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NZ Trickle of cash for leaky buildings

Property Here - Tuesday, July 09, 2013

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Government billion-dollar financial assistance package yet to deliver bulk of cash sought for repairs
Chancery Shopping Centre in central Auckland is being repaired. Photo / Sarah Ivey
Chancery Shopping Centre in central Auckland is being repaired. Photo / Sarah Ivey

The Government has paid out only $8.05 million from its $1 billion leaky home victim assistance scheme, introduced two years ago.

Building and Construction Minister Maurice Williamson said that was paid since 2011 but more money would flow from the Financial Assistance Package (FAP) scheme soon.

"To date, $8.05 million worth of government FAP milestones payments have been paid and further payments will be made as repairs progress on the approved FAP repair contracts. I'm advised the bulk of payments and repairs for those involved in the FAP will be made in the next two years or so."

Lawyer Tim Rainey criticised the scheme but Williamson said the Government had taken responsibility for the crisis, which a PriceWaterhouseCoopers report estimated would cost between $11 billion and $22 billion to fix and affected 22,000 to 80,000 houses and units.

The Ministry of Business, Innovation and Employment is administering the FAP scheme, introduced in July 2011. Councils pay 25 per cent, the Government 25 per cent and homeowners the rest as long as they agree not to sue and fulfil criteria which Rainey said was an almost impossible task.

Williamson provided the figures to the Herald. "As at June 30, there were 1110 active claims, representing 3872 dwellings, which have indicated an interest in the FAP.

"The ministry has found 1016 claims, representing 2969 dwellings, that qualify for the government contribution. Of these, 499 claims [on] 1062 dwellings qualified for the council contribution. The ministry has approved $10.39 million of Financial Assistance Package repair contracts for 249 dwellings. The total cost of repairs for these 249 dwellings is estimated to be around $41.56 million.

"Since the scheme started, the ministry and councils have assessed a total of 1317 claims (representing 4008 dwellings) against the FAP contribution criteria. Some of these claims have since been closed."

Roger Levie, Home Owners and Buyers Association chief executive, said the FAP was far from a total solution for owners of leaky and defective homes but people must consider it.

"We are trying to make it work, particularly those who meet the criteria but [whose places] were privately certified. In those cases, many of which relate to multi-unit complexes, owners would be silly not to use the FAP as it is effectively a government grant.

"The systems set up around the FAP look somewhat daunting and there are a number of hoops to jump through; however, if owners get guidance from someone who understands how the system works it is not too difficult to comply."

But he warned those considering using the FAP, which had a focus of fixing to a minimum standard repair, that it would not necessarily ensure the long-term performance and durability requirements of the building code were met.

"It's really important that owners using the FAP do not simply repair to the scope provided in their Weathertight Homes Resolution Service report and that they seek the advise of experienced professionals to guide them on the work required for a complete repair to restore the value of their homes," Levie said.

The FAP did not provide an answer for those most in need: victims unable to fund their share of repairs and owners whose homes were more than 10 years old without funds to fix. "In these cases, many owners are at the lower end of the socioeconomic scale. Families continue to live in damp, mouldy homes and many are suffering from the stress and health issues related to this awful situation," Levie said.

Big leakers

Chancery Shopping Centre
• CBD retail/office precinct.
• $3.4 million for repairs.
• Repairs about halfway through.

AMP's Botany Town Centre
• South Auckland shopping mall.
• 146 shops opened in 2001.
• Boasts were made of no leaks then.
• Repairs now under way.