Faster, better weathertightness service on the way

Leaky home claims will be resolved faster and repairs undertaken sooner under a shake-up of the Weathertight Homes Resolution Service (WHRS) announced by the Minister for Building Issues, Hon Clayton Cosgrove.

The changes follow a comprehensive review of the WHRS by the Department of Building and Housing and will be supported by government investment totalling $30.5 million over 4 years.

‘The review clearly showed the need for real improvements and that is what these changes are designed to bring about,’ Mr Cosgrove said. ‘It is all about ensuring that New Zealanders have confidence in the quality of their homes and these changes are part of wide ranging reforms across the building and housing sector. This includes the announcement last month of a licensed building practitioner regime. ‘One major change following the review is that the scope of assessments of leaky homes will be widened to cover probable and not just actual damage,’ said Mr Cosgrove.

‘This means that future problems that may occur can be quantified, making the whole assessment process more realistic in terms of the issues faced by owners of leaky homes. ‘As a result, assessments will now more clearly identify the full extent of property damage and the likely causes – and (without determining liability) it will identify those who might have contributed to the causes of damage. ‘This will bring all parties to the table faster, lead to quicker resolutions and earlier, effective repairs,’ Mr Cosgrove explained.

Other key changes to the assessment process, funded by the Government to the tune of $18.2 million over the next 4 years, will be a new class action approach to multi-unit claims, and better information and advice services. The changes will allow for class actions by unit owners in apartment blocks, which account for 70 percent of the claims received to date. Bodies corporate will be able to lodge a single claim for common property and damage to any units, with the agreement of those unit owners. Currently, individual owners have to each lodge separate claims.

WHRS case managers will also offer claimants more comprehensive information and assistance on their property damage assessment report, and guidance regarding the negotiation, mediation and adjudication options open to them. Comprehensive re-assessments can be requested by existing WHRS claimants. An adjudicator will consider each request and decide whether, and to what extent, additional assessment may be warranted. A key finding from the review is the need for a more timely and authoritative dispute resolution process, including a defined timeframe to be set for mediation. The improvements deliver this. ‘Mediation has often taken longer than is necessary, leading to mounting costs for all parties and further damage to properties,’ Mr Cosgrove said.

‘Essentially, this will be speeded up with a new pre-hearing phase, overseen by an adjudicator, who will set ground rules and decide the parties who should be involved. ‘This process will also allow for site visits where they can help bring about early resolution,’ he said. Where mediation cannot resolve the dispute within a specified timeframe, the matter will automatically move to adjudication where a determination will be made.

‘Again, this is about getting issues resolved and not leaving anyone in limbo,’ Mr Cosgrove said. Under the new ground rules, adjudicators will be able to make greater use of their investigative powers to identify, refine and determine the issues in dispute.

Resolving disputes quickly will enable affected homes to be repaired as early as possible. This will be helped by the introduction of an abbreviated dispute resolution process for lower-value claims, enabling parties to come together to resolve the problem more informally. Additional adjudicators will be recruited to help deliver the $9.6 million dispute resolution package over 4 years.

The Government will provide lending assistance to some WHRS claimants who cannot fund early repairs themselves and cannot access finance from a private lender (such as a bank). Housing New Zealand Corporation will receive an extra $7.1 million in capital for lending assistance for the 2-year pilot, to be repaid by borrowers at market rates of interest.

The Government intends to offer two products:

• loans through the Corporation at market interest rates for claimants declined finance from their lender
• a guarantee on private bank loans at market rates. The scheme effectively provides bridging finance so people can begin repairing their homes early. The eligibility criteria will be finalised over the coming months.

In other changes:

• $1 million will be spent on a consumer education campaign over the next 2 years, aimed at ensuring that affected homeowners have access to reliable information, and empowering home-buyers to make informed purchase decisions 
• $200,000 will be spent on research and information/ technical advice for builders and designers to make sure leaky homes are properly repaired 
• $500,000 will go into a study to examine the feasibility of introducing home warranty and professional indemnity insurance. The changes to the WHRS will require legislative amendments and it is planned that the improvements will be in place in early 2007.