Select Committee says leaky home owners already incurring costs should be covered, worries about some owners' access to finance

By Alex Tarrant

The parliamentary select committee responsible for vetting a Bill dealing with leaky homes suggested amending it to clarify costs already incured by affected property owners fixing their dwellings will be covered by a government assistance package.

Government is expecting to have legislation in place sometime this year to help cover repair or rebuild costs for possibly 23,000 affected dwellings that were built within a 10 year limit from when the legislation is put in place. Many thousands of affected dwellings will fall outside this limit - perhaps 15,000 - as government talks with the bankers association, and the legislative process, drag on.

See more in Gareth Vaughan's February 17 article here.

Under the proposed legislation, central government would pay for 25% of agreed repair costs, local government would be liable for another 25% if it signed off consent for building work, and home owners would need to source the remaining 50% or 75% of costs themselves, generally through a bank loan.

However, government talks with the Bankers Association have hit a wall over the issue of whether government would share any losses with the banks from home owners who default on loan repayments.

The Bankers Association suggested last month that government may agree to cover 15% to 25% of leaky loan defaults. See more in this March 10 article.

However central government is wanting to limit its liability to NZ$1 billion, from a total bill that may hit NZ$11.3 billion, according to an estimate in 2008 by PricewaterhouseCoopers.

'It's ok if you've started already'

The Local Government and Environment Select Committee suggested in its report on the Weathertight Homes Resolution Services (FInancial Assistance Package) Amendment Bill that the definitions of 'agreed repair costs' and 'associated costs to include costs claimants might have already incurred.

It was likely some leaky dwelling owners had already started repairs and would be eligible for assistance measures under the legislation, the report said.

The report also said some members of the select committee were concerned that many affected dwelling owners may not have the financial resources to opt into the scheme, possibly drawing more attention to the stoush between the banks and government on the need for some sort of Crown guarantee to help cover losses.