New changes to speed up a “sluggish” consenting system means councils will no longer be left “footing the bill” for major building defects, the Building Minister says.
The “joint and several liability” framework for managing building defects will be scrapped in what ministers call the biggest reform to the consenting system in “decades”.
Construction Minister says each party involved in a build will be responsible for the work they carried out. (Source: 1News)
Building and Construction Minister Chris Penk officially revealed two “major” changes alongside Prime Minister Christopher Luxon at today’s post-Cabinet media conference.
Penk said the overhaul would “ease the cost burden on ratepayers for defective building work” and be the most significant since the Building Act came into force in 2004.
As part of the changes, he said the Government was taking aim at “stalling” productivity in the building sector through cutting red tape and enabling more cost efficiencies.
“[The] sluggish consenting system is delaying projects and driving up costs, making the average standalone house here 50% more expensive to build than in Australia.
“We must eliminate system blockages to speed up the delivery of new homes and infrastructure,” the Building and Construction Minister said.
What’s happening with building defects and consents?
Introducing a bill to Parliament early next year, the Government intends to replace the existing “joint and several liability” framework with “proportionate liability,” where “each party will only be responsible for the share of work they carried out.”
“It’s time to put the responsibility where it belongs,” Penk said, saying the change would “ease the cost burden on ratepayers for defective building work.”
“Right now, councils are hesitant to sign off on building consents and inspections because they could be held liable for all defects, leaving ratepayers to foot the bill.
“This often happens when one of the parties responsible cannot pay for repairs, for example, if a business goes bust.
“Currently, building owners can claim full compensation from any responsible party — and it’s often councils, with the deepest pockets and no option to walk away, that end up paying out.
“The risk-aversion this creates [from council building consent authorities] leads to frustrating delays and extra cost for builders and homeowners.”
Penk said this wouldn’t mean councils were entirely off the hook as they will still “carry the same share of responsibility they do now for tasks like processing consent applications, carrying out inspections, and issuing code compliance certificates.”
Govt ‘exploring’ protections for building owners
Penk asserted that building owners would “be protected if things go wrong,” and that the Government was “exploring options such as requiring professional indemnity insurance and home warranties, similar to arrangements in Australia.”
The Government gave examples of home warranties that already exist here, like the Certified Builders’ Halo Guarantee and the Master Builders’ 10-Year Guarantee. It said the new regime was similar to what some Australian states had used since the 1990s.
Penk also announced today that it would allow councils to voluntarily consolidate their building consent authority functions with each other.
“It is ridiculous that builders, designers and homeowners must navigate 66 different interpretations of the Building Code, because of the number of council building consent authorities across the country,” Penk said.
“Builders can be rejected on paperwork that would be accepted by a neighbouring authority simply because each building consent authority applies the rules differently.
“Many councils have asked for this and I expect they will seize the opportunity to consolidate, share resources like building inspectors and IT systems, and pass the savings on to ratepayers.”
Today’s changes are part of a broader reform programme for building and consents, which the Government argues will make it easier and more affordable to build.
Building Consent Approvals is promising faster approvals for ‘low-risk’ house-building projects. (Source: 1News)
Earlier this month, Penk announced homeowners would soon be able to build small structures like garden sheds, sleepouts and garages closer to their property boundaries without requiring building consent.
Cabinet agreed to remove the minimum distance required between single-storey buildings under 10sqm and a property boundary or other residential building, and reduce it to one metre for buildings between 10 and 30 square metres.
Other recent changes included 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.
‘Positive step’: Industry reacts to shake-up
Master Builders chief executive Ankit Sharma said the reforms represented a “positive step” towards a more consistent, efficient and balanced system.
“Builders have long faced duplication, delays, and inconsistent decisions across more than 60 different building consent authorities. The proposal to consolidate building consent authorities and introduce common data standards has the potential to reduce compliance costs, improve consistency across regions, and speed up approvals. These are practical solutions that, if implemented well, could drive meaningful productivity gains for the sector.”
Addressing liability settings was just as important, he said.
“The current joint-and-several system has meant councils carry a disproportionate share of risk, which has made them overly cautious and slowed down consenting. Moving to proportionate liability has the potential to create a fairer and more balanced system, provided it is paired with strong consumer protections such as home warranties and appropriate practitioner insurance.”
The group representing councils, Local Government New Zealand, also welcomed the changes. President Sam Broughton said the Government’s proposals would help speed up building consenting on new homes.
“We strongly believe it will have an instant and positive impact on housing growth; councils will be in a better position to consent more efficiently, with less legal risk borne by local government — and therefore less risk for ratepayers.”
