The Diagnosis
New Zealand homes cost up to 50 percent more to build than equivalent homes in Australia. Building productivity has stalled since 1985. Sixty-six councils interpret the Building Code differently, creating a maze of inconsistent requirements that contractors operating across territorial boundaries must navigate project by project. Construction Minister Chris Penk has described the building sector as having “the potential to be an economic powerhouse, yet productivity has stalled since 1985.” New Zealand Certified Builders has called the announced reform package “the most significant change for the industry in a generation.”
Proportionate Liability
The current joint and several liability framework means that a council that played a minor role in a consenting process can be held liable for the full cost of a subsequent building defect — regardless of whether the defect was attributable to the council’s role or to the work of another party. The consequences are well-documented. The 2015 Oaks Shores case involved a $160 million weathertightness claim with the potential for rate increases of $300 per year for 30 years across the relevant ratepayer base.
Proportionate liability replaces this structure with one where each party — council, architect, engineer, builder, subcontractor — is accountable for the share of the outcome attributable to their contribution. This aligns accountability with responsibility, reduces the defensive over-documentation and risk-averse decision-making that the current framework encourages, and creates cleaner paths to resolution when defects occur.
Professional Protection
The reform package explores mandatory professional indemnity insurance and home warranty products modelled on Australian systems, where insurance schemes provide consumers with a backstop for defect claims without the litigation process that characterises the New Zealand system. This structural change — still under development rather than finalised — has the potential to shift the entire risk allocation framework of New Zealand building in a way that benefits consumers, builders, and councils simultaneously.
BCA Consolidation
Voluntary consolidation of BCA functions allows neighbouring councils to share inspectors, IT systems, and Code interpretation resources, reducing duplication and moving toward national consistency. The voluntary nature of the provision means that consolidation will happen where councils see the benefit — and where political will supports it — rather than being imposed from above. For the reform to achieve its full potential in reducing Code inconsistency, the voluntary mechanism will need to be reinforced with guidance, incentives, or, if voluntary uptake is insufficient, more directive measures.
Timeline
The enabling legislation is programmed for introduction to Parliament in early 2026. The implementation timeline — how long before the full package of changes reaches the consenting process as experienced by builders on the ground — will depend on legislative passage, regulatory development, and the pace of council adaptation. For an industry that has been waiting decades for this reform, the passage of the legislation is the beginning rather than the end of the work required to deliver the promised improvement.
