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Editorial: It's on the house

It’s a paradox of consumer law in this country that you can buy with greater confidence a $50 toaster or $5000 car than you can a $500,000 house.

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Toasters and cars are produced using modern industrial processes that have made products increasingly reliable. There’s also a considerable amount of information available about the performance of products – including our own test programme – and reviews and assessments by other organisations.

Powerful legal back-up is available through the Consumer Guarantees Act if things go wrong. Disputes Tribunals are a cheap way of dealing with disputes involving traders – and most products would fall within the ceiling of $15,000 for hearing disputes.

The limit for motor vehicles is considerably higher at $100,000 for cases taken to the Motor Vehicle Disputes Tribunal.

This is not so if you’re buying a house. As our report on pre-purchase property inspections in this issue reveals, the quality of building inspections can vary alarmingly – and your ability to even find a qualified building inspector is limited because there are few of them. So consumers are often flying blind about the quality of the house they’re considering buying.

This lack of knowledge about the real condition of the property isn’t helped by the structure of the real-estate industry here, where most buyers don’t have an agent and instead rely on what the seller’s agent tells them. It’s a rather strange notion that the interests of buyer and seller are directly substitutable when it comes to buying a house. Perhaps buyers would be better off if they had their own agent with the selling commission being split between both agents.

Our article also raises whether real-estate agents should be made legally responsible for the quality of a property’s building inspection report. This is a solution to buyers not having enough reliable information on which to make an informed decision.

Finally, we think a building disputes tribunal should be set up to deal with shonky building work for new houses or renovations. The limit would be set at an appropriate level for building disputes, which can run to hundreds of thousands of dollars. This would provide a low-cost way of resolving disputes on new builds without the major expense of going to court.

See Consumer's article on pre-purchase building inspections.

About the author:

David Naulls is Consumer's deputy CEO and the editor of Consumer magazine.

David works closely with the research and testing team to ensure the quality of all articles published by Consumer NZ. He has previously been a research writer and contract books writer at Consumer. Before returning as Content Editor, he was a freelance writer and editor for 25 years. David has post-graduate qualifications in journalism and political philosophy.

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