Jenee Tibshraeny: NZ Herald Wellington business editor on the concerns for what Government building overhaul means for homeowners

There are fears the Government’s proposal to change who is liable for shonky buildings risks leaving homeowners in the lurch.

The Government is proposing to prevent local councils from being lumped with big bills if they consent buildings that turn out to be leaky or defective.

NZ Herald Wellington business editor Jenee Tibshraeny reveals why homeowners have voiced concerns.

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Episode Transcript

Speaker 1 (00:00):
Now there are homes that are concerns rather that the
government's proposed building overhaul might leave homeowners and the lurch. Essentially,
what the government's doing is they want to remove some
of the responsibility for defective buildings from councils and instead
make the builders and the traders and so on responsible
for their work. But that is where the plan hits
a snag. Genatives Traine as The Herald's Wellington Business editor
and with us Hello janee hi Heather. So in this case,

(00:22):
the trade's would have to be insured. But that's the problem,
right whether they can actually get insurance.

Speaker 2 (00:28):
That's the thing. So if you are shifting the liability
to the people who cause the problem, the trade's and
so on, that's all fair and well. But these tradees
don't necessarily have deep pockets. So if you have a
problem with your with your home, you chase your builder.
Your builder can say that we're liquidating the company, or
it can or the builder can just say, look, we

(00:49):
can't pay we can't pay you. We're just two guys
and we can't pay you out. So then I guess
you go. Well, hopefully the builder has insurance. All the
builders offered you some sort of guarantee, warranty or whatever
on the building work. The government is looking at when
it makes this change. It's looking at making these consumer
protections mandatory. But I spoke to someone from the insurance industry,

(01:12):
Stanford Insurance director Duncan Colebrook. He's one of the guys
that provides this insurance cover for the builders, and he's saying, look,
we're not going to just ensure any old builder. You know,
they have a strong underwriting processes, and of course insurance
companies don't want to lose money. They can't just ensure everyone.

(01:32):
So the insurance industry doesn't seem to be that keen
on what the government's proposing because you know, they're not
going to provide blanket cover for every trader, every builder,
every building.

Speaker 1 (01:44):
So what's the alternative.

Speaker 2 (01:47):
Well, you know, this is all still being worked through,
but as it stands, it seems like there's a risk
that the homeowner will be exposed because if it is
not entirely ensured and the pockets of these builders and
things aren't that deep, then it could leave you in
the lurch. Duncan Colebrook, he from Stanford Insurance, said to me, well,

(02:10):
you know if the government wants to make the stuff mandatory,
like consumer protections mandatory, then maybe it needs to step
in and provide some sort of insurance cover. But you
know that he made the point that is the exact
thing the government is trying to avoid. You know, it's
trying to get rid of their liability on councils, which
kind of comes back on the government. So you're really

(02:33):
it does leave you in a sort of scratching your head.
Another insurance Brokerray spoke to Ben Recard. He said, well,
you know, insurans are hesitant about providing this kind of cover.
You know, it's specialist cover because normally an insurance company
provides cover for a year, like for your house, it
looks at the risk, provides cover for a year next year,
reassesses changes the premium, does it again. But this is

(02:55):
this type of stuff is for like ten years, you know,
so it's quite risky ten years. There's some hesitancy there.

Speaker 1 (03:01):
But this goes some way to explaining why the government
only half announced the thing, right, because we were expecting
an announcement of yes, we're changing where the responsibility lies
and this is what's going to back it up. But
we only got the changing of the responsibility, not the
backing up because it's too complicated.

Speaker 2 (03:17):
Well exactly. So. The theory is nice, let's not cripple counsels.
You know, with the leaky home saga many years ago,
councils get left with this big bill, rate payers end
up paying for it. It sounds nice. We all like that,
make the bill, the make the naughty people pay. But
there's some fundamental details there.

Speaker 1 (03:36):
You know.

Speaker 2 (03:36):
If the insurance industry is not rushing in to say
that's that's fine with us, then I still have major
questions of exactly how this is going to work.

Speaker 1 (03:45):
Yeah, totally all right, let's see what they come up with.
We'll have to wait for Chris Pink to figure it out.
Thank you so much to know I appreciate it. Jenative Schraney,
the Herald's Wellington Business editor.

Speaker 2 (03:53):
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Speaker 1 (03:57):
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