Buying guide

Leaky homes in NZ: Should I buy a monolithic cladding house?

Properties with plaster or monolithic cladding can be risky purchases, but they're not all leaky.

Last updated: 13 February 2024

The leaky homes crisis is one of New Zealand’s largest and costliest man-made messes, with estimates that around 174,000 homes were affected. The total cost to fix all of our country’s leaky homes could be as high as $47 billion, according to the experts.

The crisis kicked off in the late 80s, early 90s but unfortunately for home buyers and investors it’s far from over, and these leaky homes are still out there being bought and sold. That means. if you don’t know what to look out for. you could end up with an unsafe property that might cost hundreds of thousands of dollars to fix.

To make sure you don’t buy a soggy lemon check out our guide to spotting and buying (or avoiding) leaky homes in NZ.

What are leaky homes?

Leaky homes are residential properties that are not watertight. These were typically built between 1987 and early 2005 using certain materials and building practices that made homes more vulnerable to leaking, and more at risk of structural damage if a leak occurred.

Affected homes may be excessively damp and mouldy inside and even structurally unsound if the framing timber has rotted. These problems tend to make homes unhealthy to live in, causing respiratory illnesses and infections, exacerbating allergies and affecting the immune system. Leaky homes can also be incredibly expensive to fix - full recladding can cost hundreds of thousands of dollars. Needless to say, leaky homes are best avoided in most cases.

What caused the NZ leaky homes crisis?

Countless factors contributed to the NZ leaky homes crisis, each making the problem worse. It all started in 1987 when monolithic or plaster cladding re-emerged as a popular building material, then got progressively worse thanks to a mix of bad legislation, shoddy materials, poor workmanship and risky design practices.

Monolithic cladding, or plaster

Monolithic cladding, otherwise known as plaster cladding, is often named as the main culprit of the leaky homes crisis. This material tends to crack slightly if not maintained properly, allowing moisture into the frame below and progressively getting worse. Monolithic cladding gave homes a smooth, seamless look that was in fashion at the time - but it turns out that look wasn’t conducive to watertightness. If you’re considering buying a home that looks like this, it’s worth investigating further as it may be at a high risk of leaking.

Not all plaster homes leak, but they may be at a higher risk.

Shoddy building practices

The majority of homes in Aotearoa New Zealand don’t have watertight exterior cladding. In fact, most exterior claddings are not 100% waterproof and a small amount of rain or other water may leak through inside. This isn’t a problem as long as there’s a gap or cavity between the exterior cladding and the framing that allows the water to dissipate.

From 1987 onward builders started to fix monolithic cladding directly to the timber frame behind it, with no cavity. That meant that when the cladding leaked, the timber framing behind and the inside of the home could become damp or even rotten, compromising the structure of the property. The moisture could then leak through to interior cladding, insulation and interior flooring.

To make matters worse, untreated kiln dry timber was permitted by the building code from 1996 onward, which meant that when the cladding leaked the timber had no protection from the moisture and quickly became damp. For most of these buildings their one line of defence was a special waterproof paint that tended to work at first then fail after a few years.

Risky designs

According to building experts, there are several design features that increase the risk of leakiness and are worth looking out for. These include:

  • Flat roofs or roofs with parapets (mini walls at the edge of the roof).
  • Roof to wall junctions.
  • Lack of flashings on windows and penetrations (flashings are thin pieces of thin material installed to prevent the passage of water through a joint in a building).
  • Decks over living areas.
  • Low ground clearance, or level of ground inside is above interior floor level.
  • Complex designs: the more complex the design, the higher the risk.
  • No eaves: homes with wide eaves are at lower risk than those without.

While having these features doesn’t mean a home is leaky, it does indicate that the property may be a high risk and further inspection is required.

How can I spot a leaky home?

If you’re in the market for a property you should always keep a close eye out for leaky homes. Here are a few things to look for.

If you keep your eyes open during a property inspection you may be able to spot signs that a home is leaky.

Risky periods for leaky buildings

The first thing to consider when looking out for leaky homes is when the property was built, as the highest risk period is between 1987 and early 2005, according to Prendos:

Before 1987: low risk.

1987 to 1996: high risk.

1996 to early: 2005: high risk.

2005 onward: low risk.

Homes built outside these high risk periods can still be leaky, so you still need to do your due diligence when buying.

Warning signs for leaky homes

You should always have a building inspection done on a home before you purchase it as this will alert you to any signs that it’s leaky. According to Building Performance NZ, these may include:

  • Sagging of ceiling linings.
  • Corrosion of fixings such as screws and nails.
  • Discolouration of materials such as skirtings or architraves.
  • Mould or fungi forming.
  • Uneven floor surfaces and lifting of floor coverings.
  • Swollen materials such as skirtings.
  • Evidence of no cavity between cladding and framing in the LIM report.

You may even notice visible cracking of the cladding, a slightly damp feeling in the carpet (if you’re barefoot) and a musty smell. While you can look out for these warning signs, many leaky homes may not appear leaky at all. That’s why it’s so important to purchase a building inspection before buying any home, and ask your inspector to pay special attention to moisture levels and whether the home has a cavity between the cladding and the frame. If you suspect a home you’re looking at may be leaky it could even be worth purchasing a specialist water tightness inspection, which will investigate the property’s cladding in more detail.

Not all plaster homes are leaky but they should be approached with caution.

How much do leaky homes cost to fix?

Many Kiwis still buy leaky homes, despite their terrible reputation and the high level of risk. The fact is, if the land it's built on is valuable enough, and the price is very low, a leaky home can still be a good buy, if you know what you’re doing.

However, it’s worth considering that fixing a leaky home can cost $330,000 to $380,000 on average, or over $500,000 in the worst case scenario, according to Opes Partners.

What’s more, the bank may not lend according to the future value of the house once it's fixed, so it may be difficult or impossible to borrow the money needed to fix the property. That means you’ll need cash or usable equity to fix up the property, a process that could take anywhere from three months to over a year.

Should I buy a monolithic cladding or plaster house?

Monolithic cladding and plaster homes aren’t all bad. But if you’re looking at a home that has this type of cladding it’s important to investigate further to ensure that it’s not a leaky home. If the home does not have a cavity between the cladding and the framing, chances are that it will leak at some stage even if it hasn’t yet. Plaster homes built post 2004-2005, that do have a cavity, may be ok.

If you find a home that doesn’t have a cavity and shows evidence of leaking, you should take great care when buying. These homes can still be a good deal, but they should be priced extremely low to factor in the potentially huge cost of recladding. Before buying you should hire a building inspector and surveyor, get detailed quotes for repairs, and be certain that the home will be worth at least as much as the repair, plus purchase price once you’ve refurbished it.

*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice, especially if you suspect it’s leaky.


Ben Tutty
Ben Tutty

Ben Tutty is a regular contributor for Trade Me and he's also contributed to Stuff and the Informed Investor. He's got 10+ years experience as both a journalist and website copywriter, specialising in real estate, finance and tourism. Ben lives in Wānaka with his partner and his best mate (Finnegan the whippet).