Faster consenting of homes: who pays when there’s a problem?

Tuesday, 1 October 2024

Homeowners should not be left to deal with the consequences if builds go wrong as a result of the Government’s overhaul of the building consents system, a leaky home advocate says.

Building and Construction minister Chris Penk has announced the Government is investigating “major reform“ of the system, prompted by unreasonably high building costs and a cumbersome consenting system.

Options to streamline the process, which include the establishment of a smaller number of regional Building Consent Authorities (BCAs) and having a single point for contact for builders to submit plans to, were up for consultation.

But Roger Levie, from the the Home Owners and Buyers Association (HOBANZ), said he was extremely concerned nothing had been said about increasing the consequences for when builds go wrong.

“The idea that you can take away regulation, and the existing defective building situation will improve, is ridiculous.

“There needs to be some sort of system or insurance to deal with liability when things go wrong because you can’t have that liability going back to the homeowner.”

The Government was also pushing for BCAs to make much greater use of remote inspections, which came with higher risk, he said.

“If they are trying to suggest centralising the consenting system, so there are fewer local experts on the ground, and then rely on remote inspecting, it’s a recipe for problems.

“The industry still underperforms in terms of building correctly as the building code is seen as something to build to, rather than the bare minimum. That’s not a robust practice and there is a risk of failure.”

Many people thought the leaky home crisis was over, but it was not, and HOBANZ dealt with defective new builds on a regular basis, he said.

If builders could prove they were good builders, had insurance, and were prepared to suffer the consequences if their builds failed, then the reforms should go ahead, he said.

“But if builders think they can build without consequences, use the system to their advantage, and leave the homeowner to suffer when things go wrong, then it shouldn’t.”

Levie said the Government seemed to be listening to industry and lobbyists, and not homeowners.

Any regulatory changes needed to be undertaken in a systematic fashion, rather than the bit-by-bit approach being taken in a bid for “quick wins”, he said.

But Minister Penk said he was confident there would be no increased risk of large or small scale building problems resulting from changes to the consent process.

That was because the standards were not being lowered, and nothing in the building code was being changed, he said.

“We are just looking at more efficient ways of building work being done, and at incentivising innovative solutions that improve productivity and enable building at scale. The economies of scale achieved will be helpful rather than risky.”

Liability settings across the whole building system would be looked at as part of the review, as the current settings left councils liable for defective work, and that created a risk averse approach, he said.

“Council chief executives are interested in the proposals because they are interested in having less liability, but no decisions have been made.

“An example of an option might be that if there was a nationally approved plan, the council might have liability where they had some control over how the plan was implemented, but they would not have liability if something was wrong with the plan to start.”

Insuring builders adequately for their work was another possibility in theory, he said. But the reality was that if the insurance market was not up for it, then government would have to provide it, and that was a problem for rate or tax payers.

Penk said people recognised that building needed to be made quicker, easier and more affordable, and he had not encountered a negative reaction to the proposals.

The Government was open to feedback, and consultation with the industry would take place between now and Christmas, while public consultation would happen in the new year.

“It will be an intricate, and detailed process, but ideally it won’t be too lengthy as it is urgent, and we need to get on to it.”

Canterbury-based construction expert Mike Blackburn said the Government seemed intent on rushing building changes through, but looking to work out the details later, and that was a risk.

But the consenting system was long overdue for a shake-up, and he was “absolutely” in favour of the review as the industry had been frustrated with the consent process for many years, he said.

“There may be some resistance from councils, but there is a precedent for centralisation of consenting.”

Consentium, which is a wholly owned subsidiary of Kainga Ora set up in 2021, is the first independent BCA outside of the councils.

Blackburn said he was also aware of a private company which was near to applying to become a commercial independent BCA, although once established it would work primarily with group home builders.

His understanding of the Government’s plan was that there would not be a relaxation of the Building Code or the rules around inspecting properties.

“But liability is a major problem, as there is a significant lack of insurance cover for individual builders, and councils tend to be the last man standing. That’s a risk for the industry if the system is moved away from councils to private companies more.

“Because the moment you have an independent organisation, where does the liability sit? I understand the Government is not looking to remove councils, but the liability issue remains, and that could be a sticking point.”

Overall, the intent of the changes, as with the other regulatory changes being made by the Government, was to make it easier, cheaper and faster to build more buildings, he said.

“But while the industry would be generally supportive of reform, there are lots of questions to answer and boxes to tick first.”

Building Industry Federation chief executive Julien Leys said everybody would agree with the need for reform as the consenting system had bedevilled the sector for a long time.

His organisation had always felt there should be greater focus on improving the system, he said.

“That’s because it is one of the big factors around delays and cost increases, and reforms once implemented will make a big difference.

“But there are aspects to the proposals which mean the details will be really important.”

Liability was one issue that would need to be addressed carefully, he said.

“Another is whether there should be some sort of Ombudsman to have oversight of the new system, and review the decisions that are made.”