My plan to fix New Zealand’s leaky homes crisis (update).
It’s time to stop beating around the bush and tackle New Zealand’s leaky homes crisis head on.
To start with, New Zealand needs to enact new legislation to protect buyers and sellers of at-risk homes. Until now there has been too much focus on finding people to blame and recovering money lost. The Weathertight Homes Resolution Services Act 2006 was set up to provide speedy, flexible and cost-effective procedures for resolving leaky home disputes as an alternative to the courts.
The Act might help you if you own a leaky home, but what about the thousands of genuine, unsuspecting people who are out there trying to buy a new home or investment. What measures were put in place to protect them? The answer – None!
Most people don’t know/won’t admit the extent of New Zealand’s leaky home problems. Newspaper reports often try to tally up the current and future cost of cleaning up the problem. Most estimates talk in the billions of dollars. That is a big problem.
Most plaster homes are worth less than their (for example) brick equivalents. This is partly due to stigma and partly due to previous, existing or possible future water ingress. Not all plaster homes leak. Many will never leak. But if you were buying, how would you really know how safe your $500,000 or $1,000,000 investment is?
Many owners of (broadly speaking) 1991 to 2003 homes think their home might look like other leaky homes, but couldn’t possibly be one. In my experience, many are sadly mistaken and could suffer emotionally and financially sometime in the future. If nothing else, the plaster stigma is going to cost them money. That is sad.
A classic example of what is going on right now is as follows: A plaster home is listed for sale by an owner who knows their home was built during the “danger’ years. They don’t have a pre-sale inspection done. A buyer has a pre-purchase inspection done and fails the house, walks away. The house is then listed with a new agent (for obvious reasons!). Another buyer has an inspection done and buys the house. Two different inspectors, two different buyers, two different agents, two different outcomes. Too many variables and variations of opinion. No set rules from Government to adequately protect buyer or seller. Very much “buyer beware”. Nobody taking responsibility for the original poor building practices. Shouldn’t the Government take this responsibility? I say yes!
I have a big problem with the fact that new immigrants (and some locals) are being literally stitched up into potentially leaky or (actually) leaky homes. (Update: Sometimes sellers know there’s a problem and hide it from all parties, sometimes they simply don’t know). At-risk homes are still selling without the buyer approving a building inspection report.
This is where Government must step in to protect the citizens of this country.
If a house leaks and is bought “eyes shut” by a new immigrant for $1million, the actual value of that house could be, say, $800,000 if the problems had been/were found/known. If this immigrant stays a few years then sells under the same circumstances (to another buyer) then the problem is hidden again. The value of the house remains artificially inflated until finally the problem(s) is/are discovered.
This is what Government needs to do:
Legislate that all homes constructed in the danger period (to be defined) cannot be listed for sale or sold without having a Government directed and tightly controlled inspection report attached to the listing agreement and the sale and purchase agreement.
Shock horror this will cost homeowners about $1000 to have done, but that is a cost they will just have to wear. If Government really wants to help, Government could subsidise this from the funds they will save by generating fewer court cases in the future.
This would then be the scenario when a leaking home is listed for sale (like the $1million one referred to above): The thorough report (includes invasive tests, moisture readings etc) would be viewed by the buyer. The buyer would decide to pay about $800,000 due to high moisture readings found in some areas. The sellers would understand why the buyer is offering such a low figure, after all they had a chance to make repairs but worked out repairs might cost them about $200,000. If they had done repairs, the house might be worth $1million. The inspection report would form part of the sale and purchase agreement by law.
Finally, the problems caused by bad building practices in the past are brought into the open and the problem is solved. More leaky homes would be repaired more quickly than under any other program proposed in the past.
Of course this doesn’t help owners who never intend to sell, but at least it would be a great way to protect consumers buying houses.
Fast forward twenty one years to the year 2030. A recently painted and refurbished plaster townhouse comes on the market for the first time since built in 1998. The listing includes a very comprehensive Government controlled building inspection report that shows serious problems, not the least crumbling timber framing and some walls with 40% moisture content. The house sells for land value only.
Leaky homes are worth less than non-leaky ones and the sooner these homes find their real value the better. Now is the time to legislate and protect consumers as described above.
Anyone agree/disagree?
Good points Steve, and yes in a generations time, I agree that the home will be worth even less. I recently saw one of these new thermal imaging cameras that some of the home inspection companies are using. The latest model I saw was pretty accurate, but does still needa trained eye to work them. I heard of a home 18mths back where just a moisture test was done with a probe and came back negative around some windows. Just like yr scenerio a new buyer came along and commissioned a different home inspection outfit, and they pinted out that some of the flashings, or underlying foil in the same relevant places could give false readings on earlier generation units. I believe an invasive test ended up being paid for to settle the differing results, which in the end came out positive, and the buyer was happy to go ahead with the purchase.
Thanks David for your input, the first person brave enough to comment on this sensitive issue. Your example of the variation of results between different building inspectors and their tools and checklists is a compelling argument in support of my proposed legislation. Thanks.
HI Steve,
I like what you say!
I recently wrote a blog about Leaky Building Owner Syndrome.
But you have taken it a step further. Compulsory builders reports. hmmm. maybe by a Council or Govt certified building inspector to make sure there is continuity.
As we both know, houses are sold every day that could have soggy base plates and toxic mould in the gib, the trick is to find a way to protect buyers without causing further cost and grief to owners of texture coated homes that don’t have problems.
The 4.5 below is in the new draft of the practice rules on the http://www.reaa.govt.nz site but maybe it should say land/buildings.
People can make submissions by the 28th August at http://www.reaa.govt.nz/industry-consultation/
4.5 A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Further, where it appears likely,
on the basis of the licensee’s knowledge and experience of the real estate market1 that land may be subject to hidden or underlying defects, the licensee must either:
(a) obtain confirmation from the client that the land in question is not subject
to defect; or
(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.
4.6 A licensee must not continue to act for a client who directs that information of the type referred to in rule 4.5 be withheld.
Explanatory note
Rules 4.5 and 4.6 seek to balance legitimate interests of buyers to have relevant information about the land in question (an issue that has become more compelling as a result of weathertightness issues) against the limits of a licensee’s ability to know all details about the land, the licensee’s legitimate obligation to be fair and truthful, and the ethical and moral obligations of a seller.
Thanks for pointing this out Ross.
I agree it is good that buyers may feel there is a higher level of protection for them, but we are still going to be faced with the big issue of building inspectors operating from different perspectives.
For example, a building inspector who built and lives in a plaster home is less likely to scare a buyer away from a plaster home than one who built and lives in a brick home. This is a given, human nature at work.
This is exactly why Government needs to take responsibilty for the inadequate building code that existed during the ‘leaky home’ period (to be defined).
Legislation is required. If we don’t get legislation, the buck will be conveniently passed to real estate salespeople/licencees who are found guilty of forcing buyers to buy leaky houses unconditionally.
This won’t happen if Government develops a standard building inspection checklist, then legislates that listing agreements and sale and purchase agreements must have that report attached. This is the only effective protection for consumers. Any less and consumers could still be badly burnt.
Great write ups, but and it is a big BUT, the governments of the day and this is any government, is only interested in ensuring it cannot be litigated againist and if in that process the consumer is also protected, great. However if you require legislation that will or could make businesses answerable and especially big business and potentially damage their bottom line you have no chance in this life or any other for that matter. Heres how it works. Govt passes regulations to ensure work is carried out to a prescribed method or standard and if not done to that regulation will instigate some form of disciplinary process againist the installer, the primary purpose is to prevent the state from litigation. still will not fix the problem!!!!!!!!!!!!!!!
Thanks John Doe,
Appreciate your thoughts. It’s jolted me into preparing my case for when I get my audience with the Building Minister, which hopefully is just around the corner.
I’ll be posing the question “is it more important that Govt protects business or the general public, or itself?” What exactly is Government’s view of it’s role in this fiasco?
With the legislation I’m proposing, several more builders, developers, architects, suppliers etc could be dragged through the courts over the next few years, but only those involved with buildings constructed from (roughly) 1999/2000 onwards due to the Building Act’s 10 year time limit for claims. See this article that explains the 10 year time limit http://www.leakyhomeforum.co.nz/2008/10/22/the-10-year-time-limit-for-claims/.
It does raise an interesting conundrum though for the Government.
It would be easy for Goverment to turn a blind eye to my suggested legislation designed to protect consumers, in the hope that around 2013/2014 the last of the 10 year time limit claims will be made and dealt with by the courts.
In 2014, my suggested legislation would be a no-brainer for the Government of the day. They could legislate in 2014 to protect consumers and not worry about the costs of court cases and the burden on councils, because there would be no claims and no court cases from then on.
So why would today’s Government wait until 2014 to legislate while consumers (especially buyers) are being disadvantaged every day until that date? They would wait because it is easy to do and it would save Government a lot of time and money.
I say Government should not pass the buck and rely on real estate salespeople to point out to a new immigrant that they are buying a home that “might” have problems in the future. This arrangement is far too loose and fraught with danger for consumers (immigrants or not).
Legislation is the only solution. Without it, consumers are at great financial and emotional risk.
There are buyers buying potentially leaky homes right now, today & yesterday. I appraised one that was leaking last year and found that it sold last week for a non-leaky (potentially inflated) price.
When that buyer decides to sell in 2015 or 2020 or 2030 or beyond, they are likely to wish that my legislation had been in force the day they made the offer and bought. If they had a standard Government directed and controlled building inspection report their eyes would have been wide open, not wide shut. They probably would not have paid what they did, and they would be more wealthy, healthy & wise. I knew that it was leaking, I saw the water, I hope they did!
Think about it. How many plaster home sellers are selling today, wiping their brow and boasting to their friends “thank goodness we got out of that”. I often hear people say that. It’s happening every day and it’s a disgrace.
I am not quite as clever as most people replying here. I am N.Z. Plasterer who would like to point out that it is not only plastered houses that have failed people of that building time all style of houses can leak. I just thought you emphasise the word plaster alot and to me that reads like you have already passed the blame to this sector. I could start pointing the finger myself “cough Architect, parapet walls, internal gutters cough” but then it goes round in circles.
Yes I do agree to the laws to be sorted to protect the consumer in some way.
We use some amazing products which are branz approved and we should not be seeing problems in the future with plastered homes.
I dont want to start an arguement Because I totally agree. I just have to protect my livelyhood and my passion which is my job.
Cheers Wes
Wes, thanks for your comment. Yes I see your point completely and agree that all homes can and do leak. No argument from me and apologies for using the word ‘plaster’ a bit loosely. Most of the affected homes I’ve seen have some type of plaster cladding so I’m sure you’ll understand why I’ve used it. Agree the modern plaster systems and installation methods are far superior to a few years ago. Best luck.
Hi Steve,
I happen to be half way through a response to your email and forgive me for not replying earlier and now popping up here! I was just doing some research and happened upon this blog courtesy of Google! We are simply bogged down dealing with all of the pressing issues that we are advocating around that now go well beyond leaky homes – Building Act Review and Unit Titles Bill to name just a few pieces of legislation that will affect home owners and buyers.
Just to touch briefly on some of the key issues of the thread above;
1. Government Pre-purchase inspection – the Government simply won’t go near it, and whilst we think that it is an essential part of the due diligence that purchasers ought to do when buying, we have real concerns about the lack of suitably qualified and competent inspectors that have the appropriate level of professional indemnity insurance in place. It is fair to say that the vast majority of pre-purchase inspection reports we see are not worth the paper they are written on. Of grave concern is the proliferation of ‘Thermographers’ who have got themselves a thermal imaging camera and are out there doing business and don’t have a clue what they are looking for or how to operate the camera properly! One recent report we have seen gave the subject house the ‘all clear’ and yet it turns out that it is so badly damaged the new owners are going to have to spend over $700K to remediate it. Thanks primarily to the previous owner and original builder who colluded to cover up the defects and the thermal imaging was a waste of time in terms indentifying the rotten timber hidden behind the walls. What was even worse is that the company concerned charged over $2000 when the going rate is around $800. The only way around this sort of problem is going to be to engage a properly qualified Building Surveyor but they are few and far between and even then we have doubts as to whether or not they would even uncover the serious defects that might be covered up by an unscrupulous vendor.
2. I’m sorry but I must challenge your definition of risk – we are dealing with defective homes with build dates between 1988 and 2009 – yes 2009! The ‘youngest’ house on our books is just 6 months old and is leaking like a sieve. Another contemporary house that we know of and is seriously leaky cost $3.9m to build and is just 18 months old – built by a so-called master builder and overseen by an architect and signed off with a Code Compliance Certificate issued by the Council. The irony is that it is likely to come up for mortgagee sale fairly soon and without the usual protections in the S&P agreement (struck under mortgagee sale protocols) and the lack of perceived risk any prospective purchaser will think they are getting a bargain at around the $2m mark I bet and yet they will be buying into a nightmare. Because of the 6 to 15 year latency of these sorts of problems manifesting themselves or being discovered by ‘accident’ we simply cannot say with any confidence that the changes to the Building Act in 2004 has resulted in houses being built without defects – we are currently working with over 150 owners with defective houses that were issued with Code Compliance Certificates issued post 2004.
3. Following on from the discussion of perceived risk, there are many a plaster home that is performing more than adequately and we must not forget that monolithic plaster claddings have been around since the 1920’s and many of those older homes are performing well. The issue is the abandonment of good old fashioned building practices, spiralling down of skills in the industry and the staggering lack of thought about moisture management in terms of good mechanical flashings of windows and doors together with good roofing practices in terms of good diverter flashings and falls. This is not an exhaustive list by any means, but what I am concerned about is the misconception that all plaster homes (or plaster look homes) are leaky – yes they need to be treated with suspicion, but buyers MUST NOT drop their guard given that many people are buying into leaky home nightmares where the houses are more ‘traditional’ in design and have pitched roofs, eaves and in some cases weatherboard cladding (my own leaky home included) or brick cladding and are perceived to be low or no risk – remember also we have the emergent problems with seriously defective homes from a structural point of view. Essentially our warning is that EVERY home must be subjected to due diligence – LIM Report, Council Property File review, comparison of as-built to what was consented/permitted in the first instance and of course a pre-purchase survey including electrical warrant of fitness for older homes and geotech reports for those that have at risk topography (i.e. cliff-top or re-claimed land) – and of course a valuation that actually takes into account the matters uncovered in all of the previous discovery processes. By the way – did you know that in Auckland City alone there are 23,000 residential dwellings that have been built since 1991 and they do not have Code Compliance Certificates – I wonder how many of those homes have changed hands multiple times without anyone knowing that that the dwelling is potentially non-compliant.
4. Your wish to have every house ‘perfect’ is of course a pipe-dream and whilst I too would like to see the building industry aspire to such a goal it seems that the industry is resigned to the fact that every house will leak at some time in its lifetime and even if they standards in the industry were as high as we would like them to be it is acknowledged that at least 1% will fail. So looking forward it is a matter therefore of how that 1% will be addressed and that is the very solemn challenge we have in sitting around the table in the review of the Building Act. But the legacy that we as a nation are left with, and what you and I are confronted with every other day, is born out of the ‘perfect storm’ where the standards had generally spiralled so low in almost every facet of the construction process and building products (including un-treated timber), inappropriate designs (complex roofs and integrated balcony decks), over reliance on silicone rather than good old fashioned flashings and the drive for thermal efficiency (no drying) has blighted our housing stock and destroyed wealth beyond any natural disaster we might choose to contemplate.
5. We have some views on how the future might look, and what role HOBANZ will play in protecting the consumer across a broad range of risk associated with the home ownership proposition.
Anyway, that is where I shall leave it for now as I need to get back to my research!
Regards,
John Gray
President
The Home Owners & Buyers Association of New Zealand
Hi Steve,
Just came across your article. Have you had your meeting with the Building Minister yet? By the way, I’m trying to find out which period are houses subjected to the building code that resulted in leaky buildings. Some say it’s 1992-2004, some say 1991 – 2003 and some say 1990-2004.
Given that many properties are being sold via auction which tend to be unconditional, perhaps the law should require that properties sold by auction should have building report which includes invasive moisture reading.
I was searching for something real estate related and came across your site Steve, great to hear some good discussion on this topic and the differing views etc re the Leaky homes, and granted their are a plenty of homes that leak and are not weather tight. Excuse me for not being familiar with the exact definition of a leaky home but my interpretation would be a home that is not weathertight ie. moisture coming in from the outside. Granted I am aware of homes with these problems and it is a disgrace to the building industry.
What really annoys me is I don’t see much talk about the lack of controlled ventilation in homes (particularly recent and new homes) and therefore these homes are rotting with moisture build up from the inside out. Homes today are so well sealed (provided they aren’t one of the leaky ones) that they cannot breathe and in colder climes around the country, the daily breathing of the occupants, cooking, showering, and saving power by drying clothes on racks inside is causing huge moisture build up in the structure. This is responsible for huge amounts of damage and may well be that the plaster house are actually very well sealed and therefore exaggerating the problems mentioned above.
The building code is responsible for these issues in my opinion and this is the most important thing to have changed – written to suit the differing regions throughout the country whose climates vary hugely. I have a number of rental properties & have built a few dwellings so I have learned a few things along the way.
In Queenstown where I live it astounds me that multi million dollar homes are built and the amount of the total budget spent on ventilation and heating is pathetic. Owner, builder & Architects seem to think they are doing great things by throwing underfloor heating in the kitchen & bathroom. and maybe one or two heat pumps in the house. Usually the heating is inadequate(often due to a very thermally inefficient structure so it doesn’t matter how much heat you throw at it) and the ventilation aspect is non existent – bar opening a window, which many people are loathed to do on plenty of days in the year.
If there is no control of the internal climate of the home then in my opinion you are living in a very expensive tent.
I have two apartments only 4 and a half years old, tilt slab construction and part of a complex of 11. I have had no end of trouble with these units and the moisture is all generated from the inside. I have see inside all of the other apartments recently in an effort to get the owners to install a forced air positive pressure ventilation type of system. The level of deterioration of the apartments astounded me and mine actually were in great condition compared to the others, but I look after them.
A major issue in one of mine and the apartment opposite was the pitched roof with non existent air gap or roof space between the gib and external iron. The thermal break between the inside gib and the outside cold iron is completely insufficient and therefore the dew point is happening inside the sandwhich of the iron/paper/batts & gib. Within the first 3 months of the first winter the gib was so sodden in places there were drips coming through the painted inside gib.
Another apartment opposite the ceiling gib got so sodden the gib collapsed. The owner employed builders to fix it – they didn’t have a clue, it cost her a fortune and the same thing will happen again. She had a heat pump installed 2 years earlier and thought she had solved the problem.
The positive pressure systems are relatively primitive but they gently introduce dry, filtered and heated (if you want) air into the home this allows the positively pressurised internal space to force the moisture laiden cold air out of the structure via the natural leakage points. I have this type of system retro fitted in all of my rental properties and they have solved the problems of internal moisture build up.
In the roof case mentioned above I showed the builder the water damage suffered after the first winter and his answer was to blame the building paper so got the building paper company to cough up for some new building paper, ripped the roof off, replaced the paper, put iron back on & thought he had solved the problem. I was there on the day he took the roof off and there was no evidence the paper had failed. Most builders have no idea about this as they have built it to code, its signed off and thats it – they don;t care and as an owner you have no comeback.
Therein lies the problem – the building code and until it is changed the building stock in New Zealand will good for nothing but a bulldozer way before its use by date is reached.
This is more of a problem obviously in the colder climes where I am from but it is also very relevant throughout many parts of the country – with most likely the exception being the far north. If you have streaming windows with condensation on a cold morning, whether you have single or double glazing, and you do nothing to mitigate it then you will be steadily having moisture permeate the structure of your house.
I cringe to think the nightmares that many people buy inadvertently that will cause some phenomenal stress in their lives, and not just financial.
What really gets me is that we are a developed but young country and we have the ability to learn from those older developed countries around the world – and yet we don’t. Europe and the US and Canada have found solutions and ways to build that last and work yet we completely ignore them, and we do it on so many fronts, but thats another topic.
[...] There’s also some good links to info over at Steve Koerbers site here, as well as his opinions on how to fix it here. [...]
People I have not added to a blog before so excuse the randomness. I do try to stay on track, but frustratingly another equally important thought pops up. I think I may have construction industry A.D.D.
Investors, developers, designers/architects, councils, government, & tradespeople all play a critical part within the process, nothing new here I know.
The consumer has borne the brunt of the debacle that is the New Zealand construction scene.
The famous line from a developer post construction, and I should add after they had achieved the lowest trade cost to construct, boldly stated something to similar effect, that “I never asked them to do it to be non-complaint with the building code” – The oddest thing with this stupendous retort is that “you get what you pay for”. I digress, apologies.
One, and I should add, if not most important aspects of creating an accurate weathertight structure is ‘Trade Co-Ordination’. Most trades people, not all have a negliable appreciation or respect for other tradespeople with which they intersect during the construction process. Yet it is these intersections, and junctions that form critical joints in a buildings envelope. It amuses me today to still see construction practices which are considered rudimentary to weathertightness not being achieved.
The perception in and outside the industry is that we only need cavities because of leaky plaster claddings. How wrong this perception is, and the potential for failure in new construction is as high as ever unless the checks and balances are in place. John Grey noted this in his previous thread. We introduced an onsite assistance program to ensure every project we supplied products to was fit to have our products applied. In fact we entertain a minimum of three checks per project (standard residential dwelling), and more dependant on the size of the project. The original concept behind this process was to accurately apply the plethora of ever changing information to our business partners, learn ‘practically’ what was actually occuring onsite & apply that knowledge to our business. This basic concept would mitigate potential risks, and serve to educate not only the people we supply, but educate the sub-trades with which we interact on a regular basis. What we have found is that we have become a check and balance for other trades that we intersect with. We do not sign off on their work, as this is the end goal of a professional tradesperson to accept responsibility for what they have been engaged to do.
Many of our industry competitors consider our process to be inviting risk, yet I fail to see how this can be if we apply sound ‘best current’ knowledge in a uniform manner. Ignorance has no place in a robust construction industry. It only serves to protect those that do not wish to change, and those that wish to blame others for their own failures.
Our industry must change, not overnight, rather incrementally, & together as an industry not as individuals trying to protect their patch, and ultimately the consumers perception.
Consider this – Does your aluminium joinery company warrant that their windows won’t leak ? A) NO. I find this amazing. Inturn the consumer continues to think that just because the glass isn’t broken that the window doesn’t leak. They will however see a crack in their plaster clad house and ’safely’ assume that the this is the cause of their woes rather than the result of the cause. Nothing in this industry is ever simple and the obvious has appeared to be the answer when in fact it is the opposite.