Building law reforms

Last updated: 1 October 2019

The aim of the building law reforms is to make the building system more efficient, lift the quality of building work, and provide fairer outcomes if things go wrong.

Video transcript

About the reforms

The most recent survey of new homeowners by BRANZ found 80 percent of home owners had to get tradespeople back to fix defects after they had moved in. Consenting delays are also an issue, costing around $1,000 for each week a residential site is shut down.

The building reforms will speed up consenting, support designers and builders to choose the right products and install them in the way intended, and support the use of innovative building methods such as prefabrication.

A new manufacturer certification scheme will mean manufacturers with good systems in place can produce quality modular building components that are deemed to comply with the building code. This will reduce the number of Council inspections required, saving time and money. The Government is taking a phased approach to the reforms to accelerate changes that bring immediate benefits while work continues on those proposals that need further development and testing. This will also ensure the sector has enough time to transition to its new regulatory settings with minimal business disruption.

What changes have been confirmed?

Cabinet has now approved reducing the building levy and standardising the levy threshold. This means that from 1 July 2020, the levy rate will reduce to $1.75 including GST, for any building work that is over the $20,444 threshold (including GST). This is great news for anyone who is involved in a building project, as the cost for consenting will be reduced by about $80 (based on average new build in Auckland).

This is the first change that will come into force as part of the wider building legislation reform programme.

What other changes has the Government agreed?

Faster building consents for prefabrication and off-site manufacturing

Current building consent processes are best suited to traditional construction methods and can present barriers for more innovative ways of building. The Government is proposing to address this through a manufacturer certification scheme, which will provide a new streamlined consenting pathway for quality manufacturers using modern methods of construction such as off-site manufacturing.

Certified and registered manufacturers will be able to produce modular building components within a defined scoped of practice. These components will be 'deemed to comply' with the Building Code. This means BCAs won't need to look at these modular components when issuing a building consent or undertaking inspections except for how the design will interact with other on site elements such as site works, foundations and connections to services.

The Scheme will use specialist, third party assessors to conduct assessments and audits to ensure manufactured components meet the required quality standards. This will reduce the duplication of effort for both BCAs and for manufacturers while also recognising the robust quality assurance processes many manufacturers already have in place.

Faster and more cost-effective construction through greater use of offsite construction may also support the Government's broader housing affordability goals by bringing more affordable homes to the market that meet, or exceed, New Zealan's building code requirements.

Better information and clear responsibilities for building products

Manufacturers and suppliers will be required to make a minimum level of information publicly available about the building products they sell. This will include a plain English description and information about how the product should be installed and maintained.

Manufacturers and suppliers will also be required to provide evidence for claims they make about their products' performance.

The new requirements will help designers and builders choose the right products, and will speed up consenting by reducing the need for BCAs to request further product information.

Making product information publicly available will also improve the quality of building work by helping builders install products in the way intended. This should reduce the number of inspection failures, saving up to $1.5 million a year.

MBIE is now working with key stakeholders to finalise the information requirements that will be set in Regulations. This will ensure they enable better design, consenting and building work without placing an undue burden on manufacturers and suppliers.

MBIE will have the power to require any person to provide information when this is needed to determine whether a building product or method should be subject to a ban or warning. This will ensure risky products and methods are kept off the market.

Strengthening CodeMark to provide greater product assurance

The Government is strengthening New Zealand's existing product certification scheme, CodeMark, by improving the quality of product evaluations and certificates.

Changes include setting registration requirements for product certificates and product certification bodies, and providing MBIE with the ability to investigate, suspend or revoke registrations where appropriate.

This will build confidence in the scheme, make consenting more efficient, and lead to safer and more durable building work.

Reducing the building levy

The Government has decided that the building levy will be reduced from $2.01 to $1.75 (including GST) per $1,000 of consented building work above a threshold of $20,444 (including GST) from 1 July 2020.

This will lower building consent costs by around $80 for the average new build, and by $5,200 for a $20 million commercial project.

The lower levy rate will also reduce the surplus that has accrued in the building levy account without affecting the level of service MBIE provides to levy payers.

Building sector stewardship

The scope of the levy is also being widened. If the change is approved by Parliament, MBIE would be able to spend it on activities related to the broader stewardship of the sector. Stewardship is crucial to the development of an efficient, high-quality regulatory system. All expenditure will continue to be for the benefit of levy payers and within Treasury guidelines.

Updating offences and penalties

The Government is increasing penalties for offences against the Building Act, and setting higher penalties for companies than individuals. This will bring the Act into line with other legislation and ensure penalties are sufficient to deter substandard work and poor behaviour.

There was widespread agreement during public consultation on the proposed reforms that the current maximum penalties in the Building Act are insufficient to promote compliance. Many of the current maximums have not been adjusted since 2004.

The timeframe for filing charges under the Act is also being extended, from 6 to 12 months. This will provide enforcement agencies with enough time to conduct thorough investigations, while ensuring any prosecutions will still be timely.

Summary of proposed changes to Building Act maximum penalties

Type of offence*Current maximumProposed new maximum
IndividualsCompanies/organisations
Breach of administrative obligations $2,000/$5,000 $5,000 $25,000
Breach of defined responsibilities $5,000 $20,000 $60,000
Wilful breach; significant safety risk; impersonate official $5,000 / $10,000 / $20,000 $50,000 $150,000
Serious offences* $200,000 $300,000 $1,500,000

* Refer to Cabinet paper "Lifting the efficiency and quality of the building system: Proposals for Bill One" for full breakdown

Public notification requirements

The Building Act's public notification requirements are being updated to reflect the increasing use of the Internet to access important information. This means notifications will take place online and in the New Zealand Gazette, but will no longer be published in newspapers.

When will these changes come into effect?

The new building levy rate has been confirmed and will take effect from 1 July 2020.

All other proposals require amendments to the Building Act. There will be opportunities to provide further feedback on the Bill through the select committee process.

When the Bill is passed into law, the updated offences and penalties, together with the new public notification requirements, are proposed to come into effect immediately.

What other further changes are being considered?

MBIE is continuing to develop advice on proposals to strengthen occupational regulation within the sector. A Bill will be developed that could be tabled in Parliament before the end of 2020. This will ensure building professionals and tradespeople have the right skills and can be held to account for substandard work or poor conduct.

We received clear feedback during the public consultation that the building insurance market is not currently in a position to meet the large increase in demand that would arise from a compulsory guarantee or insurance product. The Minister has asked us to report back in 2020 on options to address issues with risk, insurance and liability in the building system.

Sector feedback has strongly supported taking a logical and phased approach to change. This makes sense, as it allows us to keep up the momentum with the reforms while continuing to work on those proposals that need further development and testing.

Documents

Further information

If you have any questions about the reform programme please email building@mbie.govt.nz

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This information is published by the Ministry of Business, Innovation and Employment’s Chief Executive. It is a general guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case. Expert advice may be required in specific circumstances. Where this information relates to assisting people: