Quality first in Act reforms

By - , Build 120

The government has announced plans for significant reforms to the Building Act 2004.

The Building Act 2004 was a response to weathertightness problems. Since then, there has been a general improvement in building quality, but there are still signs of a lack of confidence in the sector.

Proposed changes to the law are designed to drive the culture change necessary to rebuild that confidence and provide New Zealanders with dependable quality buildings. When announcing the changes, Building and Construction Minister Maurice Williamson emphasised that quality comes first.

To provide an incentive to improve quality, the proposed changes will make it clearer that builders and designers responsible for faulty work will also be responsible for the cost of ‘putting it right’.

Incentives to improve residential quality

Proposed amendments to the Act will make accountability clearer and enforceable. For example, a written contract between building contractors and consumers for residential projects above $20,000 will be mandatory. Every contract must include a summary of the already existing warranties in the Act that require building work to be fit for purpose, meet the Building Code and be undertaken with reasonable care and skill. Explicitly including the warranties in contracts should raise awareness of these general requirements and strengthen the incentives for contractors to ‘build right first time’.

Before the contract is signed, the contractor will have to give the consumer information about their insurance or surety backing to cover the cost of fixing any fault. This will help consumers make informed choices based on the skills and background of the contractor.

A new 12-month defect repair period will be introduced. During this time, a contractor will be required to routinely fix any defects in their work notified by the consumer, provided there has not been consumer misuse or negligent damage. The onus will be on the contractor to fix the defect, or prove the request was unreasonable, rather than on the consumer. At the same time, consumers will get more information about what maintenance they need to carry out and the importance of reporting any defects to the contractor as quickly as possible.

For the many builders who behave professionally and responsibly, these requirements will not be hard to meet, but they will help consumers identify the cowboys.

Should home warranty insurance be mandatory?

There is a strong focus on how liability is apportioned. Disclosure of insurance backing is a good first step, but some people think that home warranty insurance should be mandatory.

The government has instructed the Department to consider whether changes are needed to the application of joint and several liability. The implications of any change plus the costs, benefits and risks of such a scheme will be investigated.

If all parties put more effort into building right first time there will be fewer instances of faulty work and less need to apportion liability.

Stepped risk-based consenting

The proposed amendments to the Act will also set up a stepped risk-based building consent system if the conditions are right, for example, if there are enough licensed building practitioners. The amount of plan checking and inspection by a Building Consent Authority (BCA) will be better aligned with the risk and complexity of the work and the skills of those carrying it out.

Three processes are proposed for consenting in the residential sector, based on the type of building work:

  • A streamlined process for some low-risk work (such as a free-standing garage) – the BCA checks that certain conditions are met (for example, the work is undertaken by a licensed building practitioner) but no further inspections are carried out.
  • A simplified and more prescribed consenting process for certain simple lower-risk residential work (such as single-storey houses built using proven methods and design with low structural and weathertightness risks).
  • Existing consent and inspection requirements for moderate to high-risk residential work, such as complex multi-storey houses, and for lower-risk work not involving a licensed building practitioner.

Changes are also proposed to the process for consenting commercial buildings that reflect current best practice. The changes will allow third-party (non-BCA) review and quality assurance processes as an alternative to the current consenting and inspection requirements, provided certain conditions are met.

More changes on the way

There are other changes on the way, for example, more minor work will be exempt from needing a building consent. How to develop a more nationally consistent building consent system, while retaining local delivery, is also being looked at.

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