A Financial Wrecking Ball – “Leaky Homes”
For some this title will send a shudder down the spine and
bring back painful memories of experiences past, for others it’s the elephant
in the room when it comes to selling their biggest asset - their home.
This is typically how it all unravels, the home was built
between 1994 and 2002 and has a monolithic cladding system has no eves and
looks a bit dodgy with cracks and staining on the exterior. There is even staining
on some ceilings internally… Oh no the wrecking ball is swinging back….. I’ll
get someone in to look at the house who is a building inspector…. Further
investigation needed the report says…. Full report and $2000 later, it’s got
some design issues and water damage to the internal framing under the windows
and the deck is leaking…. Building estimates in and its $250k to re-clad,
emphasis estimate! The wrecking ball
has swung and wiped out a good portion of your retirement fund.
At best your home is now at 10%-20% discount, at worst it’s
the land value only. The banks will find it hard to fund it for you unless you
have the income and the equity in the property. Get ready for the barrage of
paperwork needed. A good way to wipe out
10-15 years of hard work and a massive headache to boot. This has wrecked
families and severely impacted people’s health due to the incredible stress and
anguish owners go through.
So why did it even get to this stage? Building homes that
are obviously inferior for a variety of reasons - design, cladding & window
systems, installation skill, build quality, building rules. It seems as though
it is a combination of them all. Even a modern home if built poorly can have
these issues and water is not a buildings friend no matter what it is
constructed of except maybe an igloo? This building system has been used
throughout the world with success in less formidable climates as our own and
dear I say a more competitive building products industry? It appears from my
research we need better quality products, better installation and maintenance
of these in NZ.
I work with an inspection firm that completes accurate and
thorough testing and can, through its partners, assist with providing a paint
system and window system guaranteed for 10 years that greatly reduces the risk
of water penetration. With this comes a revolutionary monitoring system that
measures moisture inside the homes walls regularly so that issues are found
quickly. Any remedial work over that period is completed free of charge. The
system is 20% of the cost (in most instances) of a full re-clad and can provide
a potential buyer with a guarantee and monitoring system for peace of mind in
This approach is an industry disruptor which is a long time
coming and should change a national cost that was estimated at $11b in 2008, affecting
42,000 homes at that date – 69% of the cost falling on the owner. This is now
estimated at $25b mostly because the cost to remedy has risen 400% over that
time. Why? It’s not building material costs going up! It seems re-clad is the fall-back
position when it now doesn’t need to be for many of these homes. Some houses
will be knackered and need to be re -clad or most likely knocked down but they should
be in the minority.
It appears there is an industry built out of this issue where
everyone seems to do well out of the process bar a few construction companies
and most of all the home owner.
Feel free to call me so that I can point you in a different
direction and help with my area of expertise which is funding this for you- Stop
that financial wrecking ball.
*All information provided is for
information purposes only and where the information comes under the auspices of
the Financial Advisers Act 2008 it is considered to be class advice only. No
information is to be taken as specific personal advice