Published: Tue, Jun 1st, 2010

The Government has, at long last, announced its proposal to address the leaky homes crisis.

The crisis surrounding defective houses has escalated over recent years. In a report by PricewaterhouseCoopers (released in late 2009) the scope of the problem has been assessed as affecting between 22,000 and 89,000 houses. The report has adopted “consensus forecast” of 42,000 homes however many experts believe that the scale of the problem may well exceed the 89,000 estimate. Even on the PricewaterhouseCoopers conservative estimate the cost of remedial work is expected to amount to over $11 billion!

Consistent with this assessment, we have noticed a significant increase in the number of leaky home disputes being referred to us. We have developed a considerable degree of experience representing not only homeowners but also builders, developers, architects designers and other subtrades. Proceedings of this nature have traditionally been pursued through either the Weathertight Homes Tribunal or the High Court.

The latest proposal to address the problem envisages the Government contributing 25% of the repair costs with the relevant Local Authority contributing a further 25% on accepted claims. The proposal was announced in mid May and at the time of writing this article Local Authorities were yet to respond to the suggestion. The specific details are not yet available.

It is anticipated that homeowners would remain at liberty to pursue the potentially responsible parties (including builders, developers, designers, subtrades and possibly building product suppliers/installers) for amounts over and above those contributed by the Government and Local Authorities. Homeowners would also be at liberty to elect not to avail themselves of the financial assistance package and simply pursue the potentially liable parties through the Tribunal or Courts at their discretion. The approach to be adopted will need to be considered in each case and will vary depending on the particular circumstances not only of the homeowners and the house but also the potentially liable parties (and their financial circumstances) and the specific defects giving rise to the claim.

The recent proposal also envisages bank loans becoming available for homeowners for the remaining 50% of the remedial costs. This assistance will need to be provided by trading banks and as yet the criteria and details are still to be determined.

Of particular importance for any party involved in a leaky home (especially owners) is to be aware of the very strict 10 year time limitations which preclude claims being commenced after the expiry of 10 years from the date on which the defective works or actions are alleged to have occurred. In light of the fact that most of the houses currently exhibiting leaks or water ingress were constructed in the period between 1992 and 2005 this strict 10 year limitation period is highly relevant. We strongly recommend any homeowner concerned about their house to take urgent steps to assess their options. Michael Robinson or Andrew Hooker at this office have considerable experience in assisting parties involved in leaky home disputes and will be happy to answer any particular questions that clients may have concerning leaky homes (whether as a homeowner or party against whom a claim is being made).

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