Smith looking at extending exemptions for registered builders to self-certify some types of building work; also looking at new building guarantee scheme to deal with liability on self-certified work

By Bernard Hickey

Building and Housing Minister Nick Smith has asked his officials to consider expanding the current list of exemptions for gaining building consents that would allow licensed building practitioners to 'self-certify' certain types of building work.

His comments come after the release of the 'Loopy Rules Report' by the Rules Reduction Taskforce, which recommended the speeding up of risk-based consenting, the simplication of consenting for minor structures and the increased use of building consent exemptions under Schedule 1 of the Building Act.

Smith also said the Government was considering a Law Commission recommendation from June last year that would cap Council liability for building failures at NZ$300,000 per dwelling. That would reduce the potential liability carried by Councils for building failures, he said. The Government was also looking at an officially sanctioned building guarantee scheme to provide some backup for building owners where self-certification led to problems, he said.

"I have asked officials to go away and explore those (Schedule 1) extensions and see whether there are further areas where we can reduce red tape," Smith told reporters in Parliament after the release of the report.

"I think it is about getting the balance right. We want affordable homes. We want good quality homes. So where we can get rid of red tape that is not needed to maintain quality, but can reduce the frustrations for builders and for homeowners, we should do it," he said.

"But we need to do it with care, and that is why I am going to take my time working through these recommendations - for the very reason that rash deregulation in this area can result in the sort of problems that occurred around leaky homes that ultimately cost New Zealand and New Zealand homeowners billions of dollars."

Smith said the Government was looking at a June 2014 Law Commission report recommending a cap for Council liability to be set initially at NZ$300,000 for a single dwelling; NZ$150,000 per unit in a multi-unit development, and NZ$3 million per multi-unit development.

"At the moment I am sitting on a report from the Law Commission that proposes to change the liability laws around building," Smith said.

"What they are saying is that is is unfair for the council to carry all of the liability," he said.

"If you are also looking to extend schedule one, which is the area where builders are exempt from getting building consent, there is the very real concern as to if it goes wrong who is going to fix it, and that is why I have got my officials working on a guarantee scheme which would effectively provide a backup in the event that the builder went broke or defunct, or there was faulty building work, that the homeowner would still be protected."

Compulsory scheme?

Smith pointed to a compulsory guarantee scheme used in Britain and a number of building guarantee companies in Australia, although he noted both Master Builders and Certified Builders also had schemes in New Zealand.

Asked if the guarantee scheme would increase building costs, he said that was the tradeoff involved.

"The question is whether we introduce some degree of regulation to require those, so if we are going to reduce the red tape we can also ensure the quality and we can ensure that, where there are building mistakes, things are fixed," Smith said.

"I am hopeful of being able to put out some specific proposals in both these areas by Christmas."

RMA progress?

Elsewhere, Prime Minister John Key said the Government's support partners had signalled they would support a fresh draft of a Resource Management Act reform bill through its first reading to the select committee stage.

"The Bill is pretty much complete as I understand it now, primarily because our support partners wanted to be able to read the Bill so they could actually see where they're going. I am fairly confident we've got the numbers to get it to a first reading," Key said.

"Whether we can get it out of the committee stage once we get it to that I don't know. We are in the very early stages, but it's making progress and my guess is it will be introduced relatively soon," he said.

Smith, who is in charge of RMA reforms, later said the Government was still in discussions with its support partners and he was still hopeful of tabling a bill before the end of the year.

(Updated with comments on RMA reform)