NICK COWDY / Residential Sales Consultant, Principal Agent
The New Zealand Government has announced significant reforms to overhaul the building consent system, signalling a major shift in how building projects are approved and inspected. Building and Construction Minister Chris Penk has highlighted that the country faces unreasonably high building costs and a complex consent process, which have contributed to making New Zealand one of the least affordable housing markets globally. To address this, the government aims to replace the current Building Consent Authority (BCA) system with a new, streamlined model designed to improve efficiency, consistency, and affordability.
Proposed Changes to the Building Consent System
One of the key elements of the reform involves reducing the number of BCAs from the current 67 district and city councils, which each have different practices and interpretations of the national building code. The inconsistency across councils has led to increased costs and delays for builders, with developers often needing to resubmit identical plans multiple times. The government has introduced three potential models to replace the BCA system:
- Voluntary Consolidation: This model would allow councils to pool resources for building control functions, removing existing barriers to integration. Some councils already share resources, but a fully integrated system would further streamline processes.
- Regional BCAs: By establishing larger regional BCAs, the government aims to improve consistency and take advantage of economies of scale. This would replace the 67 local authorities with a smaller number of regional entities that could deliver a more uniform service.
- Single Point of Contact: This option would set up a centralised point where builders could submit plans. Building inspections could be outsourced to either existing BCAs or private consenting providers, increasing competition and encouraging specialisation.
These reforms are expected to reduce delays, allowing developers to complete projects more efficiently and at lower costs, with the ultimate goal of improving housing affordability.
Liability and Accountability Concerns
One of the most significant points of discussion surrounding the reforms is the issue of liability for defective buildings. Currently, councils and ratepayers are often left bearing the costs when things go wrong due to a system known as “joint and several liability.” Under this system, councils are held liable even if other parties, such as builders or contractors, are responsible for substandard work.
The government is considering changes to this liability structure. One option being explored is the introduction of professional indemnity insurance for builders and tradespeople, similar to systems used overseas. This would shift some of the financial risk away from councils, creating a more balanced system. There is also discussion about requiring homeowners to insure their properties against defects, providing an additional layer of protection.
However, concerns have been raised about the potential reintroduction of private consenting providers, as this model led to the infamous “leaky homes” crisis in the 1990s. Critics argue that private providers may not have the necessary competency or financial backing, leaving homeowners vulnerable. To mitigate this risk, the government would likely require private providers to carry mandatory insurance.
Safeguards and the Road Ahead
While the reforms present exciting possibilities for improving the construction industry, they also raise concerns that must be carefully addressed.
Minister Chris Penk has sought to reassure critics, promising that the reforms will not lower standards or lead to another leaky homes crisis. He emphasised that no changes will be made to the building code, and the focus will remain on improving efficiency and quality. Penk also suggested that a regional model could help manage demand, especially during periods of high activity following major developments or natural disasters.
As the consultation process unfolds, key stakeholders in the construction industry, councils, and homeowners will need to weigh in on how best to implement these reforms while maintaining strong safeguards for quality and accountability. If successful, the proposed changes could mark the beginning of a new era for New Zealand’s construction sector, driving down costs and making homeownership more attainable for future generations.
