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Clayton Cosgrove

23 February, 2007

Lower value leaky home claims to be fast-tracked

Building and Construction Minister Clayton Cosgrove today announced another key step in getting better outcomes for those affected by leaky homes, with the setting of a $20,000 ceiling for fast tracked Weathertight Homes Resolution Service claims.

Mr Cosgrove said claims under $20,000 would now be managed through a new streamlined WHRS claims process. This process will encourage fast resolution of claims informally through negotiation and mediation within set timeframes.

If settlement is not reached then an application can be made to the new Weathertight Homes Tribunal for adjudication based on the papers, unless a hearing is needed.

Mr Cosgrove said the new process means faster dispute resolution and lower costs.

"I have heard of lower value claims where the costs from lawyers and experts can exceed the cost of repair, so these reforms will help ensure a quick settlement so people can get compensation from the liable parties, get their homes fixed faster and get on with their lives."

Mr Cosgrove however said all claimants, regardless of the size of their claim, would benefit from the introduction of time-limited mediation to stop parties from dragging out the claims resolution process.

The Minister also announced that from April 1, 2007, claimants would be able to get a new comprehensive assessment report that would include potential as well as actual non-weathertightness damage repair costs. The fees for a full assessor’s report are $500 for individual homeowners and $1500 for representative claims from multi-unit complexes. There will be no cost for an eligibility assessment report.

"New WHRS claimants and claimants yet to be decided eligible will be able to get these new beefed up assessment reports that can be used as expert evidence during the claims process, " Mr Cosgrove said.

The Weathertight Homes Resolution Services Act 2006 passed in December 2006 will help all owners of leaky homes settle their disputes faster, hold those responsible to account, get compensation from the liable parties, fix their leaky homes, and it will also enhance consumer protection for homebuyers.

Other key measures in the Act include: the establishment of a new Weathertight Homes Tribunal; better information, advice and guidance for claimants; the opportunity for a class action approach to multi-unit claims, such as for apartments and terraced townhouses and the requirement for territorial authorities to place WHRS notices on Land Information Memorandum (LIM) reports.

The new Act and regulations will come into force from 1 April 2007. The Government's two-year lending assistance pilot for WHRS claimants who are unable to access finance from private lending institutions is expected to be in place from the same date. The scheme will be run by Housing New Zealand Corporation.

Background Information

What regulations have been approved?
The Executive Council has approved regulations required to fully implement the WHRS Act 2006. There are two sets of regulations: one to establish the lower-value claim ceiling, and one to bring into force the fees for a full assessor’s report.
The regulations will be implemented on the same day as the WHRS Act 2006 comes into force on 1 April 2007.

How many claims would qualify for this category?
Claims for $20,000 or less are predicted to be around 20% of standalone houses. There will be a review of the ceiling six months after commencement on 1 April 2007.

Who was consulted about the lower-value claim ceiling?
Consultation with public consumer and interest groups and government departments on the policy underpinning the new Act and regulations was done in 2006. Stakeholders were consulted in early 2007.

Who can apply to get the new beefed up assessment reports?
New WHRS claimants and claimants yet to be decided eligible will be able to get these new beefed up assessment reports that can be used as expert evidence during the claims process. Claimants who have already received assessment reports will be able to apply to the new Weathertight Homes Tribunal for adjudication and a further report on any potential weathertightness damage.

Are the full assessor’s report fees considered too low?
These fees are not intended to be cost recovery.

What are the key measures in the WHRS Act 2006?
Key measures in the Act include a more comprehensive assessment and broadened definition of damage, a coordinated approach to resolving multi-unit claims, relief for voting thresholds to make it easier to make multi-unit claims, a new streamlined lower-value process, requiring territorial authorities to place WHRS notices of existing and new claims on Land Information Memorandum reports, and more effective and efficient dispute resolution.

How will the Act help owners of leaky homes?
The main benefits for homeowners include the ability to claim for a wider scope of damage; receipt of an accurate and comprehensive assessment of the damage to their house and what work is needed to repair it; improved information and case management; reduction in the average time for claims to be resolved; lower legal and evidential costs; and a reduction in barriers to claims by bodies corporate and owners of homes in multi-unit complexes.

How do the WHRS reforms fit into the bigger picture?
The WHRS enhancements are part of a package of Government reforms aimed at ensuring homes are designed and built right the first time. That package includes: the licensing of those who design and build, while protecting the Do-It-Yourself (DIY) tradition, the review of the Building Code, an auditing and accreditation scheme for Building Consent Authorities, sector and consumer education, building product certification, a financial assistance scheme pilot to help the worst affected owners of leaky homes and investigation into options for home warranty and professional indemnity insurance.

  • Clayton Cosgrove
  • Building and Construction