Govt Overhauls Building Consent System With New Safeguards for Owners

The announcement builds on earlier commitments to modernise the consent system by replacing the existing joint-and-several liability model with a fairer, proportionate liability framework.

The Government has introduced a suite of safeguarding measures designed to protect building owners and strengthen confidence in New Zealand’s construction sector, as part of a wider overhaul of the building consent system. Building and Construction Minister Chris Penk says the reforms aim to remove long-standing barriers, reduce delays, and promote a more productive, accountable, and resilient industry.

The announcement builds on earlier commitments to modernise the consent system by replacing the existing joint-and-several liability model with a fairer, proportionate liability framework. This shift forms the backbone of the Government’s effort to encourage councils, builders, designers, and developers to operate with greater certainty and fewer risk-related constraints.

Ending a System That Burdened Councils and Ratepayers

Under the current joint-and-several liability model, councils can be held responsible for the full cost of building defects—even if they contributed only minimally to the issue. Because councils cannot dissolve or declare insolvency, they frequently become the default target for expensive claims.

“This risk-averse environment has slowed productivity and delayed the delivery of new homes, public buildings and commercial developments,” Minister Penk said. “Councils have shouldered unfair levels of liability, leaving ratepayers to cover costs arising from mistakes made by others.”

The move to proportionate liability means each party will be held accountable only for defects arising from their own work. The Government expects this reform to streamline consent approvals, increase confidence among councils, and reduce the financial exposure borne by local authorities and their communities.

Strong New Protections for Owners and Homebuilders

To support the transition to a proportionate liability system, the Government has unveiled several complementary measures to ensure building owners remain fully protected against substandard work and structural issues.

Key reforms include:

• Mandatory professional indemnity insurance for all architects, engineers, and other design professionals involved in building design

• Compulsory home warranties for all new residential buildings up to three storeys and renovations valued at $100,000 or more

• Stronger disciplinary penalties for Licensed Building Practitioners (LBPs), including doubling the maximum fine from $10,000 to $20,000 and extending possible suspensions from 12 months to 24 months

These measures are designed to reinforce accountability across the sector and ensure homeowners are not left carrying the risk when things go wrong.

Building Warranties to Protect Consumers

Minister Penk highlighted the significance of home warranties for safeguarding consumers during and after construction. The mandatory scheme will require builders to provide:

• A one-year defect warranty, covering general issues identified after completion

• A 10-year structural warranty, protecting homeowners from long-term structural failures

“For around half a percent of the total build cost, homeowners gain a decade of protection,” Penk noted. “Warranties are already widely available across New Zealand, and providers have assured the Government they are prepared to scale up. This means consumers can shop around and choose the warranty product that best suits their project.”

Ensuring Designers Stand By Their Work

The requirement for architects and engineers to hold professional indemnity insurance gives building owners greater confidence that design professionals are financially backed to address any errors or defects arising from their work. The mandate will not extend to general trades, focusing instead on the parts of the process with the greatest design-related risk.

“Requiring this insurance ensures designers are capable of standing behind their plans,” Penk said. “This boosts trust in a sector where a single design mistake can have costly downstream effects.”

Raising the Standard for Licensed Building Practitioners

The Government also introduced tougher penalties for poorly performing builders to help protect the reputation of the wider workforce.

“I’ve heard from tradies that the poor work of a few cowboys can unfairly damage the industry’s reputation,” Penk said. “Strengthening disciplinary measures supports skilled practitioners by holding to account those who cut corners.”

Building a Faster, Stronger, More Affordable System

Together, these reforms are intended to transform New Zealand’s building regulatory environment, making consenting faster and more efficient while ensuring no compromise to consumer protection or build quality.

“These changes safeguard building owners, underpin wider consent reforms, enforce accountability, and make building faster, easier and more affordable,” Penk said.

The Government plans to introduce legislation to implement the reforms, with further details expected as the building system modernisation programme progresses.