Leaky homes prompt repeal of Building Act

September 2003

 

The Building Bill 2003 (the Bill) was tabled in Parliament on 28 August, following a consultation project and review in March/April 2003.

The Bill will repeal the Building Act 1991 (the Act) and is designed to minimise the risk of future regulatory failure.

The review was triggered by the leaky homes crisis and the subsequent transfer of responsibility for the building industry to Commerce Minister Lianne Dalziel on 1 January 2003.

As a result, the Ministry of Economic Development (the Ministry) is now responsible for policy advice on the Act and associated regulations (including the New Zealand Building Code) and building consent issues.

What are the perceived problems with the Building Act 1991?

While the Act currently protects people's health and safety and the environment, it is felt that the Act does not place sufficient emphasis on the need for shelter and protection from the elements.

In addition, there is a perception that the Act's narrow focus on reducing front-end compliance costs results in insufficient emphasis being placed on minimising whole-of-life capital costs of buildings.

Key changes proposed

Purposes
A recent discussion document proposed an extension of the current Act to include the amenity and importance of household units, the importance of design and construction in achieving code compliance to focus on the whole-of-life costs of a building and the reasonable expectation of home owners as to the durability and maintenance of a household unit.

Private building certifiers
Under the current Building Act, private building certifiers are approved by the building industry authority and must hold professional indemnity insurance.

Private building certifiers can issue building certificates and code compliance certificates, but cannot issue building consents.

The changes would enable an accredited building consent authority to undertake all functions related to a particular building consent, including the issue of the building consent.

The proposals also exclude the territorial authorities from any liability associated with the issue of a building consent and a code compliance certificate by private building certifiers, and remove the requirement for professional indemnity insurance.

While these changes would appear to offer less protection to homeowners, they should be seen in the context of the additional matters set out below.

Building consents and code compliance certificates
The Bill requires owners to apply for a code compliance inspection as soon as practicable after completion of building works and in effect deems completion of those building works to occur two years after the granting of the building consent.

The current Act provides no incentive to complete building work within a prescribed period from issue of consent - in practice, some owners never apply for a code compliance certificate.

Improved capability of building professionals
The current Act provides no regulation of building practitioners and there is no requirement under the Act to have a competent building practitioner build or design works.

A fundamental change to the Act will require the licensing of all building practitioners by a statutory board.

By July 2009, the Bill will require all applications for building consent to be accompanied by plans and documentation certified by a licensed building practitioner as being code compliant.

Architects and engineers will be deemed to be licensed building practitioners, given the existing registration systems for these professions.

The Bill also requires licensed building practitioners to certify that their work complies with the terms of the building consent and that critical work in the building process will need to be undertaken by or supervised by a licensed building practitioner.

Using these mechanisms, the homeowner will be able to track the architect and engineer responsible for the design of the household unit.

More importantly, they will have written confirmation that the plans were code compliant and also be able to track the registered licensed building practitioner who undertook or supervised the building work and again obtain their written certification that their work complies with the building consent.

These changes will provide significant additional control over the building industry.

A five-year transitional period will enable the building industry and practitioners to apply for and be licensed by the new statutory board.

Improved consumer protection
In addition to the mechanisms described above, the Bill implies specific "contract" terms for any building work carried out in a household unit - that the building work will be fit for purpose and carried out with reasonable care and skill.

These specific contract terms deal with the concept that the household unit is fit for its intended purpose.

Summary

In summary, the Bill will make a number of changes:

• it will amend the purposes of the Building Act to ensure greater protection for the owners of residential buildings by including a consumer protection purpose i.e. fit for purpose;
  
  
• ensure sufficient emphasis is placed on minimising whole-of-life capital costs for residential building;
  
  
• resolve the concern that there is no overarching regulation of the professionals and trades involved in the building industry and, in particular, that there is no regulation of draftspeople and builders.
  
  
• the draft legislation includes provisions for standard terms in building contracts that cannot be contracted out of to be implied into all building design and construction contracts, whether written or otherwise; and
  
  
• occupational regulations for all building practitioners, including architects, engineers, building certifiers, electricians, draftspeople and builders.

Advice and information

If you would like to know more about the proposed changes to the Building Act and how it may affect you, please contact the Bell Gully Construction and Projects Group listed below.

AUCKLAND

Mark Crosbie
Partner

Tim Storey
Partner