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.
12 Comments
"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”.
Exactly why BCA consolidation should be both mandatory to a single NZ entity & 100% independent of councils.
The Minister blinked first.
Now they're cooking! Finally, something sensible and worthwhile from this coalition government. Well done, Chris Penk.
As far as I'm aware Labour kicked off the move away from joint and several liability but am unsure if it was in their first term or second term. Don't know how far they got but at least National is seeing it through.
Good move long overdue. Staggering if it’s true that building productivity hasn’t improved since 1985, but unfortunately believable. Everything still handbuilt as a bespoke one off….imagine if any other industry was like this
It's so ripe and long overdue for disruption! Builders should not wield golden hammers!
Open up much more land at the same time,
- Flood the market at all ends!
Any industry the that becomes inefficient, should be put to the sword, via innovation.
Bring on the ZURU 50K prefab homes!
Could not come soon enough, land + home at 450k.
Burn the landbankers and specuvestors!
It's so ripe and long overdue fir disruption! Builders should not weild golden hammers!
Then get in there mate and start your own disruptive building company. You'll be sure to make squillions undercutting everyone.
Speedmax makes a good point, part of the problem is everyone wants their home to be distinct. The cheapest way to make something is to make the same thing over and over again.
Issue is section shape and size. I'd suggest that you could get away with at least six designs and suitable variations for section shape and still be able to mass produce. I looked at the Zuru website. Personally not a fan of single pitch, shallow slope roofs. Also a bit too boxy.
Houses in NZ really need eaves.
Our big issue is the desire for houses to be fashionable. In other parts of the world, they'll retain styles for decades or centuries. So there's a uniformity of materials and processes. We used to do something similar here, up to maybe the 70s.
The tradies should be able to do their work almost blindfolded. Now the nature of design is so disjointed and moving that the process of house building is very clunky, and often being made up on the fly.
Also need the other obvious component to free up land and reduce price…a land tax to discourage hoarding. With cheaper land and more productive construction sector house prices could return to sensible levels which in turn could facilitate a more productive and competitive overall economy, with same wages affording a better quality of life and lower export of smart young people. Am I hoping for too much?
Speedmax. Yes yes yes!
There's probably about 6-10 entities all pushing up the cost.
Even if you made land cheaper, the council is going to clip $100k-$150k just validating a section.
You’re not hoping for too much…but jeez houses can be built for a sensible(ish) price now…but no one wants a 100m2 rectangle box home the same design as the neighbours on each side with fibre cement weatherboards, one mid sized bedroom and two single bedrooms, one bathroom with a shower above the bath, no walk-ins, no media rooms, no ensuites, no home office, no attached double garage with remote opening doors, no stone benchtops with butler pantries, forget the out entertaining area…the list goes on…everyone I know who has built over the last decade has moaned about the cost but also absolutely refused to compromise on any of the above 🤦🏻♂️😂
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