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Leaky homes are still being built and a "dramatic overhaul" of the Building Act is needed desperately to end the crisis, says Building and Construction Minister Maurice Williamson.
The minister said he had been shocked at the extent of the problem since taking over the portfolio in December.
He had visited a new development in Auckland, which experienced builders had told him would "almost certainly" go rotten.
"I was shown cavities, walls and timbers ... untreated timbers being used. They can look at this and know that in two years they can rip off the cladding and it will be black and rotting.
"I thought leaky homes were a thing of the past that went wrong some time ago. But I don't think this is over by a long way."
Williamson said some of the risky building practices he witnessed complied with the Building Act.
"It desperately needs a major piece of work done on it."
Experts believe up to 100,000 buildings around the country may be affected by rotting, including large high-rises in Auckland.
Last week the Herald On Sunday revealed legal action was being taken by 255 owners of apartments in the 23-storey Spencer on Byron tower in Takapuna over alleged "defects", believed to involve leaking.
Home Owners and Buyers Association president John Gray said if proven it would be the biggest case so far, but he knew of others which would make it "pale in comparison".
These included a cluster of more than 300 units in central Auckland.
Engineering consultant John Scarry had also heard of large Auckland buildings plagued by leaking problems, including a 12-storey block where the occupants paid no rent for six months because it "leaked like a sieve".
It's not only residential buildings affected - two schools in Williamson's Pakuranga electorate are leaking.
Macleans College in Bucklands Beach is facing a repair programme which could take between five and eight years and cost up to $12 million.
Principal Byron Bentley said students and teachers faced problems every time it rained.
Pakuranga College principal Heather McRae said a two-storey block containing up to 10 classrooms had been confirmed as a leaker and reports had been commissioned on another two buildings.
"The biggest issue is the quality of the building. It isn't sealed properly and the timber wasn't treated properly. It's perfectly safe, but it's what is happening inside the building."
McRae said the suspect buildings had been constructed in the late 80s to early 90s.
"Obviously it's a big headache for the Education Ministry. I think there will be large numbers of schools affected. I expect in Auckland it will be a very big problem."
