The Department of Building and Housing recently provided additional information about the proposed government assistance package for leaky home owners. While the scheme will not be finalised until 2011, the announcement does clarify certain aspects of the scheme which impacts upon eligibility for it.
It is now clear that the scheme will not cover home owners who have already taken matters into their own hands and have completed repairs of their houses. Those home owners must continue to pursue any claim they have made in the Weathertight Homes Tribunal, or the courts. It is also clear that the existing weathertightness legislation will require amendment to implement a key feature of the scheme. It is intended that if home owners opt in to receive a contribution of 50% from the council and government jointly, or 25% from the government where a territorial authority was not involved in the certification of their home, they will still be able to pursue other liable parties. If those parties are sued, they may be entitled to cross-claim against the council, but for the scheme to work, this right will have to be removed, as not to means that councils could not rely on the scheme 'capping' its liability at 25%. Because this legislation will restrict the rights of the other building parties who may be sued by an eligible home owner to cross-claim against the council, such an amendment may cause controversy amongst the building industry.
It is proposed that the government guarantees the lending, but the scheme will also require ‘buy-in’ from banks, who must be prepared to lend to home owners who opt in to the scheme, on normal lending criteria. Negotiations with banks are proceeding at present.
Repair costs
As it is proposed that the scheme will proceed on the basis that councils and governments will contribute 50% jointly to the cost of repairing the home, how the costs of repairing the house are determined is one of the most important factors in determining whether the scheme will be suitable for leaky home owners.
As most owners of leaky homes who have repaired them know, there is a great deal of uncertainty in predicting the actual cost involved. Unless the cost estimate is very accurate or contains an element to guard against contingencies, there is a risk that the amount agreed to form the basis for compensation will not reflect the actual cost of the necessary repairs.
Only when these and other issues have been finally determined will it be possible for home owners to decide whether to opt in to the scheme. Because the scheme will only reimburse home owners for 50% of the costs of remediation, it will not suit everyone, but it will provide an avenue for home owners to pursue that does not involve expensive and uncertain litigation. To opt in, the home owner will need to be able to fund the balance of the repair costs, and where the home owner cannot do this then litigation in the Tribunal or the courts (if affordable) will probably remain their best option.