Government announces ‘biggest building consent reform in decades’

Monday, 18 August 2025

The Government is moving to amend the Building Act to allow councils to merge their building consent functions, allow private operators to do more consenting work and scrap the current building liability regime.

As The Post reported this morning, the changes to the system will be the largest in a generation and the Government hopes will clear the way for more building.

The changes were announced at a press conference held by the prime minister, Christopher Luxon, following a Cabinet meeting, on Monday afternoon.

Construction Minister Chris Penk has previously said that his goal is to get the building system - from consents to liability to import of building products - ready to go when the economy turns up again.

“The building sector has the potential to be an economic powerhouse, yet productivity has stalled since 1985 despite major advances in building methods and technology,” Penk said.

“New Zealand’s sluggish consenting system is delaying projects and driving up costs, making the average standalone house here 50% more expensive to build than in Australia.”

Building Consent Authorities (BCA) - which all territorial authorities (councils) are required to be - will be allowed to amalgamate their consenting functions under the plan, which the Government says many want to do and will help reduce cost and increase capacity.

Among the regulatory changes being made as a part of the Government’s reforms are that territorial authorities are no longer required to be Building Consent Authorities provided they transfer those functions to another BCA.

In what could be a boon for private consenting firms, the Government also plans to remove restrictions on councils transferring their consent functions to non-council BCAs.

The Government will also be “updating and standardising regulations to eliminate duplication and incentivise collaboration”.

The Government also says that it will help ensure there is more consistency across the 66 current BCAs.

“It is ridiculous builders, designers and homeowners must navigate 66 different interpretations of the Building Code, because of the number of council BCAs across the country,” Penk said.

“Builders can be rejected on paperwork that would be accepted by a neighbouring authority simply because each BCA applies the rules differently.

“Many councils have asked for this and I expect they will seize the opportunity to consolidate, share resources like building inspectors and IT systems, and pass the savings on to ratepayers.”

The Government will also be scrapping “joint and several liability” and replace it with a new “proportionate liability” model, although the details around that have not yet been decided.

Joint and several liability means that when there are two or more parties potentially responsible for mistakes, the customer can choose any one to try to win damages from - regardless of the level of their responsibility. In the case of many building mistakes, that means the local council who signed off on the work.

“Right now, councils are hesitant to sign off on building consents and inspections because they could be held liable for all defects, leaving ratepayers to foot the bill,” Penk said.

“This often happens when one of the parties responsible cannot pay for repairs, for example, if a business goes bust.”

The original intent was that the customer would be made whole and then the party that pays out the claim could turn around to seek a contribution from other liable parties.

The Government is exploring options such as warranty schemes and indemnity insurance as replacements for joint and several, with the aim of shifting the potential costs of defective work away from ratepayers.

“Currently, building owners can claim full compensation from any responsible party – and it’s often councils, with the deepest pockets and no option to walk away, that end up paying out,” Penk said.

According to the Government, proportionate liability will mean that councils are only held accountable for the tasks they undertake - not the mistakes of other builders or sub contractors.

Moves welcomed

Property Council NZ chief executive Leonie Freeman said the changes would addressed long-standing issues that had created cost and delay.

“Joint and several liability has often left councils as the last man standing. Proportionate liability changes this,” Freeman said.

“Spreading accountability more fairly across the construction pipeline should ease pressure on councils and provide greater certainty for the market. We expect this will also help reduce the risk-averse behaviour that slows down consenting and drives up costs.”

Meanwhile, Local Government New Zealand (LGNZ) said consolidation of BCAs would speed up building consenting on new homes.

President Sam Broughton said the changes would be welcomed by councils and were overdue. LGNZ had been asking for the changes since 2019.

“Local and central government are strongly aligned on the need to streamline rules and processes to deliver economic growth, and this starts with housing growth.

“Under the current system, councils are often left ‘holding the bag’ if something goes wrong with the finished building. This means ratepayers bear a disproportionate and unfair amount of risk and cost, and this has driven an overly cautious approach to consenting from councils.

“We strongly believe it will have an instant and positive impact on housing growth; councils will be in a better position to consent more efficiently, with less legal risk borne by local government — and therefore less risk for ratepayers.”

Master Builders CEO Ankit Sharma said builders had long faced duplication, delays, and inconsistent decisions across the different BCAs.

Consolidating the number and introducing common data standards could reduce compliance costs, improve consistency across regions, and speed up approvals, he said.

As well, “The current joint-and-several system has meant councils carry a disproportionate share of risk, which has made them overly cautious and slowed down consenting.

“Moving to proportionate liability has the potential to create a fairer and more balanced system, provided it is paired with strong consumer protections such as home warranties and appropriate practitioner insurance.”