Leaky Buildings Hide their Secrets

December 16, 2013

Leaky buildings hide their secrets. Despite years of experience inspecting buildings, Harry Dillon knows not to believe his eyes when it comes to leaky buildings

..By Paul Dykes

Article originally published in the Tauranga & Rotorua PROPERTY INVESTOR

Most buildings leak at some point, says Harry Dillon, business manager at nationwide property performance consultant Prendos, but it’s the trapped moisture that makes them a “leaky building”.

“Even to my eye, it’s not always obvious,” he told members at the TPIA September monthly meeting. “Just because it lets moisture in doesn’t make it a leaky building. With certain monolithic cladding systems, water couldn’t get out.

“I’ve given up guessing if a house is good or bad. You can’t rely on cracks in the plaster to see where moisture is getting in. In most cases there aren’t any. You have to remove some of the cladding to discover its true extent.”

Harry knows more than most about the problem – from diagnostic to remediation. He has been involved in litigation proceedings and runs courses for builders about leaky buildings for the now merged Department of Building and Housing. “I’ve been involved in more than 300 leaky homes.” Harry Dillon

While we might all be able to spot saggy ceilings or damp carpet, you don’t need sopping wet timber for rot to exist, he says. “Branz tested untreated framing in perfect laboratory conditions and it started to show signs of decay within three weeks.”

Harry questions whether untreated timber framing and various cladding systems should ever have been permissible under New Zealand construction law (use of untreated timber framing in houses has been largely banned since July 2011). The problem was already known in Canada, where it is called “leaky condo syndrome”, he says, and Canadians are now going back to fix what they thought they had already fixed years ago as we are now doing in New Zealand too.

“There’s no clue as to how big the problem is in New Zealand. Known claims are just the tip of the iceberg.” The Weathertight Homes Resolution Service (WHRS) has processed more than 6,500 claims so far, but there is a huge chunk of the iceberg underwater, an unknown amount being homes that have been repaired with a building consent. Another unknown portion represents homes that have been repaired without a building consent (using the like-for-like provision of the Building Act 2004), and the bottom half of the iceberg is homes that have not been repaired, or the owners don’t know they leak.

He says a PricewaterhouseCoopers report tried to quantify the problem in 2009 and came up with an estimate of 22,000 to 89,000 homes. “The top figure is an horrific amount, but the industry estimate is for about 40,000 – that’s still 40,000 families affected.” About 75% of the WHRS leaky homes claims to date are in Auckland, but Tauranga has a significant leaky homes issue, exacerbated by its climate – hardly the dry, arid climate of Tuscany.

It’s not just houses or apartments – leaky buildings include offices and shops, schools and tertiary institutions and hospitals and rest homes.

What causes leaky buildings? (See panel.) Harry puts it down to people opting for the cheapest price, and being willing to accept cheaper untreated wood from dominant timber companies. It was also poor design coupled with a drive to maximise the house size on its footprint, typically using Tuscan-styled architecture. Couple these to a general lack of knowledge and skill and a 1991 performance-based building code that permitted “fit-for-purpose” product to be used, and you can have leaky buildings.

“There are some products and systems that we were able to use that we can no longer use, so what does that say about their suitability in the first place,” asks Harry.

Potential Risk House

The Prendos website has a very useful feature at www.prendos.co.nz/potential-risk-house that shows typical weakness areas (see image above) and shows what can be found. “The most common problem is the ground clearance issue, where you have cladding going right down to the ground. Next is a closed-in deck with a flat handrail, then flat roof areas.” Stucco and textured-fibre-clad buildings were more at risk.

Traditional eaves typically protect 75% of the walls, say Harry, with 60% of New Zealand houses having eaves of 450-600 mm. By contrast, 50% of the claims at WHRS are for houses that have eaves of less than 100 mm.

Harry and Guy showed a range of slides that made the point for them. Little, if any, damage was visible from the outside, but once a part of a panel had been removed the findings were horrific. Harry also warned about the black mould that is often present in decaying, damp areas behind the cladding – stachybotrys. This is highly toxic to touch and inhale. “I don’t know if I’ve ever come across a case of a leaky building without stachybotrys,” adds Harry. “It’s highly hazardous – what does exposure do to the home owners living in it?” He always uses gloves, a respirator and a mask when working near it.

“I’ve seen so many sad cases. People know [their home is a leaky building] but put their head in the sand, sometimes 10 years go by before a client seeks advice. If you think you might have a leaky building, I urge you to do something about it.

“A typical re-clad of a 3-bedroon, 2-storey house could cost several hundred thousand dollars. People don’t have the financial means to fix them. Properties are being exchanged for land value.”

Harry says to make sure you know the value of a leaky building before, during and after remedial work. There is still a stigma associated with plaster-clad houses and they can take slightly longer to sell – even though there might be nothing wrong with them. Valuers often apply a 13-15% discount.

The banks also have leaky homes on their radar. Even for refinancing, a house on a bank’s watchlist may require a weathertight inspection, and the bank might lend to only 50% of the value of the property. Harry says properties on such watchlists are selected largely by era, and he suspects there are about 160,000 on such lists. Leaky Home Rish by Construction Date

The remediation inspection can start with moisture detection. Harry says thermal imaging cameras need to be in expert hands at the right time of the day, but have their limitations as they are designed to detect moisture – not rotting timber. There are also non-invasive moisture metres and invasive metres, requiring holes to be drilled into the side of the building. You can sometimes see the holes plugged with silicon. There is always a risk of rotten timber being left behind because it wasn’t detected.

Harry advises against doing nothing. “If you knowingly let moisture get into the building, that’s contributory negligence – you could have helped prevent the damage. And if a building is not fixed properly when you knew it leaked… there’s a $300,000 law suit underway over a $3,000 repair. The new owner is seeking redress based on the warranty clause in the Sale and Purchase agreement.”

Guy adds that maintenance can prevent a lot of the problems from escalating. “Almost no cladding is maintenance free,” he says, “so clean your gutters, and check sealants. Paint and wash down to keep warranties for the cladding. Every product requires maintenance and correct fitting.”


Questions to ask if you are thinking of buying a leaky building:

  • Has an assessment been done, when and by whom?
  • What is the land value?
  • What is the age of the building, CCC and risk profile?
  • Who certified it?
  • Does it qualify for FAP? (Financial Assistance Package)
  • Can value be added, stigma reduced or design risks reduced through changes in cladding and design?
  • Are there special considerations if it’s an apartment?
  • What are the cost risks?

What caused Leaky Buildings?

It’s a combination of factors:

  • Poor design
  • Lack of knowledge
  • Lack of skill
  • Building maintenance
  • Light-handed regulatory regime
  • Questionable suitability of some products
  • Poor use of some products
  • Too little education, up-skilling and training for those involved in the entire building process

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