Key Takeaways
- The New Zealand government is introducing changes to the building consent system to ease the liability load on local councils and speed up consenting.
- All three-storey homes and alterations costing $100,000 or more will require a home warranty under the new system.
- Architects, engineers, and other building design professionals will be required to have indemnity insurance.
- Fines for Licensed Building Practitioners will be doubled, and disciplinary penalties will increase.
- The new system aims to provide strong protections for homeowners and boost consent productivity.
Introduction to the Building Act Changes
The New Zealand government has announced significant changes to the Building Act, aimed at easing the liability load on local councils and speeding up the consenting process. The changes, which are expected to be introduced in early 2026, will require all three-storey homes and alterations costing $100,000 or more to have a home warranty. This move is intended to provide stronger protections for homeowners and boost consent productivity. The government has also announced that architects, engineers, and other building design professionals will be required to have indemnity insurance, and fines for Licensed Building Practitioners will be doubled.
The New Consent System
Under the new system, councils will no longer be the sole parties responsible for dealing with building defects. Instead, each party involved in the building process will be responsible for repairs for their share of the work. This approach is known as "joint liability." The government believes that this will help to speed up the consenting process and reduce the liability load on local councils. The new system will also require all new residential buildings three storeys and under, and renovations over $100,000, to have insurance that covers a one-year defect period and a 10-year structural warranty period.
Insurance Requirements
Building and Construction Minister Chris Penk has announced that home warranty schemes will be mandatory for all new residential buildings three storeys and under, and for renovations over $100,000. These schemes will provide coverage for a one-year defect period and a 10-year structural warranty period. Penk has also stated that professional indemnity insurance will be required for building designers, such as architects and engineers. This will ensure that these professionals are financially able to stand by their work and provide confidence to building owners. The minister has assured that home warranty schemes are already widely available across New Zealand and that the sector can scale to meet new demand.
Industry Reaction
The New Zealand Certified Builders Association has welcomed the changes, stating that they will set the building industry up for growth and support better supply and quality of homes. The association’s chief executive, Malcolm Fleming, has said that the previous arrangements were unfair to local councils and ratepayers, as they were often left to pick up the bill if something went wrong with a build. Fleming believes that the new approach will provide a more proportional liability system, where whoever makes a mistake is responsible for putting it right. However, the Insurance Council of New Zealand has expressed some concerns about the new approach, stating that there may be challenges for insurers. A property lawyer has also raised questions about who will underwrite the insurance, highlighting that insurers have been reluctant in the past to insure for weather tightness defects.
Increased Penalties for Licensed Building Practitioners
The government has also announced that disciplinary penalties for Licensed Building Practitioners (LBPs) will increase under the new system. The maximum fine will be doubled from $10,000 to $20,000, and the maximum suspension period will increase from 12 months to 24 months. This move is intended to provide stronger protections for homeowners and ensure that LBPs are held to high standards. The government believes that these increased penalties will help to boost consent productivity and provide confidence to building owners.
Conclusion
The changes to the Building Act are intended to provide stronger protections for homeowners and boost consent productivity. The new system will require all three-storey homes and alterations costing $100,000 or more to have a home warranty, and architects, engineers, and other building design professionals will be required to have indemnity insurance. The government believes that these changes will help to speed up the consenting process and reduce the liability load on local councils. While there may be some challenges for insurers, the government is confident that the new system will provide a more proportional liability approach and support better supply and quality of homes.