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July 5, 2019

Building policy reform – Summary of proposed changes by MBIE

In this month’s article I wish to preview some of the proposed amendments to the Building Act 2004.  There are five main areas where amendment is proposed by MBIE, namely, building products and methods, risk and liability, occupational regulation, the building levy, and offences penalties and public notification.  Nevertheless for this article I will only address the first two identified.

Building products and methods. 

The key proposals within this area include

  • A definition of building product that covers not just components, but building systems that can reasonably be expected to be incorporated into building work;

  • Product manufacturers to supply publically accessible information about their building products. This would apply to building products only, not building methods. The information would include:-

-a description of the product;

-details of the manufacturer/supplier;

-scope and limitations of the product’s use;

-design and installation requirements;

-maintenance requirements;

-a declaration if a product is subject to a warning or ban.

  • Clarify the responsibilities of manufacturers, suppliers, designers and builder for building products and building methods;

  • For building products and methods, enable MBIE Chief Executive with the power to require a person by written notice, to provide information or documents, or both, if it is considering issuing a product ban under section 26, (if such information is necessary to make that decision and the information is not readily accessible).

The purpose behind these proposed amendments is to ensure there is better information available at consent stage for assessing use of building product and methods in construction.

Strengthen the framework for product certification. 

Under this heading the amendments proposed are to:-

  • Allow for regulations to set requirements on product certification bodies and for accreditation and registration of product certification bodies;

  • Allow for regulations to set out the process and requirements for registering a product certificate;

  • Allow MBIE to set rules for the interactions between participants in the product certification system;

  • Provide MBIE with the powers needed to administer the registers of product certification bodies and product certificates.

The thinking behind these changes is that product certification has an important part to play in encouraging innovation in products and methods, however currently there is a lack of confidence in new products entering the market, and their compliance with the building code.  These changes are aimed at enhancing the confidence construction participants can retain for new products, where products are introduced following a proper product certification process.

Make consenting easier for modern methods of construction (MMC) including off-site manufacture. 

Features of the proposed amendments in this area involve:-

  • Enabling a manufacturer certification scheme for repeatable manufacture building processes used to produce building work;

  • Clarifying what roles and responsibilities for MMC will be when the new framework is in place;

  • Minimising duplication of effort such that two consents are not needed for the same work.

The thinking behind these changes is to encourage the positive aspects of MMC such as increased productivity by applying the same approach to a consent process.  Repeated MMC should be met with a tailored consenting process.

Risk and liability. 

The building of houses for homeowners has proven to be a risky equation for them.  On the one hand there is the risk that the builder goes out of business before a house is complete, alternatively there is the risk that there may be construction defects at the end of the build.  There are two key changes proposed.

Guarantee and insurance products. 

A builder would have a statutory obligation to offer a homeowner guarantee and insurance product before starting work on a new home or significant alteration.  The homeowner however could opt out of this scheme.  The premium would either be paid directly by the homeowner or could be incorporated into the cost of the build, and would transfer on sale.  The presence of these policies/guarantees would be recorded in LIM reports.  The duration of this guarantee and insurance product would match current building work limitation period under section 393 of the Act being 10 years.

The thinking behind these proposed changes is that the ultimately end user homeowner would be protected.  Furthermore, it would incentivise builders to carry out good quality building works for if the guarantee was regularly being called up, a builder would become uninsurable.

Cap on building consent authority liability. 

The principle of “last man standing” has resulted in Building Consent Authority’s attracting a disproportionate amount of liability for building defect cases.  The current applicable legal principle is that of joint and several liability.  The proposed reform being considered is placing a limit on Council liability of 20% of total loss.

The aforementioned legislative changes are just a snapshot of what is currently being considered.  Submissions are invited by MBIE on all of the proposed legislative changes by 16 June 2019.

NOTE: This article is not intended to be legal advice (nor a substitute for legal advice).  No responsibility or liability is accepted by Legal Vision to anyone who relies on the information contained in this article.