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PM’s Presser – Leaky Home Loan Scheme

PM’s Presser – Leaky Home Loan Scheme

Victims of leaky homes will get help with the cost of repairs under a new government loan scheme announced today – but homeowners will still pay half.

Prime Minister John Key appeared at Monday’s post-Cabinet press conference with Building and Construction Minister Maurice Williamson, Auckland mayor John Banks and Wellington mayor Kerry Prendergast to help sell the scheme.

The package would see the Government and local councils each reimbursing homeowners for 25 percent of their repair costs over a five-year period and a government-backed guarantee on home loans to pay for the work.

The Government has allocated an uncapped $1b for contributions and would also pay for the scheme’s administration costs.

Key said shoddy construction had affected thousands of lives and was on a similar scale to a natural disaster.

The Government’s contributions were “the right thing to do”.

But Williamson said homeowners had to acknowledge there was a limit to what the Government could contribute.

“It actually is their asset that is being fixed; it’ll be restoring equity into their asset.

In many cases after the restoration is done they’ll be able to recover everything they put into it because of a rising house market.”

“You can’t just have this happen and expect someone else to pick up the entire tab,” he said.

Williamson said the Government still had to work out many of the details, such as whether the Government guarantee would cover defaults and whether homeowners would be compensated for costs that overrun estimates.

There were some certainties: the scheme would not replace the Weathertight Homes Resolution Service, and claimants could still take legal action against third parties.

But the new scheme would only cover those whose homes were less than ten years old.

Williamson said the Government had to draw a line somewhere.

“If you take away the ten-year time limit the sums of money just become horrific and unable to be done.”

“If you drew it at 11 someone at 12 would feel aggrieved; if you drew it at 12 someone at 13 – we think ten years is right under the [Building] Act,” he said.

Mayors Banks and Prendergast said they were hopeful about the scheme and were confident other councils would agree to it.

But the contributions could potentially mean a greater burden on ratepayers, Prendergast added.

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