From Weathertightness to Weathertight: Funding Solutions for NZ’s Leaky Buildings Crisis
The Continuing Legacy of Leaky Buildings
Earlier estimates placed the cost of the leaky homes crisis at around NZ$11 billion; more recent projections have ballooned to as much as NZ$47 billion.
There are numerous examples of multi-unit developments that are equally affected — The Connaught in Auckland is undergoing a $46 million reclad, with 98% of owners already levied in advance to fund progress. A decade-long $157 million lawsuit involving Harbour Oaks found Auckland Council breached its duty of care during building inspections.
Levy Fatigue and Its Consequences
Remediation for larger complexes often leads to special levies in the tens of thousands per unit—stressing household budgets unexpectedly.
Diverging levels of owner readiness to pay big sums upfront mean meetings fail to reach quorum, postal ballots stall, or personal disputes escalate, delaying critical work. Delay's then cause inflationary cost increases and the subsequent building degradation increases the costs at exponential levels.
Unpaid levies accrue interest and legal fees; defaulting owners can lose voting rights or face liens against their units, while others shoulder more burden.
The emotional and financial strain can be substantial—some owners spend years repaying, sell at distressed prices (sometimes as low as 10% of the remediated market value), or face indebtedness.
Negative Outcomes: Macro to Micro
Body Corporate:
- Projects stall mid-way, increasing costs
- Administration expenses balloon
- Insurance becomes harder or more expensive
- Reputation suffers, discouraging buyers
Individual Owners:
- Unexpected $20-100k+ bills destabilise household budgets
- Legal debt, interest charges, damaged credit ratings
- Loss of voting rights, tribunal disputes
- Resale complications and negative equity impact
This takes an unimaginable toll on the Body Corporate community with the stresses creating a less than optimal environment for their day to day living.
What Experts Say
- Climasure (July 2025) reports the crisis might cost around NZ$47 billion, describing it as a “slow‑motion disaster” comparable to earthquake casualty levels.
- Hobans (Dec 2022) emphasises that remediation timelines can stretch for years—with disputes often delaying progress long after funding is raised.
- Dentons (2022) warns of cost overruns in the tens of millions, and highlights that some Body Corporates even seek court approval to cancel unit plans when repairs become uneconomic.
How MOD Finance Provides a Better Path
- Avoid big upfront financial shocks: Instead of asking individual owners to pay tens of thousands per unit immediately, MOD Finance offers a collective loan that spreads payments over time—easing cashflow pressure.
- Enable proactive project delivery: With funding secured, committees can sign contracts, hire professionals, and meet regulatory deadlines—no more waiting for quorum or full levy collection.
- Reduce disputes, protect relationships: Predictable repayments reduce tension between owners, making discussions less adversarial and allowing focus on common purposes, not cash divides.
- Defend property value and insurability: Timely remediation and funding certainty make buildings more attractive to insurers and buyers—while avoiding credit adverse events for individual owners.
Final Take
Leaky building remediation is costly—but delaying or splintered funding makes it exponentially worse. Special levy fatigue isn’t just a governance headache, it impacts lives, finance, and long-term asset value.
MOD Finance’s Body Corporate loan solution is a smarter funding pathway: collective, structured, stress-reducing, and value-preserving. If your Body Corporate is facing remediation costs, uncertain funding timelines, or owner conflict, get in touch—we’ll work with you to create a plan that works for everyone.
