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.