Government scheme protects new home owner

Press, 27 November 1980, Page 12

Government scheme protects new home owner

In Residence

Bronwen Jones

People 7 thinking of having a house built will be interested in the Government’s Building Performance Guarantee Scheme. Under the scheme, home owners , are insured against the builder's inability to complete the house through, for example, death or bankruptcy; Owners are ateo covered against" building defects for one year, as..well. as building material failure • for three ■ years and major defects in construction for six years.

The scheme is administered by the Building Performance Guarantee Corporation through the Housing Corporation, which has the insurance application and claim forms. Although house owners deal with their local Housing Corporation staff, it is the B.P.G.C.

which decides at a monthly meeting held in Wellington which claims to take up.

The Christchurch branch of die Housing Corporation has insured about 1300 houses since the si'heme began in January 1978. About 10 people have registered claims, although two people have withdrawn theirs.

Many other dissatisfied new home owners have contacted staff to lodge a complaint, according to a branch spokesman. But they have not returned after being told they must tell the builder of the complaints before being able to make a claim. He considers that the insurance cover is not only an incentive for the builder to rectify any defects quickly but also an incentive to take greater care from the start.

However, he says that he is unaware of any builders who disapprove of the scheme and that many of the larger companies building “on spec” use it as a selling point. Because the policy is attached to the house, not the owner, the houses remain insured when sold. The B.P.G.C. has had to pay out about $19,000 to complete four houses in the Canterbury area. More than $17,000 was for one house alone.

The. original builder of the houses has been clacklisted by the Housing Corporation, but has gone into liquidation and is no longer operating. Information about the insurance scheme can be supplied by the Housing Corporation, but several points deserve mention here.

The owner must apply for indemnity after signing the contract for his home to be built and before excavations for the foundations begin. If the

contract is not approved by the corporation, conations may oe applied. The owner must pay the first SlOO of- the total claims made. This does not mean the first $lOO of every claim.

One payment of between $35 and $95, depending on the cost of the house, is made when the insurance is first taken out.

If a second builder has had to be brought in to finish your house, you are not covered for any progress payments made in advance for the work the initial builder has not completed. There are several other things against which you are not protected. Among these are: ordinary “settling in” of the new house; materials that become defective through lack of maintenance; and. after the one-year cover runs out, you are not protected under the six-year cover for “small defects” such

as small leaks and minor cracks in the foundations.

According to the Housing Corporation, after the first year, major and minor defects are distinguished by their cost.

It has taken three to four months for claims to be processed. The corporation claims that it has had “teething troubles” with the scheme, but these are being ironed out and streamlined.

Also, people applying to make a claim often have not had the right documents. To make a claim you must have a copy of the indemnity form, copies of correspondence with the builder, the Housing Corporation, and the Guarantee Corporation, and a copy of the house plans anaspecifications. The scheme is available to new flat-owners as well. The insurance is held individually. Where property is owned jointly, owners can make a joint claim.