Changes to liability and Building Consent Authorities: Biggest changes to building consent system since the Building Act came into force in 2004, Minister for Building and Construction Chris Penk says

The Government is shaking up New Zealand's building consent system with plans to move from joint and several liability to proportionate liability for defective work.

In addition councils will be allowed to voluntarily consolidate their Building Consent Authorities with one another. 

These are the biggest changes to the building consent system since the Building Act came into force in 2004, Minister for Building and Construction Chris Penk says.

Proportionate liability

When it comes to defective work, joint and several liability means liability is shared between multiple parties - and the payment is shared by these parties.

The Government will scrap this and replace it with proportionate liability, Penk says.

Proportionate liability means each party will be responsible only for the share of the work it carried out.

“Building owners will be protected if things go wrong, and we’re exploring options such as requiring professional indemnity insurance and home warranties, similar to arrangements in Australia.”

Penk says the plans would ease the cost burden on ratepayers for defective building work.

He says councils are hesitant to sign off on building consents and inspections because they can be held liable for all defects and this leaves ratepayers footing 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 leads to frustrating delays and extra cost for builders and homeowners,” Penk says.

“It’s time to put the responsibility where it belongs.”

The Government is looking into supporting mechanisms for proportionate liability which may include:

• Requiring home warranties for certain building projects, with an option to opt out
• Requiring professional indemnity insurance

Voluntary consolidation of Building Consent Authorities

The Minister says it’s ridiculous that builders, designers and homeowners must navigate “66 different interpretations of the Building Code, because of the number of council Building Consent Authorities (BCAs) across the country”.

Builders could have paperwork rejected that would be accepted by a neighbouring BCA "simply because each BCA applies the rules differently", Penk says.

Councils will be able to voluntarily consolidate the functions of their BCAs with each other.

“Many councils have asked for this,” Penk says. “I expect they will seize the opportunity to consolidate, share resources like building inspectors and IT systems, and pass the savings on to ratepayers.”

‘Eliminate system blockages’

“The building sector has the potential to be an economic powerhouse, yet productivity has stalled since 1985 despite major advances in building methods and technology."

“New Zealand’s sluggish consenting system is delaying projects and driving up costs, making the average standalone house here 50% more expensive to build than in Australia," Penk says.

“We must eliminate system blockages to speed up the delivery of new homes and infrastructure.”

Penk says the Government is determined to get the building and construction sector “firing on all cylinders, and that requires bold change”.

The Government plans to introduce a Bill to Parliament in early 2026.