Hon Maurice Williamson

Minister for Building & Construction

/
22 December 2009 /

Media Statement

Review reinforces Government action on weathertightness

A PricewaterhouseCoopers (PwC) report released today on the size and cost of the weathertightness problem reinforces the Government’s work towards assisting affected homeowners, Building and Construction Minister Maurice Williamson said today.

“I commissioned this report because we needed to know the magnitude of the problem so we could respond appropriately,” Mr Williamson said. “The PwC report shows the damage is much larger than anyone had previously wanted to acknowledge.

“The review estimates that between 22,000 and 89,000 homes are affected. The Government acceptsPwC’sconsensus forecastthat around 42,000 dwellings built between 1992 and 2008 could have been affected.

“The report says it is likely that only a minority of these leaky homes – around 3500 -have had repairs done to date, and around 9000 failures had now gone beyond the 10-year legal liability limit period.

“This leaves thousands of New Zealanders in a terrible position: they may not be able to borrow the money to repair their homes, orto sell them, so their single most important asset is decaying in front of their eyes.”

Based on 42,000 failures, the report estimates the total economic costs of fixing the affected homes at $11.3 billion in 2008 dollars.

“Issues can be laid at the doorstep of a lot of people and organisations, but the blame game has been played for too long – now it’s time to act. That’s why the Government is bringing together a package as a priority to help affected homeowners repair their homes and move on.”

ENDS

Copies of the report :

Media Contact : Bridie Wilkinson 021 243 9725

  • Some cladding manufacturers who provide E/2 AS1 details in their technical specifications carry weathertightness disclaimers and state it is the responsibility of the designer and builder to ensure weathertightness.
  • Some Monolithic plastering companies provide warranties for their product only and also carry weathertightness disclaimers should their own appraised buried “flashing” system fail.
  • E/2 AS1 reviewed documents still allows the continued failed practice of burying plastic “flashings” under a thin skim of plaster, relying totally on sealants and microns of paint to provide durability and weathertightness.
  • These buried plastic mouldings which masquerade as flashings are contradictory to all basic principles of the 4 D`s, Deflection, Drainage, Drying Durability. Deflection of water at the critical window to cladding junction is paramount.
  • In 2009 The Dept of Building and Housing released a report commissioned by Price Waterhouse on the expected weathertightness failure rates by type of cladding for dwellings built 1992-2005

Monolithic-EIFS polystyrene80%

Monolithic-Stucco (solid plaster)95%

Monolithic-Fibre cement (flush finished)80%

Plywood, Fibre cement (with battens)80%

More than a decade after Leaky Home Syndrome was made public the same repetitive practices and failed details are prevalent.The same faulty details that caused the problems in the first place are still currently sanctioned in E2/AS1 External Moisture documents.

Summary Fact Sheet of the PricewaterhouseCoopers Report into the scale and scope of Leaky Homes

The Department of Building and Housing commissioned PricewaterhouseCoopers to carry out research to re-estimate the size and cost of the weathertightness problem in New Zealand. The key findings are as follows:

Failure Rates

  • The total number of affected dwellings is estimated to fall within the range of 22,000-89,000. The consensus forecast is for an estimated 42,000 failures;
  • Under current policy settings and resolution mechanisms, approximately 3,500 dwellings have undergone some form of repair to date;
  • It is estimated that approximately 9,000 of the failures have occurred beyond the 10 year limitation period for legal liability;
  • Failure rates since 2006 appear to be much lower than in previous years, suggesting changes in the regulatory requirements and building practices have addressed the major problems identified in the past and reduced the incidence of weathertightness failures.

Failure Costs

  • For the consensus forecast of 42,000 failures, the total economic cost (i.e. repair and transaction costs) of remediation of the affected dwellings is estimated as $11.3 billion (in 2008 dollars);
  • These costs are estimated to be distributed, under the current policy, as follows:
  • 69 % to the owner;
  • 25 % to councils;
  • 4 % to third parties (e.g. builders); and
  • 2 % to the government (the cost of administering the WHRS etc)
  • Owners carry the largest share as:
  • they carry their own transaction costs;
  • failures occurring after the 10-year liability limit are the owner’s responsibility;
  • many failures have gone unrecognised and will, therefore, remain the owner’s responsibility;
  • some owners are responsible for the building work (they are the developer) or have failed to mitigate damage when recognized (contributory negligence).