Leaky buildings bills clobber city ratepayers

The Auckland City Council has paid $41.5 million on leaky building claims and is in the process of settling another 148 claims, totalling $225 million.

The latest figures follow an actuarial estimate last October, which showed the leaky building crisis would cost ratepayers $321.3 million, or about 3 per cent of their rates, over the next 12 years.

Actuaries Melville Jessup Weaver, working for Local Government New Zealand, have put a $2.3 billion overall bill on fixing leaky buildings nationwide.

The council's finance committee chairman Doug Armstrong said the problem was still horrendous for the council, and he was looking forward to some relief from the new Government.

On the good news front for the council are two unrelated rulings from the High Court at Auckland, which found against developers Greg Nielsen and Brian Gailer, who might be forced to pay about $2.5 million for leaky building disasters.

The court pinned responsibility on Mr Nielsen for making decisions about poorly-built townhouses at Laxon Tce in Newmarket and ordered him to pay $1.2 million.

Mr Nielsen is appealing against the decision, but the council hopes publicity about the case will encourage developers who have been involved on a site to take more responsibility in the settlement process.

Homeowners' and Buyers' Association president John Gray has the judges' finding against the two developers.

The council has written to the Government asking it to support a local government initiative to focus on repairing homes, rather than continuing with the current litigious way of resolving claims.

Building and Construction Minister Maurice Williamson has asked the council to nominate an officer or officers to join an external reference group chaired by the Department of Building and Housing to research the size and scope of the crisis.

Once there is a clear picture of the size and scope of the outstanding weather-tight problems, the Government will plan a response.

Mr Armstrong said one action the Government needed to address was limiting council's future liability, otherwise councils would have no choice but to enforce stricter and more costly building rules to protect themselves.

Figures from the Department of Building and Housing show that on February 1, Auckland City accounted for 940 of the 2118 active claims in New Zealand.

WHERE THE MONEY HAS GONE

$41.5m settling 261 claims

$9.2m on legal and expert fees

$225m on 148 ongoing claims, including 43 apartment blocks and 105 single claims worth $44.6m