After all this time, John Gray isn’t far from where he started. The office of Hobanz, the Home Owners and Buyers Association of New Zealand, is a space in a bustling, well-appointed co-working centre on Auckland’s Ponsonby Rd. It’s just metres from the corner of Vermont St, where, in 2004, Gray discovered that his new house, part of a back-section development where he chaired the body corporate, was a leaky home.
As nice as the new office space is, the return to Ponsonby has been a retrenchment for Hobanz, the advocacy organisation Gray formed with Roger Levie in 2007. Hobanz used to have its own office and more staff. It continues to provide advice and services to people who find themselves in bad buildings, but the dream of it being a mass-membership organisation modelled on the Automobile Association has receded. Gray, who never gave up his day job as an airline pilot, is 64 and so is Levie.
“Roger and I do ask, where do we go next, and we’re not making any traction,” he says. “This will be our last push.”
“This” is a second, three-part season of A Living Hell, the documentary that originally screened as a one-off in 2021, presented by Gray and Levie. It makes the case that the leaky homes problem that emerged in the 1990s has not only not gone away, it has morphed into something much worse. More than half of all apartment buildings constructed in New Zealand in recent years have serious problems, it contends, and that is ruining lives.
“It’s our way of communicating the problem to New Zealanders, because the government won’t and no one else will – and certainly the real estate industry won’t,” says Gray. “And it’s all head-in-the-sand stuff. It’s buyer beware and I think that’s particularly unfair.
“This behemoth of an organisation called MBIE [the Ministry of Business, Innovation and Employment, which subsumed the Department of Building and Housing in 2012] is responsible, but it simply will not tackle the problem.
“It doesn’t even want to recognise it. It just beggars belief that we’ve given it sufficient evidence of the problems and yet it turns away, it just turns a blind eye.”
As the title suggests, A Living Hell doesn’t stint on the human impact. It opens with The Ridge apartment building not far from the Hobanz office. The St Marys Bay block is a 2004 office conversion which, since 2020, has been a ruined shell, frozen part-way into a remediation launched by a fractured, dysfunctional body corporate. The people who bought apartments there – including a couple with a new baby given two days to vacate before their home was stripped out – are stuck paying their mortgages. With remediation costs estimated at up to a million dollars per apartment, it’s effectively unfixable.
Most Aucklanders don’t know it exists. The problems identified in more-visible buildings in the city centre will probably come as a surprise to most of us, too.
“There’s a little drive we did right at the start, where we just drove around the top of Queen St looking at apartments,” says John Hagen, the producer and director of A Living Hell. “We showed about five or six – we saw 25. All in that area, all defective, and most of them without a plan of what to do.”
A national disaster
Hagen came to the cause from the very heart of real estate media. He co-created Mitre 10 Dream Home and directed 10 seasons of TVNZ’s Location, Location, Location. In the course of making the latter, he says, “We started seeing leaky homes coming up on the market – and so we were making stories about it. Eventually, it was like, not another bloody leaky home story. And I came across John and Roger.”
Hagen teamed up with Gray and Levie in 2011 to direct A Rotten Shame, which was described by the Listener at the time as “devastatingly laid out” and “excellent if terrifying television”. It now feels like a Hobanz origin story and an unheeded warning. Hagen subsequently joined the board of Hobanz.
The problem is not confined to Auckland. A Living Hell also visits Wellington, where a different issue – strengthened earthquake standards – has left owners in a mess that the Unit Titles Act, which governs bodies corporate, seems incapable of resolving. Then there’s the Queenstown Lakes District Council agreeing to a breathtaking $100 million settlement of claims on a development consented by council officers.
Friction over liability
That settlement was negotiated by Grimshaw & Co, the most prominent and prolific dispute-resolution firm in the housing sector. The exact quantum of claims the firm has handled is subject to confidentiality agreements, says principal Paul Grimshaw. “But what I can say, I suppose, is I have sued councils and builders and all the rest of them for a long, long time and the amounts that I’ve sued them for get into the many, many hundreds of millions of dollars.”
Grimshaw is interviewed by Gray in the final episode of the series, defending the principle of joint and several liability that means when, as is often the case, builders and developers wind up their companies to escape liability for faulty buildings, the local authorities that gave consent are fully liable for claims. It’s a somewhat tense encounter, reflecting the complex relationship between Grimshaw and Hobanz: a smaller drama within the bad-buildings saga.
Gray and Levie met when the former, having settled a claim on behalf of his own body corporate, sought to help his partner and future wife, Lorraine, who lived in a development in Cleveland Rd in Parnell, where Levie was the body corporate chair. While Gray had taken his own case through the weathertight homes resolution service for no more than $8000, the Parnell claim went to the High Court, with Grimshaw acting for the body corporate. The stakes, and the bills, were much higher.
“And so I started asking some hard questions, and Paul Grimshaw didn’t like that,” Gray recalls. “And it just got worse – our relationship really soured.”
Ostensibly on the same side – that of the desperate building owners – the two men and their organisations have clashed more than once over the years and worked closely together at other times. Disputes are in the nature of the “fraught environment”, Levie says: “We’re dealing with people’s livelihoods and welfare, large sums of money. It is an environment where you often get different views. Because of the financial exposure, people fight.”
Fire risks
Gray thinks the burden on ratepayers is unsustainable; he favours the proportionate liability regime that Australia has. Grimshaw says such a system would reduce the sums owners could claim so much that “you’d have derelict houses all over New Zealand”.
But the pair are largely on the same page as to the nature of the problem. “The historic problem is still around,” says Grimshaw. “And that is that the building code is prescriptive, rather than proscriptive. It doesn’t really give you much of an indication as to how really you should build buildings.”
But, he says, the problem is also far more complicated now than in the days of homes with rotting timber frames.
“There are concrete buildings where the girders through the middle of the concrete are rusting. There are many, many buildings that have fire issues. So often, buildings have a false ceiling and then a ceiling above that, which allows the fire to spread horizontally through the building. Or in a big apartment block, if you don’t seal the pipe penetrations and things, fire can spread through those holes to the next apartment building.
Fire safety is one area where the building code is quite detailed. It contains six separate clauses on the matter. The Altera apartments in Stonefields, Auckland, features in A Living Hell. The complex was built by Fletcher Construction in 2015 and won an award for architects Warren and Mahoney the following year. Then, in 2018, it was found to have multiple problems, including fire compliance failures.
“How the hell did that happen, and how did they get away with it?” Gray fumes.
Deafening silence
Fletcher has since repaired the buildings under a settlement, but declined to talk to the series producers. No one, it seems, wants to talk about it.
“The Labour Party ministers said [MBIE] has commented so we won’t,” says Gray. “Well, actually, they haven’t.” (MBIE told the Listener it had responded to questions from the programmes’ producers.)
Gray also feels let down by Auckland Central MP Chlöe Swarbrick, who appeared in the 2021 programme but, he says, has failed to follow up. But he’s most exercised about the new National-led government’s “Better Building and Construction” reform, which Housing Minister Chris Bishop has promised will cut red tape by, among other things, fast-tracking consents, no longer requiring consenting officers to physically visit buildings under construction and potentially allowing “accredited building organisations” to prepare consents and undertake building inspections.
“They haven’t reflected on the fact that it was the National government back in 1990 that created this mess in the first place by introducing a new performance-based Building Code and the Building Act, and stripping out all the consumer protections that were there, due to the lobbying that went on. Off the back of that there was Ruth Richardson’s “black budget”, where they scrapped the apprenticeship schemes. So for several decades, we’ve had builders who weren’t doing apprenticeships. Anyone can become a builder and, particularly in the standalone housing market, that’s where we hit a major problem.”
Private consenting has been tried before and was “a disaster”, Gray says. As A Rotten Shame showed, firms involved could escape any liability for their actions. The idea that these services, as well as builders and developers, could be backed up with enduring insurance is a fantasy, he says. The insurance industry has no appetite for such risk, and premiums would be prohibitive if it did happen. “I doubt that anyone would insure builders or council or whatever against these kinds of claims, because it’s so enormous and they’re so prevalent,” Grimshaw adds. “Your insurance company wouldn’t make any money, in other words.”
Grimshaw also thinks there should be “more red tape rather than less red tape to obtain a building consent. Because that’s the first problem, right? If you have detailed plans and it’s rigorously inspected by the council before a building consent is passed, then you’re starting down the right track. So, you need far more scrutiny at the building consent stage. Then I think you need far more council resources during the inspection process.”
MBIE’s head of tenancy Katie Gordon says law changes taking effect in May are designed to ensure better compliance with the Unit Titles Act by body corporates. The changes also broaden requirements for disclosure to potential buyers.
Grimshaw sees merit in another solution offered in A Living Hell: the path taken in British Columbia, Canada, which has eased its leaky building problem by not letting the principals of development and construction firms escape liability by winding up their companies.
“Any way in which the directors could be personally liable is a great idea,” he says. “You can try to make the directors personally liable. You could ask the developer to post a bond able to be taken by owners in the event there are problems with the building. But that would require a bit of a change, which I’m not sure New Zealand would be bold enough to do.”
Any reform taken now – and a more regulated environment seems less likely under the National-Act-NZ First coalition – would not prevent the latent problems lingering from the past three decades. There is no comprehensive picture of the scale of the problem in New Zealand – an estimate that more than half of apartments have problems is based on Australian research by Laura Crommelin of the University of New South Wales, who, says Hagen, told producers the problem was likely just as bad “if not worse” in New Zealand.
Last shot
Meanwhile, the warriors are beginning to tire. Grimshaw will be out of the picture for “a few months” this year as he accompanies his wife, writer and Listener columnist Charlotte Grimshaw, on her Katherine Mansfield scholarship to the south of France. Gray is not far off getting his SuperGold card.
“Sometimes, my wife asks me why I keep going,” Gray admits. “Because I’m in tears dealing with these people.”
He thinks getting through the slow-rolling crisis may require cultural change as well as legislative and regulatory change. He sees Simplicity Living’s long-term build-to-rent strategy as a rare cause for hope. European countries, where long-term rentals are common, do not have the same problems in constructing good residential buildings as we do. He’s still hoping, against experience, that someone in power will listen.
“Because it comes back to the fundamental need for housing and because it’s a big choke point for our development as a country,” he says. “The destruction of wealth, which becomes intergenerational, too, is just appalling. I’m firmly of the belief that this is the biggest consumer issue we have in New Zealand today. We are still building shit buildings.”
A Living Hell is on Sky Open, concluding on Sunday, February 18. It is streaming on Neon.