Government Announcement: Lifeline For Leaky Building Owners Available Early 2011

The Government has announced a proposed financial assistance package for eligible leaky home owners.

The proposed package involves the Government and local authorities each contributing 25 per cent of the agreed repair costs, and homeowners funding the remaining 50 per cent backed by a government loan guarantee.

This 50:25:25 ratio cost sharing arrangement is an improvement on earlier proposals which included only a 10 per cent contribution from the Government on a "take it or leave it" basis.

The Government is also proposing a bank guarantee scheme for homeowners who have been refused loans because their prime asset, their homes, are rotting.

The proposal is aimed at getting homeowners access to finance quickly to enable remedial works to start sooner. This reduces the cost overall, as houses are not left to deteriorate while homeowners wait for compensation to start fixing the leaks.

Key features of the proposed package include:

• It is voluntary and will operate alongside the curent disputes and litigation process.
• Homeowners who take advantage of the package forgo the right to sue local authorities or the Crown, in exchange for a combined government and local authority direct payment of 50 per cent of agreed repair costs.
• Homeowners still have the option to pursue other liable parties such as builders, developers and manufactures of defective products for the remaining 50 per cent of remedial costs.

The Government hopes to have the package available for eligible leaky home owners in early 2011. It has estimated that of approximately 42,000 homes currently affected over the country, 25,000 homeowners may opt for the scheme at a cost to tax and ratepayers of $2 billion over five years.

Councils and local authorities are currently submitting responses to the Government's offer and it is expected that once local councils give the proposal the green light, the finer details of the proposal will be fine-tuned.

Should you have any questions please contact Jo Hudson.