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Progress on leaky homes - English

Negotiations with banks to lend leaky home owners money for repairs are going well, Finance Minister Bill English says.

The leaky homes crisis followed deregulation of the building industry, where a resulting lack of rules meant problems with design and products left thousands of homeowners with ongoing problems.

Issues included flaws in design, product, cladding, workmanship, rules and checks.

Under the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill, the Government and local authorities would each contribute 25 percent of agreed repair costs, with affected homeowners funding the remaining 50 percent backed by a government loan guarantee. The bill has had its second reading.

"The terms the Government laid out quite some time ago now haven't significantly changed," Mr English told reporters today.

"There's been a lot of negotiation but the key idea is that there's some loss sharing and I gather we're making very good progress on it."

The New Zealand Bankers Association previously raised concerns about the loan guarantee, saying the term was misleading.

"People would normally think of a guarantee as standing in the shoes of the borrower. What is actually on the table is not that, it's more in the nature of a loss-sharing agreement," chief executive Sarah Mehrtens said.

The 50 percent provided by the Government and local authorities would be calculated into banks' lending criteria, but there was no separate guarantee for the 50 percent the homeowner would have to fund.

Mr English said the danger of loan defaulters was an issue.

"The Crown's been interested in working with the banks of course who have their own risks, that they have security on a home that may not have the value that they think it has backing the mortgage.

"So we've been looking at loss-sharing arrangements. The Government's been keen to help a bit, help with the problem but share with the banks the job of making sure that the money is well spent."

Mr English said the Government had provisioned a "pretty substantial contribution" into the scheme in last year's budget.

"We think we're pretty well covered, the idea of giving homeowners this option was to help a lot of them get on and solve their problem, rather than sitting and waiting and hoping that something would happen."

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Comments and questions

What BS this “loss sharing” lark is.
Presumably Dodgy Bill, he of the flexible residential abode, will now extend that "principle" to all, appliances, shares, bonds, dollar coins. ["Ah, silly me, I got a $100 “bill” from your Treasury....and I didn't snip a bit off, take it to the lab and test it… to see if it was real….as you say it is on the front of the note…..and because I thought that’s what you'd taxed me for. Isn’t Isn’t that what you and TAs do for what we pay you in taxes, rates, consents, CCCs etc? At least, that’s what I thought the arrangement was?
No, you're right ....lets "Loss Share" there, even if I’m not sure you are losing anything.
Of course I understand that you have to charge me for the Treasury function and for those big packages you guys all have to have these days. (No, not the Weiner ones….and do spare us that).
And you are right.... just because you charge me for doing something doesn't mean I should rely on you to do that. After all you are very busy with the lawyers handling your various family trusts to max out on your claims for allowances.
Hell, no. “Loss sharing” is cool. And, of course I don't think it was unfair that you got two lots of gst as well....and maybe a third when I used one of those products your BIA liked so much to do the repairs with too. I have to say, it was very stylish the way you guys just liquidated the BIA....even Hendo thought that was dodgy, and something he wouldn't do.
What balls you have, sir.
I'm so stoked on this Loss Sharing....I think we should can “NZ 100% Pure” and make it “NZ 50:50 Loss Sharing”.....and hark, that is probably a truer reflection of where you guys want to take us – back to shearing sheep.....back to the 1950s.

I think this is a ambitious undertaking by the New-Zealand government. This new method of "loss-share" seems to be a revolutionary idea, but will it work in practise? Loans from the government may force New Zealand into further international debt - and what will happen if NZ is struck by another earthquake. I think this idea should be reviewed again, taking disaster control into consideration.

I just dont get why the government and the Councils dont have close contact with leaky home owners who all understand and know that the fundamental systems put in place dont work and are of little assistance to' victims'. The Council/ Govt needs to take over the responsibility of the repairs through a regalatory body to prevent the absorbetent and inflated over runs from an industry controlled by greedy professional consultants. If you go 'the Government Way' you lose the right to recover any costs over the percentage allocated . Why should I do that? Its not my fault I ended up with a leaky home . Our repair cost was 4-5 times the original estimate . I believe 3/4 of the pay outs on leaky homes could be prevented through a more logical system taking financial presure off the 'Victims' and the Councils