Big changes coming to New Zealand construction industry

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The Government has made a number of announcements recently that have the potential to significantly change the landscape in the residential construction sector.

The terms of reference for a review of the Building Act cover such things as:
• removing building regulation that adds cost but is of little benefit,
• streamlining building consent requirements to reflect risk and complexity, including reducing the amount of work requiring a consent,

• improving the allocation of risk and liability across parties in the construction sector,
• providing consumers with more information about their rights and responsibilities and improved dispute resolution mechanisms,
• greater incentives for professional performance, including self-certification of Licensed Building Practitioners’ work,

• streamlining administration of building regulation, including options for consenting processes to be carried out by groupings of councils, and
• how the use of smart technology could improve consenting processes.

We welcome any improvement in the efficiencies relating to obtaining a building consent, whether that is by consolidation of Building Consent Authorities (BCAs) and/or technology. We are most interested in streamlining building consents to reflect risk and complexity, improving the allocation of risk and liability and “self-certification”.

These have the potential to make a real difference to us. It is common sense where buildings are of low risk, and designed and built by competent practitioners that they do not need to have the same level of oversight as higher risk properties.

Once this regime is established it is only a short step for these buildings to not have any BCA oversight at all (other than resource consents and building envelope conditions etc), and the licensed building practitioner certifies that the building complies with the building code, just as registered plumbers and electricians do now against their requirements.

The BCA merely becomes a repository of the plan and undertakes no other role.
This will reduce the exposure BCAs have to liability issues but further exposes the builder, and others in the supply chain.

For this to work it will require a complete rethink of the present joint and several liability regime that exists, and builders will have to look carefully at the role of professional indemnity insurance.

The Government sees home warranties as playing an important role in this space as it hopes this will provide consumers with somewhere to turn as a relief of first resort.
These are things that are well worth exploring further, but they will have to be carefully worked through as the devil will be in the detail.

It is pleasing to see the Government has finally announced when builder practitioner licensing will become compulsory. Unless you have an exemption as a DIYer you will need to have a license to undertake restricted building work from 1 March 2012.

Restricted building work is essentially the primary structure (foundations and framing), external moisture systems (roofing and cladding) and active fire safety systems in small-to-medium sized apartments.

The Department of Building and Housing is also looking to simplify the license application process, and is currently consulting on that so we will advise you when and how you should apply for a license once that is resolved.

The next 12 months will be very busy indeed as the sector and Government works through the Building Act review and begins to comprehend the effects it may have on the industry.
We look forward to it. For more detail on the announcements, members should refer to the latest edition of Nailing It Home.