Building a better system: major reforms for New Zealand’s building industry

The Government is currently undertaking major reform of the building system with the intent of ensuring healthy, safe and durable housing can be delivered more quickly and at a lower cost. The reforms cover changes to the building consent system, increasing remote inspections, making minor variations to building plans, and other changes. The intention of the reform is to bring modernisation and flexibility to the current system.

 

Background

In 2023, the Government began a broad review of the building system. Aspects of this reform are currently being implemented and others are open for consultation. This latest reform focuses on streamlining the building consent system in order to reduce inefficiencies for building consent authorities (BCAs) and building consent applicants alike. This article summarises some of the key developments and proposals. Changes in respect of the earthquake-prone building regime and requirements, consenting requirements for granny flats and review of the building code are not covered by this article.

 

Minor variations without consent

The Government has recently made changes to regulations under the Building Act 2004 (BA) to allow minor changes to building plans without needing to apply for a building consent amendment. Those changes have been in effect since 30 September 2024.

Changes have been made to the Building (Minor Variations) Regulations 2009, and a new set of regulations (the Building (Minor Customisations) Regulations 2024) were promulgated. The changes to the Minor Variation Regulations have been made to add clarity as to when product substitution will fall within the definition of ‘minor variation’ under section 45A of the BA. The new Minor Customisations Regulations introduce a definition for ‘minor customisation’ for customisations that may be made to the plans and specifications for which a national multiple-use approval has been granted for the purposes of section 45B of the BA.

Both changes are made to give greater flexibility to change building plans.

 

Changes to building consenting system

On 29 September 2024, the Government announced its intention to reform the building consent system. Building and Construction Minister Chris Penk highlighted the perception of inconsistent interpretations of the building code by different BCAs across the country, and the challenges faced by builders who deal with multiple BCAs.

The Government is investigating options for reform including:

1. Voluntary consolidation – allowing councils to work together to deliver building control functions.
2. Regional BCAs – establishing a smaller number of regional BCAs to replace the 66 current BCAs.
3. Single point of contact – setting up a single point of contact for builders to submit plans to. Building inspection may then be contracted out to existing BCAs or private consenting providers.

Public consultation is expected to occur in the first half of 2025.

 

Promoting accountability

In the 29 September announcement, the Government also announced a review of the liability settings across the building system. Currently councils can be liable for defective work, and are often the last man standing left to cover the costs associated with defective or non-compliant building work for which others are primarily responsible.

Liability under the BA has also recently been the subject of significant case law in respect of criminal liability for producer statements (Re Solicitor-General’s Reference (No 1 of 2022) from CRI-2021-463-55 ([2022] NZHC 556)[2024] NZCA 514), the limitation period of contribution claims (Beca Carter Hollings & Ferner Ltd v Wellington City Council [2023] NZSC 117) and duty of care owed by building product manufacturers (Cridge v Studorp [2024] NZCA 483).

On 8 October 2024, the Government announced changes to promote increased accountability for building work. These changes include:

• Strengthening the registration and licensing regime for builders.
• Improving consumer protection measures in the BA.
• Ensuring regulators have the power to hold people to account through licensing, complaints and disciplinary procedures.
• Introducing new penalties.

This is in part being addressed by the consultation on the proposals to increase the use of remote building inspections.

 

Providing for remote inspections

On 2 October 2024, the Government announced its intention to increase the use of remote building inspections to promote productivity and decrease consenting costs. Some councils already use remote inspections, but the Government intends to increase usage across the country and promote consistency in practice. The Government is consulting on the proposal until 29 November 2024.

Alongside its proposals to promote accountability, the Government is considering a new offence of deliberately hiding non-compliant building work in remote inspections, with a penalty of USD50,000 for individuals and USD150,000 for businesses.

 

Promoting competition

On 5 September 2024, the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill (Bill) was introduced to Parliament.

The Bill proposed to remove barriers to the import of overseas building products by:

• Providing for the recognition of overseas standards.
• Streamlining the citing of international standards that can be used with acceptable solutions and verification methods issued by MBIE to comply with the building code.
• Enabling the chief executive of MBIE to specify that building products, or groups of products, provided overseas are to be treated as product certifications in Aotearoa New Zealand.

The Bill is currently being considered by the Transport and Infrastructure Committee, with submissions closing on 14 November 2024.

 

Looking ahead

These reforms are likely to have a significant impact on the building industry, and in particular on BCAs. The changes to the building consent system could bring a major shift in how decisions are made under the BA, as well as BCAs needing to adapt to new overseas products and greater use of remote inspections.

Of some significance, new liability settings in the building system have the potential to reduce the risk and costs on local government, but with the long limitation period on decision making under the BA, any direct implications will not be known for some time.

On 13 October 2024, in another Sunday announcement (which is becoming a regular occurrence for the current Government), Minister Penk summarised the changes/reform announced over the last 10 months and stated, “We will be announcing the next step in the Government’s plan to make building easier and more affordable in the coming weeks.”

We will closely monitor the next round of announcements. For further guidance on how to navigate these reforms, please contact our team.