Homeowners planning to build or renovate will soon face new protections and new rules as the Government confirms mandatory home warranties, insurance requirements for designers and tougher penalties for builders under sweeping building system reforms.
Building and Construction Minister Chris Penk also confirmed the current liability model will be scrapped in favour of one which means each party will only be responsible for mistakes they made.
“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,” Penk said.
Under current legislation, when two or more parties are involved in a mistake, the customer can pursue any of them for the full damages regardless of each party’s involvement.
“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,” Penk said.
He claimed that had slowed productivity and delayed delivery of new homes, public buildings and commercial developments.
He first announced some of the changes in August.
Other recent changes include allowing homeowners to build small structures like sheds and garages closer to property boundaries, exempting “granny flats” from consenting rules, allowing trusted building companies to build without consents and enabling approved plumbers and drainlayers to self-certify their own work.
Home warranties
Mandatory home warranties would be introduced for all new residential buildings up to three-storeys and renovations costing more than $100,000.
It would cover a one-year defect period and a 10-year structural warranty.
Penk said home warranty schemes, which cost about 0.5% of the total build price, would give homeowners confidence their investment was protected.
“The benefits of a home warranty scheme for those planning to build a house or carry out major renovations are significant.”
Penalties and insurance
Disciplinary penalties for licensed builders would double, with the maximum fine increasing from $10,000 to $20,000 and the maximum suspension period from 12 months to 24 months.
“Disciplinary penalties were long overdue for an update and strengthening them supports skilled professionals by holding to account those who cut corners,” Penk said.
The Government would also require architects, engineers and certain building surveyors to hold professional indemnity insurance.
Around 90% of designers and engineers already have this cover, which typically costs between $1500 and $3000 per person annually.
The reforms will be in the Building Amendment Bill, expected to be introduced in early 2026. There would then be a one-year delay before the new requirements take effect.
Increased penalties for builders would be happen though a separate piece of legislation in 2026.
The group representing councils, Local Government New Zealand, welcomed some of the changes when they were announced in August.
