Thousands of owners of leaky homes could miss out on compensation because of a 10-year time limit on claims.
Claims must be filed within six years of the damage occurring or being discovered, but no more than 10 years after construction or renovation.
As the largest number of leaky homes
was built between 1998 and 2000, Homeowners and Buyers Association president John Gray said there was a "steady and alarming increase" in the number of owners set to miss out on help.
"Thousands" had been denied any chance of compensation "by the stroke of a pen", he said. "They've fallen off the 10-year cliff and there's no hope for them."
Homeowners advocate Bill Duval said the problem was aggravated because fresh defects were appearing in houses repaired before the problem was fully understood.
The owners would face an uphill battle for compensation, although a High Court decision gave some hope.
In May the court upheld an appeal against a Weathertight Homes Tribunal decision to strike out a claim. Repairs were made in 1997, but further faults were found in 2003 and 2004.
The court found the damage was not fully understood at the time of the initial repairs and there was a serious question over whether the 10-year period should have restarted when further defects were found.
A review of changes to the Weathertight Homes Resolution Service in 2007 found a "significant question" over whether more leaky homes were being repaired as a result.
The changes were designed to fast-track small claims and for faster resolutions.
The June 2008 report, prepared for the Department of Building and Housing and released under the Official Information Act, said there was no evidence they worked.
It said stakeholders believed the service was focused on "apportioning blame and buying a way out of a problem as cheaply as possible, and that it discourages the fixing of housing stock".
The service refused to talk about the findings, saying a full evaluation was under way.
A spokeswoman for Building and Construction Minister Maurice Williamson said he wouldn't comment until the review was complete.
Before the election the National Party signalled it wanted more money to go into fixing homes, rather than funding the service.
A review due to be finished early this year is still "ongoing", but the service won't say when it would be ready.
Gray said the system only worked when claimants had the right advice.
Some claims were stagnating and compensation could be eroded by "disproportionate expert and legal fees".
Duval agreed the service had provided a windfall for lawyers and consultants.
Local Government New Zealand estimated the total cost of leaky building claims still outstanding at $2.3 billion.
By May, the resolution service had received 5767 claims, of which 2010 were still active.
The budget for the resolution service in the 2008/09 financial year was almost $17m.
Delayed reaction
Miranda Patrick is one leaky home owner to have her compensation claims struck out by the Weathertight Homes Resolution Service.
Some faults at her $1.3 million Wellington home were repaired soon after it was built in 1994, but officials didn't deem it leaky until 2002.
"They decided to start the clock ticking from the date I first called in a guy to have a look," she said.
Patrick spent $143,000 on legal fees and consultants before the case was struck out.
"That should have been told to me when they assessed the house as leaky."
She has yet to sell or fix the home and said she could be left with nothing after paying bills.
Time line limits compo
Miranda Patrick, with son Cam, has spent $143,000 on legal fees. Photo / Anthony Phelps
Thousands of owners of leaky homes could miss out on compensation because of a 10-year time limit on claims.
Claims must be filed within six years of the damage occurring or being discovered, but no more than 10 years after construction or renovation.
As the largest number of leaky homes
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