Leaky homes in 2020 are no longer the housing market pariah

When leaky homes were discovered in the mid 2000s, NZ’s building industry and the housing market, were thrown into chaos. 15 years on, what’s changed? Are leaky homes still the scourge of the Auckland housing market?

Due to lax regulations and change in building laws, leaky homes were constructed between 1994 and the mid 2000’s. The designs with flat roofs and small eaves allowed water ingress. Monolithic cladding was cheaply installed, despite not being fit for NZ climate. Design changes meant less airflow, so that water couldn’t escape, and then untreated pine started being used for building frames, which quickly started rotting with the combination of trapped water and the warm, humid Auckland climate.

The resulting leaky mess left homes filled with mould and mildew, expensive repairs that weren’t covered by insurers, builders, governments or local councils, and sometimes houses that were completely impossible to sell.

What’s happened since then is a change in the market; and a leaky home might not be quite the curse it once was.

How many leaky houses are there in NZ?

The figures are hard to know, as it’s possible some homes may have damage that hasn’t been found yet. However, as of 31 October 2019, the MBIE had 7,382 claims lodged against some 12,815 properties. Some multi-unit buildings had one claim for a number of individual units, which skews numbers.

At this point in 2019, there were 468 open claims, with the remainder being closed or resolved. Of those open claims, most were awaiting repair cost assessments, claimant decision, or a resolution was being pursued.

The vast majority of these claims come from within Auckland and its districts. There are a scattering of claims from around the country, notably Hamilton, Christchurch, Queenstown, Tauranga, and Wellington.

But, is the leaky home issue ongoing?

A 2019 study looked into the value of homes that have monolithic cladding, or homes that have been remediated following diagnosis of leaky home syndrome. It looked into the stigma associated with leaky homes, and the perception that the homes are problematic.

There were two main findings. One, was that homes that had been repaired and reclad using cladding other than monolithic cladding had no stigma attached; they sold at prices equal to non-leaky homes. The other finding was that there was a 6% drop in sell price for homes that still retained monolithic cladding. This is down from the 9% figure in previous studies, showing the stigma is slowly disappearing.

People also pay less for homes that have architectural elements that were linked to leaky homes. Small eaves, second-floor verandahs acting as roofs for the first floor, and a range of other features.

Water damaged ceiling from leaky houseWhat does this mean for home owners?

If you are repairing a leaky home, consider recladding it with a product that is not monolithic cladding to remove any stigma or negative effects on the selling price. Because there are still leaky homes that have not been identified yet, monolithic cladding is an obvious sign that it could be a problem. If you want optimal sell-price, there are other options—speak to your builder and discuss the options available.

There are still a number of undiagnosed leaky homes on the market. Some figures from the government suggested up to 174,000 homes were potential leaky homes, a far cry from the 12,815 properties already in the system. More people are being caught out with the ten year limitation, meaning that the repair bill must be covered entirely by themselves. Not fixing the problem simply makes it worse, more expensive, and increases the risk of toxic mould and building collapse.

But more worryingly, some experts believe that some builders are still creating leaky homes. In October 2019, a further raft of changes to the Building Act were made, designed to increase the standards required from builders and making buildings ‘fit for purpose’. There is also additional information required around products used, with the MBIE being given more powers for investigation into building materials.

However, some experts believe there are gaps in the new legislation, with shortcomings in builder’s skills not being adequately addressed. There are also concerns that many builders not fixing leaky homes adequately, opting for cheaper repairs to suit the client. This means the problems continue to exist and the end result could be more repairs.

If you are looking to buy a home, renovate and repair a leaky home, or build a new home, the best advice is to find a highly qualified, experienced builder. Sika Homes tick all the boxes, as registered Master Builders, with all our builders highly skilled tradespeople.

We want to create the best outcome for you—we will work with you every step of the way. We can help you with building inspections and quotes for repairs if you’re buying. If you’re needing leaky home repairs and reclads, we can help you modernise, update, ditch the monolithic cladding and ensure weathertightness. And if you’re building, you know you are getting the very best. There’s no shortcuts to quality. Protect your investment, protect your health, and protect your family by having a warm, dry, healthy home.