Executive summary

• The problem of ‘leaky buildings’ has emerged as an issue of concern to many New Zealand homeowners. It appears to be a systemic problem, in that compliance with individual procedures and standards may have been achieved, while the overall result is a building which is not weathertight.
• Responses to the problem to date have included a major report to the Building Industry Authority, local government conferences, and several initiatives by central government, including an adjudication process for affected homeowners.
• Over the past decade, over 220,000 building consents have been issued, with an average value of $132,000 per consent. In the year to June 2002, 42% of building consents have been issued in the Auckland region. The costs of repair for affected buildings have been variously estimated at between $120 million and $1.8 billion. In British Columbia, Canada, the same type of problem has been variously estimated at costing between C$500 million to C$3 billion, with an average repair bill per ‘leaky condo’ unit of C$23,300 (around NZ$30,000 at 1998 prices).
• The statutory and regulatory environment for the building industry changed in 1991 with the passing of the Building Act, which allowed a less prescriptive set of regulations for the issuing of building consents, and allowed private sector building certifiers to compete with territorial authority building inspectors for inspection work and the issuing of consents.
• Major claims regarding weathertightness have yet to be pursued through the courts.
• ‘Home Warranty’ insurance schemes operating in Australia have been increasingly unprofitable for insurance companies, who are moving out of this particular market, in particular after the collapse of HIH Insurance in 2001.
• Consumer preferences for more complex building forms and newer construction methods have resulted in buildings which have a reduced tolerance for the vagaries of wind and rain, and fewer ‘second lines of defence’ should water enter the exterior cladding of the building.