening the way for new material, poor designs, poor workmanship and weak inspection processes.

A Government-commissioned report last year said only 3500 homes had been fixed and 9000 were outside the 10-year limitation period for legal liability.

The same report, by PriceWaterhouseCoopers put the number of homes affected at between 22,000 and 89,000 but settled on a "consensus" figure of 42,000 failures and a repair bill of $11.3 billion.

Industry experts later disputed the conclusions in the report, saying the figures of 89,000 leaky homes was more likely with a total repair bill of $23 billion.

The Bill

Official figures:
* 42,000: leaky buildings

* $11.3b: cost of repairs

Experts' opinion:
* 89,000: leaky buildings

* $23b: cost of repairs

- With NZPA