The Government has unveiled safeguarding measures to ensure building owners are protected under a more productive and ambitious building consent system.
“Earlier this year, I announced a major change to the building consent system to tackle risk-averse behaviour that slows productivity and delays the delivery of new homes, public buildings and commercial developments,” Building and Construction Minister Chris Penk says.
“This will be achieved by scrapping the current joint and several liability model for dealing with building defects and replacing it with proportionate liability.
“Right now, councils can be hesitant to sign off on the building projects New Zealand needs because they risk being held fully liable for defects they did not cause, to the tune of millions of dollars.
“This occurs because under the current law, when two or more parties are involved in a mistake, the customer can pursue any one of them for the full damages, regardless of each party’s level of contribution.
“Councils have the deepest pockets and cannot walk away by filing for insolvency, meaning that ratepayers often end up paying for mistakes made by others, even when the local council’s involvement was limited to signing off the work.
“Under proportionate liability, each party will only be accountable for the work they undertook. This will speed up consenting and ease the burden on ratepayers unfairly footing the bill for damages.
“Today, I am announcing measures that support this shift in the consent system and ensure those involved in the building process, including homeowners, remain protected.”
These include:
- Requiring professionals contributing to building design, such as architects and engineers, to hold professional indemnity insurance.
- Mandatory home warranties for all new residential buildings three storeys and under and for renovations $100,000 and above, covering a one-year defect period and a 10-year structural warranty.
- Strengthening disciplinary penalties for Licensed Building Practitioners (LBPs) by increasing the maximum fine from $10,000 to $20,000 and the maximum suspension period from 12 months to 24 months.
“The benefits of a home warranty scheme for those planning to build a house or carry out major renovations are significant. For around half a percent of the total build cost, homeowners are protected against defects after the build is finished.
“Home warranty schemes are already widely available across New Zealand, and the sector has assured me it can scale to meet new demand, allowing consumers to shop around to find coverage best suited to their build.
“Requiring professional indemnity insurance for building designers ensures these professionals are financially able to stand by their work, giving building owners confidence. This requirement does not extend to other building trades.
“I’ve heard from tradies that the poor work of a few cowboys can unfairly damage the industry’s reputation. Disciplinary penalties were long overdue for an update and strengthening them supports skilled professionals by holding to account those who cut corners.
“Together, these measures provide strong protections that underpin building system reforms, safeguard building owners, boost consent productivity, enforce accountability, and make building faster, easier and more affordable.”