New Building Consent Changes Aim to Boost Sector Efficiency

The New Zealand Government has announced significant reforms to its building consent regime, aimed at addressing delays and inefficiencies that have hindered the construction sector. Building and Construction Minister Chris Penk described the current system as “sluggish,” highlighting the reluctance of councils to approve building consents and inspections due to concerns over liability.

Penk explained that councils often bear the financial burden of defects, especially if other responsible parties, such as developers, cannot pay for repairs. He cited a troubling scenario where a developer entered voluntary liquidation, leaving the local ratepayers to shoulder a potential claim of $160 million related to weathertight defects in Queenstown. “If the case hadn’t been settled privately, ratepayers could have faced rates increases of $300 a year for 30 years,” he emphasized, underscoring the need for reform.

Key Reforms to Liability and Consent Processes

The government plans to abolish the existing ‘joint and several liability’ framework in favor of a ‘proportionate liability’ model. This change means that each party will only be accountable for the specific portion of work they completed, thereby reducing the financial risk for councils and accelerating the consent process. Penk noted that building owners would receive protection if issues arise, with potential measures such as mandatory professional indemnity insurance and home warranties being considered.

Penk acknowledged that New Zealand could learn from Australia’s approach to building consent, stating, “We can copy their homework on it to a large extent.” The anticipated reforms aim to alleviate the risk-averse environment that currently delays project approvals.

Consolidation of Building Consent Authorities

In addition to liability reforms, the government will allow councils to voluntarily consolidate their Building Consent Authority (BCA) functions. Penk criticized the current system, where builders and homeowners navigate 67 different interpretations of the Building Code across various councils. He expressed hope that councils would take this opportunity to share resources, such as building inspectors and IT systems, ultimately passing savings on to ratepayers.

The Building Industry Federation has responded positively to these proposed changes. Chief Executive Julien Leys stated that the shift to proportionate liability would have a “massive” impact, allowing for more rapid and efficient processing of consents. He indicated that mandatory insurance and auditing would transfer risk away from councils, reducing the fear of litigation.

Leys also supported the consolidation of BCAs, arguing that the inconsistencies among councils hinder progress. “Let’s look at the options: we can either get those councils to consolidate or create one big overarching national point of contact,” he said. He noted that the goal is for 80 percent of consents to be processed within three days, which would significantly expedite the overall building process.

With the construction sector facing a challenging period marked by inefficiencies, these reforms are seen as a timely response. Leys emphasized that any initiative to reduce costs and delays is welcome, stating, “It’s been 21 years since we’ve had any major reforms of the code, so it’s timely.”

As the government moves forward with these changes, builders and stakeholders await the implementation of measures that could reshape the landscape of construction in New Zealand, enhancing productivity and reducing costs for all involved.