The Minister of Building and Construction, Hon Chris Penk, this week signalled two significant changes to New Zealand's building consent system, focusing on Building Consent Authorities (BCAs). These changes follow an investigation into options for building consent reform, commenced late last year (see our article for further details).
Proportionate liability
The first proposal is to replace the joint and several liability regime applying to defective building work with a proportionate liability regime. Currently, building owners can seek full compensation for defective works from any party that was, in part, responsible for the defect. However, where other defendants do not have the means to pay, plaintiffs often look to the BCAs (local Councils) to pay the damages, typically on the basis that the BCA was negligent in issuing a building consent or certifying the works comply with that consent.
In the Minster's view, this has made BCAs increasingly conservative and risk-averse when issuing building consents and undertaking inspections, contributing to delays and higher costs for building owners. Under the new liability settings, each party will be liable only for a share of the loss, whether or not the other parties that contributed to the defect are solvent and able to fund their respective share. Recognising this could leave the building owner unable to recover its full loss, the Government is exploring options for home warranty and professional indemnity insurance, similar to arrangements in Australia and the UK, to better safeguard building owners.
Consolidating BCAs
The Minister also announced a further reform that will allow local Councils to voluntarily consolidate their BCA functions, with a view to streamlining approval processes, reducing costs and reducing inconsistency in the application of the Building Code between BCAs.
Next steps
Changes to the liability regime are signalled to be implemented by way of amendment to the Building Act 2004 through a Bill expected in early 2026. Regulatory changes are expected to enable consolidation of BCAs. Russell McVeagh will continue to monitor developments closely and provide timely updates as they emerge.