KIRK HARGREAVES/Fairfax NZ
"TIGHT BUDGET": EQC payment rule changes are putting financial pressure on families like Craig Joblin's.
In what have been labelled bullyboy tactics, the EQC released a new policy this week saying property owners opting out of the Fletchers repair scheme must pay all bills themselves and wait to be reimbursed by the commission.Homeowners could have to pay as much as $115,000 up front for earthquake repairs because the Earthquake Commission has changed its payment rules.
Previously, the commission would approve quotes, inspect completed work and pay contractors directly.
The commission backtracked slightly late yesterday after The Presscalled, promising to change the new policy to let owners claim without paying first, but it will still leave them responsible for the bills.
An EQC spokesman said the commission aimed to settle opting-out claims monthly, but could give no guarantees, especially if there were complications.
"They do take a risk if the invoice falls due and the money has not come from EQC. If you can't handle it, then you shouldn't be opting out. You are taking on a big job," he said.
The change affects people with repair costs in the $10,000 to $100,000 bracket before GST. Several thousand homeowners are estimated to be considering arranging their own work.
Steve Brooks, whose building company, Rebuild Me, does quake repairs, said: "Who has $40,000 lying around? This affects anyone who wanted to opt out and all the companies doing rebuilds.
"It's going to push the rebuild right out. People could be stuck with damaged homes for five or six or eight years. If you don't have the cash, tough, you'll be left waiting."
Brooks said he and other companies had builders busy doing work now, and jobs were at risk.
"What if EQC take three months to pay up and the homeowner takes another three months to pay us? We would really struggle and we'd end up in the Disputes Tribunal."
Homeowners would now be left to deal with new problems such as GST registration and project management qualifications, Brooks said.
He questioned the reason for the changes when "it was working fine before".
Property owners on social networking sites yesterday were angry at the changes.
"I am trying all avenues I can think of but pretty much feel we are powerless," one homeowner said.
"EQC won't get away with these bullyboy tactics to stop people opting out of Fletchers EQR-run shambles," wrote another.
However, one person said even borrowing the money and paying interest would be worth it to get the job done.
The commission does not make cash settlements on homes with $10,000 to $100,000 of damage but has contracted construction company Fletcher EQR to do the work. Alternatively, homeowners can choose to opt out and take responsibility for the work themselves.
Hard-up families dread having to stump up cash
Phillipa Main was about to start the repair process on her foster daughter's and mother's homes when the EQC told her of their new payment rules over the phone.
"They said we would have to front up with the money, and they couldn't give us a timeline when we'd be paid back," she said.
Main said she had heard of poor workmanship from Fletchers and had a good repairer lined up to do the work."My mum is 80; she's never going to get a mortgage for $50,000. Elderly people and most families can't afford the repayments, and if they could, who's going to pay the interest?"
"With Mum, I though it would be nice to get it sorted out in her lifetime. I don't want to go to Fletchers and I've been mucked around by them before. I plan to battle the Government on this one."
Homeowner Craig Joblin said he and wife Kerri have a builder they were comfortable with ready to fix their Burwood house.
With four children and one income, they cannot afford bills in the tens of thousands of dollars.
"We're on a very, very tight budget."
The couple had received an email from the EQC saying they were too far through the process to opt out, but they were ignoring it because the commission had not yet arranged any repairs.