New rules for regulating the construction sector on the way

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The planned amendments to the Building Act signal a new era for the construction sector in New Zealand.
The Act will be amended to make it clear that builders must meet the Building Code’s minimum standards, and new contracting and information disclosure requirements will place a greater emphasis on the need to “build right first time”.

The Minister says the long-term goal of the package is to achieve a more efficient and productive construction sector that stands behind the quality of its work.
He says “the Building Act 2004 was a result of weathertightness problems. There has been a general improvement in building quality since 2004, but the current system is not creating the right incentives to improve productivity”.

Incentives for improving quality in the residential sector

Under the planned changes, builders taking on residential building work worth more than $20,000 in price will be required to have a written contract in place with their clients.
Every contract will have to include a summary of the existing warranties in the Building Act that require building work to be fit for purpose, meet the requirements of the Building Code, and be undertaken with reasonable care and skill.

This requirement is expected to reduce the number of disputes between builders and their clients. However, it will mean that builders will be held to account for fixing their mistakes, at their own cost.

Mr Williamson says the planned changes to contracting requirements and supporting information are aimed at rebuilding confidence, by making it clearer to all parties what is expected and how any problems will be fixed.
Builders will be expected to fix any defects in their work that are reported within 12 months of completion, on top of the existing obligation to “put things right” for up to 10 years as long as there has not been misuse or negligent damage caused by the consumer.

At the same time, consumers will be informed of their responsibility to carry out reasonable maintenance and the importance of reporting any defects as quickly as possible.
New information disclosure provisions will require builders to give their clients more information about themselves, and their track record, before the contract is signed. 
This includes disclosing what, if any, financial back-up or insurance is available to cover the cost of fixing any faults.

Mr Williamson says these proposals enforce in law what is already best practice in the industry. “For the many builders who already behave professionally and responsibly, these requirements will not be hard to meet. The major difference is that it will help home owners to identify the ‘cowboys’.”

Lifting sector performance

One of the keys to improving quality, and lifting the overall performance of the construction sector, is the licensing of building practitioners.
People commissioning building work will be able to identify competent builders and tradespeople with a good track record by their licensed building practitioner status.

The Minister says being licensed is a wise choice for responsible building practitioners — it has a definite marketing advantage.
“Home owners can be confident that licensed building practitioners working on their homes and buildings are competent and that their homes are designed and built right first time.”
Licensing promotes, recognises and supports professional skills and behaviour in the construction industry. Licensed building practitioners are accountable for their work via a complaints procedure. Anyone can complain to the Building Practitioners Board about licensed practitioners if their work is substandard.

Clarifying the Code

Meeting the Building Code’s minimum standards is non-negotiable under the planned law changes. Builders and designers will be expected to know the Code and will be held to account if they fail to meet minimum standards.

The Minister says there is a lot of work to do clarify the Code so that it is easier to understand, and easy to comply with.
“If we expect builders to be accountable for meeting Building Code requirements, we need to make sure they can find it easily, understand it clearly, and get good information about how to comply.”

More low-risk work exempt from consent

The law will be changed to clarify and add to the list of minor and low-risk building work that is exempt from the requirement to have building consent.
Schedule 1 of the Building Act will be amended to allow builders and home owners to build higher fences and decks, or a 20 sq m carport or verandah without building consent. However, the requirements of the Building Code and other relevant regulations must be met.

Plans afoot to streamline the consent process

Longer term, the Government has signalled that it plans to introduce a “stepped” consenting process, where the amount of checking and inspection is directly aligned to the risk and complexity of the work, and the skills and capability of the people doing it.

This is how it might look:
• A streamlined process for some low-risk work, such as a free-standing garage or large rural shed, that simply checks that certain conditions are met (for example, the work is undertaken by a licensed building practitioner).
• A simplified and more prescribed consenting process for simple residential building work at the lower-risk end of the spectrum, such as a simple single-storey house, built using proven methods and design, with low structural and weathertightness risks.
• The existing consent and inspection requirements would continue for moderate to high-risk residential building work, such as a multi-storey house that has a complex design, and for lower-risk building work that is not done by a licensed building practitioner.

It is widely anticipated that this new approach to consenting would reduce compliance costs by doing away with unnecessary checking and inspection.
Mr Williamson said this risk-based approach will also provide incentives for builders and designers to get licensed and demonstrate their professionalism. However, the Minister made it clear that the Government won’t be making any changes to the current system until it is satisfied there is a strong base of licensed building practitioners.

The planned changes to the consent system will also depend on new contracting arrangements for residential work being in place, and the results of monitoring of building quality.
Mr Williamson said there was still a lot of detail to be worked out, and builders would have an opportunity to comment on the proposed amendments to the Building Act and regulations through the select committee process.

For more information on the planned changes visit www.dbh.govt.nz/buildingactreview.