Govt Unveils Sweeping Overhaul of Building Consent System to Boost Sector

Minister Penk noted that despite advancements in building technology and construction methods, productivity in New Zealand’s building sector has remained stagnant since 1985.

 

The New Zealand Government has announced the most significant reform of the country’s building consent system since the Building Act came into force in 2004. Building and Construction Minister Chris Penk revealed that the changes are designed to cut red tape, reduce costs, and reinvigorate a sector long hampered by inefficiencies.

Breaking the Productivity Stalemate

Minister Penk noted that despite advancements in building technology and construction methods, productivity in New Zealand’s building sector has remained stagnant since 1985. “The building sector has the potential to be an economic powerhouse, yet productivity has stalled for decades,” he said.

Compared with Australia, where streamlined approval systems have accelerated housing development, New Zealand’s slow and risk-averse consenting system has been driving up prices. On average, building a standalone home in New Zealand costs 50 percent more than across the Tasman. The Government sees this as a critical bottleneck to both housing affordability and broader economic growth.

Shifting Liability to Where It Belongs

One of the most far-reaching reforms will see the scrapping of the “joint and several liability” framework that has governed building accountability for decades. Under the current system, building owners can claim full compensation from any responsible party, often leaving local councils liable for the full cost of defects, even if they played only a minor role.

“This unfair burden on councils has created a risk-averse culture, leading to delays, higher costs, and reluctance to approve consents,” Penk explained.

He highlighted the 2015 Queenstown Oaks Shores case as an example, where a $160 million claim for weathertight defects threatened to saddle local ratepayers with crippling costs after the developer went into liquidation. “If the case hadn’t been settled privately, ratepayers could have faced rates increases of $300 a year for 30 years,” Penk warned.

To address this, the Government will introduce a new proportionate liability model. Each party will be held accountable only for the share of work they carried out. To safeguard homeowners, officials are considering additional measures such as requiring professional indemnity insurance and introducing home warranty schemes, similar to those operating in Australia.

Streamlining Consents Across Councils

The second major reform will give councils the option to consolidate their Building Consent Authority (BCA) functions. Currently, there are 66 separate BCAs across the country, each interpreting the Building Code differently.

“It is ridiculous that builders, designers and homeowners must navigate 66 interpretations of the same code,” Penk said. “A design approved in one district might be rejected in another, simply because of how rules are applied.”

By enabling voluntary consolidation, councils will be able to pool resources such as building inspectors, IT systems, and compliance teams. The Government expects this to reduce duplication, improve consistency, and deliver savings for ratepayers.

Backing From the Industry

The reforms have been welcomed by the sector, with New Zealand Certified Builders describing the changes as the most significant for the industry in a generation. Industry leaders argue that a more consistent and fairer consent and liability system will not only speed up projects but also restore confidence among builders, councils, and homeowners.

A Bold Step in the Government’s Economic Plan

The announcement is part of a broader government strategy to remove structural barriers that have slowed New Zealand’s economic growth. Faster delivery of homes and infrastructure is seen as a key priority for tackling the housing shortage, boosting productivity, and easing cost pressures on families.

“We are determined to get the building and construction sector firing on all cylinders, and that requires bold change,” Penk said. “This Government is making that change.”

What Happens Next

The Government will introduce legislation to replace the current liability framework with the proportionate model and begin work on enabling councils to merge consent functions. Details on additional safeguards for homeowners, such as mandatory insurance or warranties, will be developed in consultation with industry stakeholders.

If successful, the reforms could mark a turning point for New Zealand’s building sector—delivering more affordable homes, more consistent consent processes, and a fairer system of accountability.