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Minister for Building and Construction Chris Penk announced a new scheme in April which will allow certain construction firms to self-certify their compliance with building regulations. The scheme will be rolled out as part of amendments made to the Building Act 2004 and the Plumbers, Gasfitters and Drainlayers Act 2006. There will be strict eligibility requirements for construction firms to meet should they wish to be accredited to self-certify, paired with random audits and penalties for non-compliance with codes.
The Minister stated that this scheme is an answer to the often onerous and lengthy building inspection processes carried out by Building Consent Authorities (BCA’s). First-time homeowners, he explains, are suffering from the bureaucratic nature of these inspection processes, which make the construction of homes a more expensive and less efficient undertaking.
What does this mean?
BCA’s (bodies certified by the Government to carry out inspections on construction projects and ensure that construction firms are complying with regulations) undertake very stringent compliance checks, usually carrying out around twelve inspections for single-storey homes. BCA’s will now have a diminished role in New Zealand’s construction industry. The Minister maintains that their role in the compliance review process will still be significant but will be limited to the scrutinisation of complex, large-scale construction projects. The new scheme, on the other hand, is designed for the streamlining of simple, low-risk, ‘copy-and-paste’ projects.
While the expedition of construction work in New Zealand is desirable, the loosening of rules around compliance and the shrinking of the protective scope provided by BCA’s will give rise to separate risks that Kiwis will need to manage. Transferring the liability of faulty construction work away from local authorities and onto self-certifying firms means that people will have to remain vigilant in carrying out their due diligence before engaging firms accredited under the new scheme. For example, consumers should look into their builders’ regulatory compliance track record. Consumers should also know whether or not their chosen construction firm is solvent (if one such accredited firm goes under, property owners will have to shoulder the costs of faulty construction work if the local authority backstop has been removed) and should seek legal advice to review any construction agreements they intend to bind themselves to. Homeowners considering going forward with construction work should also review their insurance policies and pay particular attention to how their policies may protect them from incurring significant costs if there are unexpected losses incurred during the construction project.
If you need assistance in preparing or reviewing your construction agreements, please contact Ben Molloy on @email or 09 306 0605, or Shaun McGivern on @email or 09 306 0623.