Building and Construction Minister Chris Penk Photo: RNZ / Samuel Rillstone
A property lawyer says homeowners could be left vulnerable to costs when building projects go wrong under changes to the building consents regime.
The government is moving to a proportionate liability system for the Building Act, so each party is liable for the share of work they carry out.
It says councils have been reluctant to sign off building consents because they're liable for defects, causing unnecessary delays in the construction process.
Building and Construction Minister Chris Penk said the government would be exploring mechanisms to protect homeowners, such as indemnity insurance or home warranties.
Property lawyer James Wollerman told Morning Report it was not clear how that would work.
Under joint and several liability a homeowner could claim full compensation for a botched building project from the council, he said. Under the new scheme of proportionate liability - if the council and builder were sharing liability by 50 percent each - the homeowner would be left carrying that 50 percent if the builder went missing.
He said there was an option of an insurance scheme, but it was not clear who would underwrite that insurance.
"We've seen that insurers are not generally prepared to insure for weather-tightness defects.
"So there's a big question out there as to what the government's going to be able to put forward in terms of an insurance scheme that would provide some sort of protection for homeowners."
Deputy Prime Minister David Seymour, Photo: RNZ / Mark Papalii
Deputy Prime Minister David Seymour said Australia had had a proportionate liability scheme since the 1990s.
He said it made sense to shift liability away from councils, which was creating high rates for ratepayers and a risk-averse culture in construction.
"If you're a council, and you know that you can end up liable for an entire project, then you get increasingly stressed and often obstructive, when it comes to allowing more innovative building materials, more innovative techniques.
"And as a result, we end up with high rates and little innovation in building and high building costs," Seymour said.
He said the shake-up of the building consents regime would cut delays and costs for construction projects.
"Moving to a regime where the various people involved, those who provide the materials, those who do the work, perhaps those who do the design, and those who do the consent, have liability when things go wrong, is not a scary or different thing.
"It takes us to where most of the world is."
Auckland mayor Wayne Brown said scrapping the building and consents regime was a huge victory for ratepayers.
Brown said Auckland ratepayers had been footing the bill for uncapped financial liability in many building disputes and he had been campaigning to fix the issue since February 2023.
Labour Party leader Chris Hipkins told Morning Report the current rules were introduced in the early 2000s during the leaky home saga.
"Are they slowing things down? Yes they probably are. So I think the government are making the right steps, you know they are heading in the right direction.
"The issue will be getting consumer protection right."
Hipkins said that the government believed if it pushed house prices up the economy would be fixed.
"House building sure creates jobs but the housing market is not the totality of our economy."
Councils as safety net 'might be over' - lawyer
Nathan Spier, a lawyer at Meredith Connell law firm, told Nine to Noon homeowners would have to be extremely careful about the builder or designer they chose now.
"The days of councils being that safety net for people might be over, and if the money is not coming from the council like it has for the last 20 years, then where is it coming from?"
He agreed with Wollerman's comments that details of an insurance scheme were essential.
"I'm not sure we are ready to be honest, for derelict apartment buildings to be sitting in central Auckland because homeowners don't have the ability to fund the repair."
Building Industry Federation chief executive Julien Leys said there must be a mandatory insurance scheme for builders.
He said the scheme should be structured as in New South Wales, where builders carrying out projects over $20,000 must have home warranty insurance.
Spier said for years he had represented councils which were being sued over all types of defective buildings, from single-dwelling to apartment blocks, and it was unsurprising they were happy to see a shift in the liability settings.
"We have to remember that councils simply represent the ratepayers, and ratepayers have funded a lot of remediation projects around the country.
"Some of the big apartment claims in Auckland and other areas, you are talking about hundreds of millions of dollars to repair these claims.
Leys said there must be a mandatory insurance scheme for builders under changes to the building consents regime.
The government is moving to a proportionate liability system for the Building Act, so each party is liable for the share of work they carry out.
Building Industry Federation chief executive Julien Leys says the scheme should be structured as it is in New South Wales, where builders carrying out projects over 20,000 dollars must have home warranty insurance.
He says this would give protection to homeowners if a project went wrong.
