Mayors talk costs of leaky home package

Now the government contribution to the latest leaky homes rescue package is firmly on the table, local authorities and retail banks must decide how much of the tab they’re willing to pick up.

The proposed package splits the cost of leaky home repairs 25-25-50 between government, local authorities and homeowners, with the government also covering administration costs and providing loan guarantees for homeowners.

Prime Minister John Key estimated yesterday that the total cost to central government would be $1b over five years, to be considered separately from the $1.1b of new annual spending to be allocated in Thursday’s budget.

Negotiations with mayors and retail banks as to the exact details of the package are ongoing.

Cost to ratepayers

Auckland mayor John Banks and Wellington mayor Kerry Prendergast, the nominated key negotiators on behalf of local government, were present in Parliament yesterday as the scheme was announced.

Ms Prendergast said local authorities were “currently settling at something significantly less than 25% but when you add in our legal fees, it comes up as a little bit more.”

She praised government for returning with the current proposal after local authorities rejected an earlier offer.

Ms Prendergast acknowledged that, while ratepayers were already sharing the cost of leaky homes as part of the Wellington City Council’s risk bill, the new scheme would potentially mean a greater burden on ratepayers.

In Auckland, the scheme may cost the new Auckland council around $1b “over a number of years,”,Mr Banks said.

“We’re unable to quantify the amount of money ... what we do know is that Auckland City alone last year spent $6 million on lawyers. We want to get that money out of the law firms and give it to jibstoppers and painters and builders to fix the problem.”

He was confident of a buy-in from the greater Auckland mayors.

Cost to government

When asked if, given the expected cost to Auckland alone, central government could be confident of keeping their share of the scheme to $1 billion over five years, Housing Minister Maurice Williamson pointed out that Auckland contains the majority of the country’s leaky homes.

He estimated that 75% of known problems exist in Auckland, and that the addition of Tauranga, Wellington and Christchurch brought the total to around 92%.

“We do not know exactly how many people will take this particular product up,” he added.

“I want to emphasise that nobody will be required to take up this package. It’s simply another option for owners to get their homes fixed.”

Mr Williamson said that homeowners would remain entitled to pursue claims through the Weathertight Homes Tribunal or other legal avenues and, if they chose to accept the new package, would not lose their right to take legal action against builders and building designers.

“The only change is that they won’t be able to take action against the local authority who has come on board in this package,” he said.

Mr Williamson hoped the package would be available to homeowners early next year.