L17: Leaky Buildings

Question 1

What is a leaky building?

Answer 1

One that allows water to penetrate the building envelope –> held inside the wall cavity –> festers and raises moisture content in framing –> fungal growth –> weakens timber and increases mould (health issues)

Question 2

What are the common features of a leaky building?

Answer 2

Modern/Mediterranean style
Monolithic cladding (barrier approach to prevent water coming in but cannot get water out in failure)
Parapets (no eaves)
Typically multi-storey terraced housing

Question 3

What percentage of WHRS claims have monolithic cladding?

Answer 3

85%

Question 4

When did monolithic cladding peak in the Auckland market and why?

Answer 4

2001-2002 at approx 35%

Low cost, easy installation, low maintenance

Question 5

What contributed to the origin of leaky buildings?

Answer 5

1990s - market liberalisation of construction industry
Removal of apprenticeship training scheme
Performance based building codes
Competition between councils and private certifiers

Question 6

What are the 4 Ds of weathertightness

Answer 6

Deflection
Drainage
Drying
Durability

Question 7

What percentage of WHRS claims came from Auckland (May 2013)

Answer 7

77%

Question 8

What are the key locations of leaks?

Answer 8

45 including parapets, headers of openings, balconies, cladding itself

Question 9

How did the percentage of stucco and EIFS properties compare to percentage of WHRS claims for these types?

Answer 9

6% stucco, 17% EIFS

Yet majority of WHRS claims

Question 10

How did the percentage of clay brick properties compare to percentage of WHRS claims for these types?

Answer 10

38%

Yet very few of WHRS claims

Question 11

What percentage of susceptible building stock is expected to fail in NZ? (PWC study)

Answer 11

11-22%

Question 12

What are the greatest types of costs making up remediation? (PWC study)

Answer 12

71% repair

17% legal

Question 13

What is the estimated total hard costs to the economy? (PWC study)

Answer 13

$11-23 billion

= 7-15% of GDP

Question 14

What are the indirect costs of leaky buildings and what are they estimated at?

Answer 14

Health problems caused by toxic black mould and mental health (depression/stress)
Estimated at $474 million

Question 15

What is leaky building stigma?

Answer 15

Perceived risk that certain features are more susceptible; no proof that it is leaky but decreases number of potential buyers

Question 16

How are monolithic-clad properties discounted in the Auckland Region?

Answer 16

Multi-unit - 10%

SF - 5%

Question 17

What policy changes have been made due to leaky buildings?

Answer 17

Insurance industry
Legislative changes
Building controls
Health-related programmes
Ratings valuations

Question 18

How did the insurance industry react to leaky buildings?

Answer 18

Reacted immediately after Hunn Report released;

Did not want to cover private certifiers and added exclusion clauses for water ingress

Question 19

How did insurance companies deal with existing policies that could not exclude leaky building problems?

Answer 19

Claims could only be made within 6 years of knowing and 10 years of CCC

Question 20

What did WHRS 2002 do?

Answer 20

Streamlined leaky claims (did not have to go through high court)
Still required lawyers and didn’t deal with multi-unit claims

Question 21

What did WHRS 2006 do?

Answer 21

Addressed multi-unit claims
Allowed choice between going through high court and WH Tribunal - assessor’s report produced if claim deemed eligible
Used other details to measure time as 10 year limit could not be used for buildings which council did not give CCC

Question 22

What did the Building Act 2004 do?

Answer 22

Removed Building Industry Authority and created DBH
Tightened controls on building consent authorities
Defined restricted work and created LBP scheme

Question 23

What did the 2008 amendment to the 2004 Building Act do?

Answer 23

Require consent for repairs

Question 24

What is FAP?

Answer 24

Financial Assistance Package (extension to WHRS 2006 Act) aimed to reduce lawyer costs

Claims against council - council pays 25%, govt pays 25%, owner pays 50%

No claim against council (private certifier) - govt pays 25% (but will pay less due to betterment)

Question 25

What did the initial building code change do?

Answer 25

Required chemical treatment on structural framing timber (TimberSave, Agent Orange)

Risk matrix to determine whether cladding can be directly fixed or requires drained/vented cavity

Question 26

How did building controls change at councils?

Answer 26

More rigorous documentation required
Looks more at BRANZ and Codemark etc.
Established reclad processes (solutions)

Question 27

What change was made to unrental WOF?

Answer 27

Addressed health effects

Question 28

How did ratings valuations change and how many AKL properties were affected by this?

Answer 28

Needed to take into account market stigma (reduced price and potential buyers)
Over 5000

Question 29

How much did homes with at-risk features reduce in value due to market stigma?

Answer 29

5-20%

Much further discounts for homes with known leaks