Sellers cash in on leaky homes

Forty-two owners have sold their leaky homes, despite being in the middle of a Government agency's resolution process - and one has pocketed the settlement payout without doing the repairs.

The loophole has prompted warnings that buyers should ask direct questions of vendors and estate agents about whether the home has been subject to a claim to the Weathertight Homes Resolution Service.

Service acting manager Nigel Bickle told Parliament's social services select committee yesterday that it was possible for a leaky building owner to get a settlement payout, not fix the problem, sell the property, and for the new owner to lodge a fresh claim with the service. He confirmed there was no requirement for settlement payments to be used for repairs.

Forty-two houses had been subject to multiple claims to the service - 27 of which were in Auckland. But in only one case, also in Auckland, had the previous owner got a payout.

National MP Nick Smith asked whether that gave an indication that rules to require homeowners receiving payouts to fix the problem were needed. Mr Bickle replied that was one of the issues identified in a review of the service and its governing legislation that was underway.

"We are looking at what the options are in this area, and that will form part of our advice to the Government."

Leaky Homes Action Group leader John Gray told the Herald he was sure the problem was significantly bigger than the 42 cases cited by the service, and all prospective home buyers should beware.

He said many people checked the process offered by the service, and saw it was not working. The other options were to fund repairs themselves or go through the courts.

"If they are not in a position to do either of those, their only fallback position is to quietly perhaps give it a lick of paint and try to get rid of it. We know that is going on."

Mr Gray said it was illegal to sell a house without disclosing major defects, and in serious cases it could be classed as fraud.

He said the group wanted those getting settlements to be required to spend the money on repairs, except where a house was to be demolished.

Mr Gray suggested all home buyers should get a pre-purchase inspection.

Consumers Institute chief executive David Russell said everybody buying a house needed to ask the seller and agent directly if the house had been subject to a Weathertight Homes Resolution Service claim.

He also suggested people should make it part of their offer to buy a property that the home had not been subject to a claim.

Dr Smith said the loophole showed there was a "mile-wide gap" in the legislation. "The Government has basically destined the homeowner to a game of Russian roulette."

Meanwhile, Department of Building and Housing chief executive Katrina Bach told the committee leaky building claims to the service could take 15 years to 18 years to resolve.

After repeated questioning by Dr Smith, she said the department estimated the problem had a long tail.

"We think 15 to 18 years over time. If you keep on tracking on the current trajectory, it's got a very long tail, this problem, and it's better to think about some alternative or additional approaches to speed up resolution."

She said the system was not the best way to expedite resolution of claims and it could be improved.

The department estimates up to 15,000 homes could suffer significant leaks, with cost for repairs alone of $1 billion.


Claims progress

Weathertight Homes Resolution Service claims to November 23:
* Resolved: 471
* Closed: 793
* Remaining: 2581
* In mediation or adjudication: 493