Leaky homes – $22bn to fix?

We’ve all known about the leaky homes fiasco for a long time now, but for me (and the government, it sounds like!) the scale has only just sunk in, after reading an article in the NZ Herald this morning.

A few choice tidbits:

The vast majority – between 80 and 100 per cent – of homes built with monolithic claddings (seamless-looking sheets finished with paint or plaster) would fail within 15 years.

I’m not sure what the difference is between a house simply leaking and a house ‘failing’, but failing sounds worse, doesn’t it? Whatever it is, it’s 80 – 100%.

90 per cent of apartments, terraced houses and other multi-unit homes built between 1992 and 2005 would leak badly at some point.

The average cost of recladding a leaky home has reached $300,000.

So there you have it. Do not buy a house built since 1990, and if you do, have $300,000 ready – 90% chance you’ll need it. Our society ‘forgot’ how to make houses for 15 years, even though making houses is pretty much the only productive industry we have left, apart from cattle.

90 per cent of multi-unit legal claims were stalled because owners could not afford to pay their fees to lawyers and building experts.

Well that sounds dysfunctional. I’ll mention this again later.

The NZ Herald article is based on a report from PWC which puts the cost at around $11bn (how much we spent on education each year) but potentially up to $22bn (how much we spend on health each year). Building industry experts favour the higher figure, according to the article. In any case this would be difficult to pay for even during sunny economic weather.

The minister for building and construction, Maurice Williamson had this to say on the subject of $11 bn:

It’s simply ginormous.

Yes, yes it is! Not as ginormous as $22 bn though, is it!? He follows that up with:

[The government] has to just sit there with its head in its hands, saying, ‘Well, I just don’t [know] how to do this’

At least he’s honest.

If national and local government can’t afford to bail home owners out and if home owners can’t afford the lawyers necessary to get bailed out, where does that leave us? New Zealand’s own subprime crisis?

58 Comments Posted

  1. Rob – Define “Fail”.

    It “fails” if people cannot live in it. If the cause is mold spores or continual leaking or the smell of drowned rats in the walls it is still a “failure”.

    So what EXACTLY are you talking about. Houses falling down broken? Or houses that nobody can live in.


  2. Well Rob, leaks cause rot and this will eventually cause failure but probably not within 20 years. A major hurricanc, wind storm, and especially an earthquake will mean rot will be a major factor in the failure of a house. In a similar way a rusty car doesn’t fail until it collides with something.
    In 2010 Jarbury wrote, “European cities are full of higher-density dwellings that don’t leak. They build them out of brick and stone, we built ours from Weet-Bix. That’s your explanation.”
    Now we are more aware of the result of earthquakes, it needs to be pointed out European cities do not have major earthquakes; NZ does. Because of this it is not wise to build with “permanent materials”. I have toured Christchurch and it is the brick and tile houses that sustained the most damage. Churches and other public buildings built in stone and brick are the ones demolished. A friend’s 1930’s weatherboard, iron roofed house moved 70cm towards the Avon river with little damage except for the foundations. If the land hadn’t been condemned it could have been lifted up and the foundations replaced.

  3. I fix leaky homes for a living. And I do mold remediation too.

    In the 10 years I have been doing this line of work, for 9 of those years, I did not see 1 home “fail” from a water leak. However, this past year, we got a hurricane, and MANY homes failed. The problem is, I would not say a water leak caused the failure, more like an 8ft storm surge that shifted homes right off their foundation.

    In terms of normal water leaks, I have never seen failure. That 15 year figure is also complete garbage. It doesn’t matter how old a home is. Sure older homes are more vulnerable, but it has to do with how homes are build. A 6 month old home can fail merely because the foundation wasn’t done properly. In those situations, I STILL wouldn’t say water or mold caused the problem, but the contractor who built the home.

  4. Are parents the only ones obligated etc…? How about teachers and administraters at schools and child care personel for examples of others charged with the same responsibility. Aren’t we all charged with the care of children, in that we are not able, for example, to leave a swimming pool unfenced? Care of children extends more widely than to just the parents of a particular child. If that is the case, surely the wider community should have input with regard ‘how the child is brought up’. Children don’t usually spend all of their childhood at home.

  5. The earlier statements (several years back) where much stronger.

    This more moderate statement has now replaced the earlier more official statement which has been removed.
    (Or I can no longer find it.)

  6. Owen, can you fault the above statement? Does decay in timber not depend on moisture, or does pine not rot quickly when kept damp? By implication, when pine is kept dry, it can last a very long time. Timber buildings in Japan and Scandinavian countries, dating back to the 15th century, are ample evidence for this.
    Let’s not confuse the issues here: moisture is the problem, and I maintain that even treated timber will rot eventually, when kept damp. Consequently the solution should be to require detailing that keeps timber dry. Overseas, standards are in use doing just that, being very successful in preventing structural damage, even in high wind and precipitation areas.

  7. The movement began in Waitakere City where it was argued that dry untreated timber was more sustainable and less toxic.
    In fact their sustainable city programme still promotes the use of dry but untreated framing .
    Go to:


    Kiln drying
    The organisms that cause decay in timber depend on a certain level of moisture. That’s
    why untreated Pinus radiata rots quickly when it’s kept damp. An alternative to chemical
    treatment for some uses is to sterilise and stabilise the timber by kiln drying. When kilndried
    to the appropriate moisture level, radiata pine can then be used as a framing timber
    for internal walls without the need for chemical treatment. Because of the risk of
    moisture entry, the Building Code does not permit its use for external walls.

  8. re treated timber, I reckon it’s important to remember that it was the timber companies on the NZ Standards committee that pushed through the change to untreated – greenies didn’t have a lot of problem with the boron – against the vote of the research people who were outvoted. so Owen’s talk of chemophobia is a distraction.

    Point taken that proper building standards would reduce need for treatment. Proper standards was exactly what the Rogernomes opposed – then as now.

  9. Owen – were you aware that there are bamboo knickers on the market (and on a lot of women as well)?

  10. E-prophet
    You are right. Technically Rimu is a softwood, just as Kauri is a softwood.
    But nine times out of ten Rimu is sold and grouped as a hardwood. And most people presume Kauri is a hardwood.
    I understand that in the Northern Hemisphere the technical distinction makes good sense but down here much less so. However, I apologise for the technical error – but I was trying to make the point that the common terms sap and heart and hard and soft are not the be all and end all.
    Macrocarpa has a heap of oil in it which means it stands up well to moisture. the problem is that if you can smell the oil like after shave on a teenager the macrocarpa is probably too young to be stable.
    I was also involved in using coconut wood as a timber. The problem with coconut is that it is incredibly hard and chips under normal saw blades and the oil is so dense it starts to smoke and burn. However when we solved these problems the blown down coconut palms in the islands after cyclones became an asset rather than waste.
    The most recent floor I laid was bamboo and is that HARD!!! Great with young dogs in the house.

  11. Owen, I thought technically Rimu is a softwood that is it is a non-pored timber. Some pines (soft woods) with high resin last very well, for example Scots pine; also Macrocarpa is better than radiata (not sure of the reason) . Yes Owen, there are other variables like a fungus infection while the timber is wet; I wonder what those spores are. Also Macrocarpa is more durable than radiata so it is a shame it is not grown more, in pruned plantations, for framing .
    Kara, I am glad you are not against Boron treatment because without this it is stupid to use radiata for construction. The problem with radiata is, to be made ground or outside durable it needs high amounts of chemicals in it and it is still not not as durable as some hardwoods. However because of wasteful use, in the past and present, plus rising demand due to population increase, there is not enough available.
    I salvage what hardwoods I can, especially Jarah. Lots of old telegraph poles and fence posts get used as firewood when the only rot is where they have been in the ground. Jarrah is an excellent turning, carving and garden furniture timber. I have turned a set of goblets from Jarrah rescued from a friend’s firewood heap. The builder of their new fence had sawn it up into firewood lengths for them.

  12. Hardwoods like Rimu are generally more resistant to decay of all kinds than softwoods (like Pine).
    So sapwood of a hardwood can last for yonks as long as it is kept dry and well ventilated. And there is sap wood and sap wood etc – depending on the timber merchants. When I was research director for Industrialised Building Systems in the early seventies I helped lead the charge to recognise Macrocarpa as a building timber suitable even for joinery. At first the uptake was slow and when we used macrocarpa it was air dried and stable. But then as it caught on, and indeed became fashionable, people were buying it and using it virtually fresh from the tree trunk and all manner of movement problems occurred because the timber was not dry. People blamed the species instead of the merchants.
    So if you use dry Sap Rimu in a wall stud it may well last 100 years expecially if the wall cavity remains dry and there is a fair amount of heart around it.

    Recently, I bought some totara which was kiln dried and had been fillet stacked in the yard. I used it on my pergolas as 3 x 2 shade purlins. The totara had been rejected for flooring (where I normally use it) because the fillets had been infected with some spore that left white bands across the timber. I thought is would not matter in such a well ventilated area. However, the stuff has really invaded the timber like a pox and I shall now have to paint it with metalex and CD 50 to bring it under control.
    I hate to think what would have happened if I had used it within a wall cavity.
    So there is more to timber than wet and dry and heart and sap and softwood and hardwood.
    The price of timber’s beauty is eternal vigilance.

  13. Wouldn’t call myself a “chemophob”; I do read scholarly articles about the health effects of, well: poisons used to prevent wood from rotting. And of its effects on soil and waterways. Not a pretty picture. And again: all we gain with this treatment is a bit more time before timber will rot, if we don’t get the detailing right.
    As for borer: I am not against Boron treatment, if it is done responsibly (without contaminating soils or waterways). This should take care of the borers. Anything else is but a big plaster given to someone who’s arm just got dismembered by a chainsaw.

  14. Me? A blogger-slagger?
    My desk and chair is equally ancient and there’s not a jot of rot in the lot!

  15. The pun produced a punishing protest. Yes it was a bit off tune for me, greenfly, especially since I have criticized you for slagging bloggers. Owen is talking about a lot of rot if he right about those houses from the 30’s.
    Finally I am working at a 50 year old sap rimu desk and I cannot find any rot in it; there are a few borer holes though.
    I wonder what Owen’s explanation is for my lack of rot; seems obvious to me that is the fact that the sap rimu has been kept dry – made it tastier for the borers though.

  16. E-phrophet – Perhaps the timbre of your comment was off?
    Never shrink from employing the pun. They’re fun!
    Owen, with his ‘saps’ and ‘heart’ likes them too, at his core.

  17. Sorry Owen I succumbed to the temptation to pun and did not think it was abuse. I was attempting to wittily point out that even sap rimu will not rot if it is kept dry. Kara could be upset at you for implying she is suffering from “chemophobia”. Yes some old houses are full of borer and rot. I do inspections for buyers sometimes. So with any house it is best to get an mature experienced carpenter/builder to do an inspection before buying. Also I agree BRANZ standards are the best ones to follow.
    I will check the age of a State House I recently repaired rotting weather boards on. I think it was built pre-WWII. I took 4×2’s to the job expecting to have to replace studs but building paper had been put under the weatherboards so there were no rotten studs.
    You won’t be charging me, Owen, because as I say I have 30 years experience working in the building industry.

  18. E-prophet
    What is it about so many of you on this blog that makes you so unpleasant and downright rude.
    I try to give some advice about timber and risky homes in Auckland and all I get from E-prohet is abuse.
    We all know that exposure to air is an important factor etc.
    But if you are buying a house in Auckland or elsewhere, built during the depression years, my professional advice is to take some care.
    I am sorry if E-prohet finds that advice is a lot of rot.
    I can explain what E-prophet found with his own house but he would obviously consider any advice I gave as a lot of rot.
    Maybe if I charged him, he would take it seriously.
    But it is the official position from BRANZ and I only meant to dissuade people from having a false sense of security about “old” houses.
    I suggest those on this blog consider who really has their interests at heart – and who is treating you like saps.

  19. Well Owen you are talking a lot of rot. When I relined the inside walls of my 1896 house the studs were not 100 percent heart rimu. There was significant borer damage but no rot; I did not have replace any.
    The main point is any timber if kept wet with exposure to air will rot and deteriorate within 100 years. It is the leaks that cause the rot not untreated timber. I would never use untreated radiata as framing because borers will destroy it.
    By the way, the 13th century York Minster Cathedral is built on a raft of oak logs because of the swampy ground. When extensive foundation reinforcement work, on the centre tower, was done in the 1970’s the logs were still sound! They are not exposed to air. Think about how old swamp kauri is when is dug up; stained but not rotten. But the kauri wash tub I salvaged from a friends garden had quite a bit of rot.
    In conclusion blaming the rot on untreated timber is a lot of rot!

  20. Those early houses were built with heart rimu and the timber remains sound.

    During the depression many houses in West Auckland around Pt Chev were built with sap rimu.
    Many of them are held up by the timber sarking wall lining. The studs have long rotted away.

    You need to take as much care buying in those suburbs and in the new apartment blocks.

  21. Jarbury says
    “One might suspect that if developers couldn’t “wash their hands clean” of developments, they might be more careful.”
    This also applies to architects.
    When I worked for a furniture factory the Dutch chairmaker explained to an award winning architect that his design, for church pews, would need bracing of some sort to last, the architect got on his high horse and said, “It’s my design, I’m not going to ruin the lines!” 6 years later I was one the people who had to fit bracing that ruined the lines more than if he had agree to the bracing suggested; AND my firm had to pay for the repairs not the architect.

  22. Kara says
    “Please do not confuse the requirement for treated timber with a higher building standard. Timber that gets wet will rot eventually – treatment will only defer the time when this becomes obvious.
    Builders and designers are to blame.”
    Yes Kara is right. My house was built in 1896 using untreated rimu and the only wall that has had rot was the added on bathroom with no eaves. I have since extended the roof to provide an eaves.
    I have had 30 years working in building trades and have seen a lot of trendy poorly functioning design by architects. About 1996 I had an argument with an English architect about the need for eaves; he maintained they were unnecessary. I guess he based his idea on the fact that in England there are many slate roof brickwall terrace houses without eaves. They don’t rot they just get damp patches on the inside walls and conduct heat out more efficiently. I know I lived in one from 2003 to 2007.
    Regards ‘Chemophobia’. The problem is it is only by chemical treatment that radiata pine becomes usable in most applications. If damp doesn’t destroy the untreated pine the borers will within 30 years; they love it!
    Even furniture made from untreated radiata pine can be ruined in 20 years.

  23. Owen, I wouldn’t necessarily have a problem living in one of the houses you describe as “yours”. The only places that fit that description I know of are some of the places in Freemans Bay, which is quite a nice area generally (except for the giant block south of Wellington St which falls into the Le Corbusier modernist trap).

    John-ston certainly raises some interesting points. One might suspect that if developers couldn’t “wash their hands clean” of developments, they might be more careful.

  24. Katie and BJ Chip,

    Thanks for those explanations. Can’t say at reading them whether dismay at how things changed from the older building codes’ days or shoddy showmen exploiting the back then government regulatory relaxations is worst.

    John-ston raised an interesting point of ‘seperate (or separate) entity principle’ and has me ask how much merit would retrospective rescinding of that so as to effect accountability/responsibility, be renderable by the existing government? To use Owen’s term it appears to me absurd that past building practitioners could continue to dodge the consequences of their own decisions and actions.

    Looks at baldly the all the folks involved in constructing proven leaky buildings have monetized unfortunate owners’ assets. The resulting loss of value for the one ought be balanced from loss of money by the other.
    Yeah, I appreciate that one must pay attention to details, but in this matter it would appear injustice is the continuance of lost in the details. Broad-brush justice may occasion a 10 percent mispend. So what? Put that billion down to NIMBY.

    And progress constructively with make work jobs until economic matters improve all round. From that pov the leaky buildings issue could capably maketh opportunity.

  25. bjchip is probably making the best informed commentary on this subject because he is aware of the curious legal framework we operate under here in NZ.
    The Privy Council told us in the Invercargill decision in 1995 that we were stark raving mad depending on a system which imposed unlimited liability on councils an consequently created an industry and market with a cavalier attitude to the quality of construction.

    In most jurisdictions council liability expires after the first on sale or say five years. After that is is buyer beware and so the industry develops a set of insurance guarantee systems so that customers can buy with confidence. Virtually everyone employs a building surveyor to inspect a dwelling prior to purchase. Of course this is largely because so many houses are hundreds of years old and have been part of a building code inspection process.
    But the system is much more like the boat and car industry. If you buy an expensive boat you get a marine surveyor. And if it sinks you sue the boatbuilder and the surveyor.
    We instead are trying to regulate to perfection and shift all responsibility onto councils and inspectors.

  26. I am surprised that no-one has pointed out one of the biggest reasons why this whole mess was able to take place in the first place – the abuse of trusts and company structures.

    Why do I mention trusts and companies? Your developer was able to create a company to do a development, such as Sacramento – they were able to use dodgy materials, sell the development and make their profit. Once the development was complete, then the company was liquidated and since the company no longer existed, the developer was safe (separate entity principle). Obviously, the smart developer would also put as many assets as possible into a trust and thus if they were sued, they had absolutely nothing to their name.

    If the government legislated that the personal assets of developers of leaky buildings and the assets of their trusts could be liquidated, then we would never have had this problem in the first place. Indeed, that could be a way of generating the monies required to fix this problem and bring the real people to account – of course, it is a pity that no-one on either side of the bench is willing to do this.

  27. Please do not confuse the requirement for treated timber with a higher building standard. Timber that gets wet will rot eventually – treatment will only defer the time when this becomes obvious.
    Builders and designers are to blame; designer predominantly as they leave detailing to the builder, who usually isn’t trained for this. The EIFS systems that leak in NZ work very well in high wind, 260 days of precipitation areas in Germany, because someone there is forced to pay attention to the details. Forced, because builders and architects who don’t, get sued successfully, and as there is mandatory insurance for both, home owners get reimbursed. Builders or architects with many claims against them will eventually find themselves out of insurance options, and thus out of business. So yes: the market can solve this problem, but not as distorted as it is in NZ, where businesses can get away scot free doing shoddy work forever, leaving home owners and councils to pick up the tab.
    Needless to say that this has absolutely nothing to do with density whatsoever. Did I mention that treated timber is optional in Germany and many other European countries? It’s not that buildings collapse all the time over there, or that there is anything like our leaky building crisis. Mandatory insurance and good detailing are the cure – not treated timber. Advocates of treated timber: please tell me what to do with the timber, once the building is demolished. Please tell me what to do with off-cuts. With soil around treatment facilities, with growing allergies in families. Treated timber is very similar as a solution as nuclear power is to cutting greenhouse gases. By masking one problem, we create a hugely longer lasting other.

  28. OK, it sounds like there are various reasons for all these leaky houses being built. One of the reasons was lack of appropriate regulations. However, why should this mean the local or national government should bail the owners of these houses out? I feel sorry for the people who are now stuck with sub-standard houses, but there are always risks when you purchase something. Is it true that no one realised the likely problems with these types of houses when they were built? It sounds from Owen’s postings that he realised the problems; surely cautious purchasers would have been able to get reliable advice _before_ purchasing this type of house? At least these people still have the land on which the houses are built, even if the house is worthless.

    Why should the rest of the population, including younger people who do not have much hope of affording a house have to foot the cost of repairing or rebuilding houses they will never have the chance of owning? I’m sure everyone here can think of better uses of government money … perhaps building state houses that are able to be rented to anyone?

  29. Tom

    Basically the Acrylic Cement over Styrofoam panels which were a new product at the time and which were advertised as monolithic claddings. The product design had a single exterior skin which was supposed to stop ALL the moisture from entering the building envelope.

    While it remains intact it has a shot. When it fails (cracks, unplanned penetrations, poor seals and design AT penetrations) the water gets trapped behind it, in the wall, next to untreated timber. The untreated timber issue persists in pretty much ALL the houses from that era (Trevor, you need to watch for this). With the result in the monolithic cladding designs, that the whole thing gets mold, rot and basically self-destructs.

    The best thing to do with a house like that is to tear it apart (carefully enough and you can keep the windows and the doors and maybe some other bits and pieces), and build it over properly. Since this represents a lot of the housing stock, and the uninsulated walls seem to represent much of the rest the reason why so many Kiwis like to go tramping and live in tents becomes obvious 🙂

    This country has the worst housing and property environment I have ever seen, the USA, Russia, Australia being the other places I have any familiarity with. How we got here? This thread seems to contain most of the issues. The developers having to foot the bill for the entire development all at once, the tax advantages to property, the ideological rejection of regulation, the irresponsible dependency on the councils for inspections and certifications.


  30. The sad thing is SPC, you won’t get the democratic right to say any such thing like ring fencing debt.

    Franklin got $1billion of assets taken from it which will mostly be privatised/sold off.

    Franklin had no say at all in it. Franklin people are still asking “why Franklin?”. Franklin was never one of the big councils that held sway in the forums. All it has is water and land and agriculture which the government wants control of. (Our water service system is a separate one). This is theft by government.

    Hide wasn’t even interviewed on it this morning. Paul Holmes, star in waiting for a knighthood for soft soaping this government, said straight out this morning; super city is done and dusted. The third bill hasn’t even been through the select committee process. The 1st bill didn’t even get that.
    Franklin will be paying for wealthy developers’ greed and a previous National government’s toadying to the business lobbies.

    Franklin has 5 leaky homes. Auckland City has Jenny Shipley’s leaky house, John Banks’ ex leaky house (wasn’t that clever of him to offload it) and Mike Moore current National stooge’s leaky house plus how many more – hundreds? thousands? to pay for.

    So, sorry SPC, you’ll have as little power as the rest of New Zealand, to stop Key and Hide taking away our birthrights in our Country.

    That’s what Key was brought here for and why he signs off everything Hide asks for.

    What I am disappointed in is the complete lack of understanding in this naive little Country of mine that if all the many disparate groups which will come under attack during this government’s time would only join forces throughout New Zealand, Key and Hide wouldn’t stand a chance.

    Then you might just get the kind of Country worth fighting for. I doubt our old soldiers would have gone over the top for smiling assassin Key and skullduggery Hide.

  31. Tom-

    the issue is about the building panels (exterior walls) that we not legal before the change of legislation in the 90’s, but were part of the ‘access to new technologies’ clause.

    They were developed for climates where the is low humidity and rainfall, like Arizona.

    The vogue for houses with flat roof, minimal lines, and a vaguely ‘mediteranean’ feel was an explicit outcome of property developers specifying the exterior wall-cladding product which had just become legal.
    The absence of any serious covering (‘plaster’!) over joins in the wall-panels meant that the external integrity of the buildings was compromised immediately, and the earliest problems came up within about 5-8 years, pre-figuring the results that have come out in the comprehensive report refrred to at the beginning of the post. If you understand how gib-stopping works with internal wall-cladding products (not going to name by brand, that would be silly, wouldn’t it …), well the protocol for sealing the joins for the exterior product was less robust than gib-stopping.

    My step-father was a builder, and for a while in the 90’s I shared ownership of a turn-of-the-century inner city villa, thus learnt by doing a bit of renovation for ourselves with my step-father’s guidance. At no stage did we ever seriously consider buying a new property being developed by any of the then-active developers in Wellington.

    As a side-track, it is interesting to discover how many of these families of developers (Keith Hay Homes, Kingdom Residential, etc) are very serious, high-minded, bible-thumping citizens who push their ‘christian moral code’ equally as hard as they market their property developments. It’s spelt h-y-p-o-c-r-i-s-y, folks.

  32. I have been looking to buy a house recently. One of our requirements was that it was built after about 1985 – we wanted wall insulation. We deliberately avoided those houses with concrete over polystyrene type construction and those without eaves or with minimal eaves. That still left a reasonable number, typically brick or block over timber frame with glass fibre insulation. I am not aware of any trouble with those even if they were in the 1995-2005 timeframe.


  33. I’m glad I am not a ratepayer in Auckland, facing a share of that $20B+ = bill.

    Pity those poor westies to be stuck with the cost of those apartments – one would imagine the reason Nats supported ACT on the super city was to get in more ratepayers to share the leaky homes bill.

    I know for one thing, I won’t support a super city in Wellington unless their bill is ring fenced to the city ratepayers only.

  34. I’ve tried for the life of me to understand how and why leaky buildings. Jarbury suggested “crap” materials, “weetbix” also coming to mind.

    So please, simply, and hopefully not just for me, were these buildings leaky via permeable-to-rain slabs, roofing tiles, whatever, or lousy joints and jointings.. or both..?

    Seems to me that ‘adjudication’ would at least require answers from suppliers, manufacturers etc

    In personal experience I could attest to builders’ attitudes insofar as a fellow had defective spouting explained to him by the guys who put it in as “open evaporation system” They were Irish-tongued and possibly joking but that in no wise excuses a lack of slope to the said spouting..

  35. Logix, I couldn’t agree more. Minimum parking requirements are the big problem – as the situation I described above would need to provide 8 parking spaces off the street.


    Minimum parking requirements are effectively mandated auto-dependency. Forcing us to spend tonnes of money providing for vehicles whether or not we actually wish to use them (and therefore providing us with significant incentives to use them, as we’ve largely paid for the privilege already).

  36. @jarbury

    It seems silly that on a 600m2 section you could build a mansion with 400m2 of floor area (two 200m2 levels), but not four 100m2 units.

    Sort of true, but the real limiting factor in most multi-unit developments is not the building itself, but the rules around the bloody cars. The driveway, the turning circles, the carport/garage, the visitor parking… all take up a hell of a lot of space, and with four dwellings the problem is four times harder than with one.

    It would all be so much easier if we were not so addicted to our dammed motor cars, we parked them in a communal area at the entrance of the site … and used those things sticking down from our hips to get the 20-40m or so to the front door.

  37. @Owen

    Private companies were often the front contractors for council funded developments. In those days the councils designed and payed for all the big expenses, the essential infrastructure such as roads, water, sewerage, drainage, power and so on. All these things were publicly funded. The ‘developers’ merely did a bit of land clearing, arranged for some low grade earthworks, paid a surveyor to do a plan, slapped up signs and arranged ‘builder’s terms’ funding for the spec jobs.

    These days the developer pays for far more than this. Example. New development “Lincolnshire’ between Johnsonville and Tawa.. requires a new $1.5m water supply pumping station and a $2m reservoir to service it and has to be paid for directly by the developer.. an essential cost that can only be amortised onto the first purchasor of the sections. The same with all the millions spent on roading, services, engineering and so on. Labelling all these essential items as ‘compliance costs’ is dishonest and deceptive.

    All the easy flat sites were developed long ago, most modern sites involve substantial earthworks to create saleable sections. And you cannot take short-cuts with sort of thing.. it has to be done properly… especially in terms of draingage and compaction.

    Whereas in earlier times the council paid for and owned them and was cross subsidised by existing and future ratepayers, they are now paid for directly by the developer… and that is why section prices are so high. No amount of ideological twisting can get away from that simple fact.

    Feel free to use my example Owen, but be aware that your audience may be smart enough to realise that it is proves the opposite of what you are intending… even if you are not.

  38. I see in more recent years there are a number of brick terraced housing developments being built in Auckland. There are some in Stonefields and others near St Lukes.

    This seems like an incredibly good idea and hopefully we’ll see more of them. You get the best of both worlds: intensification and houses that don’t leak.

    I wonder how much of the affordable housing problem could be fixed if we got rid of “one unit per site” or other similar controls, and instead just regulated bulk and height of developments. It seems silly that on a 600m2 section you could build a mansion with 400m2 of floor area (two 200m2 levels), but not four 100m2 units.

  39. Thanks Jarbury

    The fact that the housing is higher density is NO excuse for it being poorly designed and constructed.

    Owen has a point about idiots with “chemophobia”. However, it would not have been permitted if the regulatory regime hadn’t been dismantled.

    There are and were many contributing factors in the creation of this mess. The difficulty of holding the builders accountable, the lack of individual responsibility afforded by the total reliance on council to inspect. The dismissal of regulation. The introduction of a wonderful new building product that promised cheap weathertightness but had not been properly evaluated by anyone (this stuff happened to a lesser extent in the US too, when the monolithic cladding first appeared, it didn’t LAST long there and there wasn’t anybody I think, fool enough to allow untreated timber in their walls. Lots of blame going around.

    However, Owen… the notion that it is wrong to try to get higher density housing built because we have had this experience is extremely bogus. For one thing, it is easier on resources to get a multi-occupant dwelling constructed than single, and likely faster as well in terms of replacing the damaged stock.

    Think of this as an opportunity to tear down garbage and build something solid and somewhat denser, with a park around it.

  40. In the sixties I was part of the team that made townhouses possible and indeed I invented the term.
    For decades there was no problem with townhouses and infill housing because we enable them only to increase choice and to reduce the overall costs of dwelling on expensive land.
    But in the nineties density became the goal rather than choice and then the rot (literally) set in.
    The Privy Council warned us of our lunatic liability law in 1995 and we ignored it.

    jarbury, you are right in that houses in Europe are built mainly in the time honoured way. But you might be surprised at how in many cities hardly any new houses are built at all.

    Logix, you have no idea what you are talking about. There is no logic behind any of your statements.
    I promoted townhouses and infill housing in the sixties to stop governments plan to slum clear the whole of Freemans Bay and Ponsonby by allowing high density housing and deregulating land use. It worked.

    Private companies did virtually all our our suburban development in the post war years and the housing Voucher system (A Labour Government world first) made it all possible. I don’t know where you get your information wrong but even if it was true in NZ it has nothing to do with what has happened elsewhere in the world.
    Land use regulation can both drive up the price of land AND increase compliance costs. Your example shows the devastating impact of excessive compliance costs. Not many people have access to free land. You are confirming what my analysis shows. Excessive compliance costs now mean that the land has to have zero or negative value to meet the market price. Thank you. I shall use your case study to help prove my argument.

    When compliance costs alone in Kaiwaka are 60,000 how can we compete with successful urban economies in the US where you can buy the whole section for 40,000.

  41. Owen’s logic would be irrelevant if Nick Smith wasn’t falling for it hook, line and sinker.

    I don’t get your point Owen. Sure, land-use regulation encouraged more townhouses and apartments, but that absolutely did not mean we had to build them out of crap.

    European cities are full of higher-density dwellings that don’t leak. They build them out of brick and stone, we built ours from Weet-Bix. That’s your explanation.

  42. @Owen. Your constant ideological harping on the idea that ‘if only we eliminated all land use regulations then dwelling costs would plummet’ is frankly embarrasing. A close friend of mine has spent much of the last few years developing a 100 acre farm in West Auckland (inside the urban zone) that has been in the family for generations. The cost of the land was essentially zero, yet by the time all the development costs are loaded onto each and every section, the price of them required to make a sensible profit is bang on in the market range.

    I repeat, even if developers were to obtain open land for free… the cost of sections would not reduce.

    The reality you, and most people have forgotten is that prior to the 90’s National govt it was Local Councils that funded most new developments. This was how most of the established suburbs were originally subdivided from farmland. Big contractors often acted as the front-men, but it was the Councils who funded it.

    Crucially they were able to fund these projects at very low interest rates because they were such low risk entities, AND had the certainty of an income from future rates. Essentially these subdivisions were being cross-subsidised by existing rate-payers and future rate income. The whole cost of the new sections didn’t have to be loaded onto the first purchasor.

    Of course all this was stopped in the 90’s (I can’t recall the exact legislation) but effectively a requirement that prevented Councils from ‘cross-subsidising’ activities shut them out from the developing business… and handed it over of course to a small handful of big private developers. (National’s mates of course.)

    At that point the price of land went through the roof and has never come down.

  43. We could not have carried on with the existing system of building codes because they were totally prescriptive.
    The whole world changed around that time.
    We made some serious blunders in one area that allowed people to make leaky buildings.
    But they also leaked because they were encouraged to abandon good design principles which kept out the weather.

  44. One way to get the $11-22bn is to make those organizations who lobbied for the building code changes accept responsibility for providing the money; a simple case of user pays.

    Scrutinising the appointments diaries of ministers, MPs and senior officials should show who the lobbyists are/were and then a tax could be levied on them; their individual tax being in proportion to how often they lobbied. Some, of course, would be dead or otherwise inaccessible so the survivors would have to carry the entire cost.

  45. Very interesting, thanks.

    So strong land use regulation combined with weak building codes. What would have happened with strong building codes instead?

    Less leaky homes are being built now. What has changed, in your view? Land use regulations? Building codes? A wary public?

  46. Do not confuse land use regulation with building codes.

    The main driver was excessive land use regulation. This lead to sloppy and opportunistic use of the “freedoms” provided by the “loosening” of the building code in the nineties.
    During the nineties governments throughout the New World in particular, moved from a specification based code to a performance based code backed up with “means of compliance.” This was necessary to accomodate the changes in building materials and technology and to allow for efficient compliance with the need to deal with higher wind and earthquake loads than traditional codes.

    In America the combination of the performance based codes and excessive land use regulation led to short cuts in electrical and plumbing systems. Canada had its own leaky buildings. We have had leaky buildings too.

    My buildings don’t leak because allthough I use hardiflex and similar sheet claddings I always use eaves and NEVER penetrate the cladding with flashings but overlap one layer over another at the window head.(the old bungalow detail at the bay window)

    But I was providing houses on land at a reasonable price. I designed and built a very comfortable one bedroom house for a single woman on a wonderful 2000 sq m lot with harbour view for a TOTAL (land AND building) of $165,000 ten years ago. Because my lots were affordable, four out of the six sold to divorced or single women. They asked if I could do a similar development next door targetting single men! I explained I probably could not the consents for the nightclubs and bars.
    You cannot win them all.

  47. And Owen pops up with some more right wing drivel, the simple fact of the matter is the government approved something it never should have, due to Shipley in 1993 ripping up the old 1900 builing codes, codes that had been in place since 1900 and been amended whenever there had been a crisis…

    It is simply the fault of of a lack of regulation due to blinkered “the market will regulate all” thinking, you can come up with as many other flawed reasons Owen but it will not change the truth that this is a huge hole in your usually immoral ideological mindset…

    The step now, is simply for the Government to step up and accept responsibility… The same thing happened in British Columbia in Canada, the government said we cannot have our citizens living this way and provided all funds required to repair the homes and kept the lawyers and “experts” out of it… The result..? About 25% of the costs we are incurring to reach the same goal…

    We created ACC, why not a LBCC..? Why not take this opportunity to retrofit homes so we can get out power usage down 25% and have fully sustainable power generation… Lets save the future health burden crisis of having tens or hundreds of thousands of fellow citizens with lung diseases…

    Its time to act and if taxes have to go to pay for it so be it, we save more in the long run…

  48. Owen, are you saying too much regulation is to blame? Correct me if I’m wrong, but I am under the impression that in the 90’s National removed or loosened many building regulations.

  49. Yet another cost of the madness called Smart Growth or Dense Thinking.

    You will find these buildings concentrated in the Smart GRowth jurisdictions and hardly any in the lower density towns and suburbs.

    The drive for density at all costs (even though Auckland is the densest urban area in Australasia) led to buildings without eaves and with balconies within the building envelope rather than hung on the outside.
    The the Constraint on land supply caused by MULs drove up land prices to where the land was more than 50% of the total “dwelling” price rather than 20% to 25% as it used to be.
    Naturally the amount of money available for sound building within a given budget was reduced and everyone looked for corners to cut.
    Then chemophobia promoted the idea of using untreated pine.

    I know architects who refused to build such dwellings and insisted on lower density with eaves etc and the planners would not give approval and so my colleagues lost work to those who were prepared to abandon long standing good practice. And yet as far as I can tell the Green Party continues to support Smart Growth or Spatial Planning as it has been re-branded.

    How come. The normal explanation is that the GReen part wants to destroy the rich biodiversity of the suburb gardens. to protect the low level diversity of pasture.
    Again – how come.

  50. Considering that the total coast of building a house is less than $300 000 in most cases it should be obvious that the numbers come from those who make money out of saying a house is leaky.

  51. From the PWC report, who ends up paying:

    A typical adjudication might find:

    • building parties: 60 percent;

    • designer/Architect: 10 – 20 percent; and

    • council: 20 -30 percent.

    It is common to find, however, that when those parties are brought
    to account for their liability, that they cannot be found and/or are in
    no position to contribute to the liability. Liable parties have often
    gone bankrupt and out of business or have found a legal business
    structure where their assets are protected.

    One example that was discussed during interviews was of a
    business that opened a separate company for each dwelling it built
    and closed it soon after the property was completed.

    I can only conclude that in that case at least, the developers knew what they were doing, knew it would come back to bite them, and ensured they could never be held accountable.

  52. As I said to my partner this morning: We must never, ever buy a house in Auckland built between 1992 and 2005.

    On a personal note as somebody who aspires to buy a house/unit/apartment in the next 5 years – I have to wonder what this is going to do to the affordability of NZ housing that wasn’t built in the danger years? How much will a nice old villa circa 1950 or spanking new apartment circa 2006 be worth?

    Could the Labour and National govts of the 1980s and 90s have failed more conclusively to provide my generation with healthy, affordable housing? It’s hard to imagine how…

  53. Thanks Watermelon. The news article had me a bit confused initially, I thought there was two reports that came to different figures. But there is just one and the government chose the median/average cost in the report while industry experts think the higher cost is more realistic.

    I’m getting past the executive summary now. Interestingly, in 2002/2003 the estimate was $1bn of damages. My, how things change

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