The New Zealand Government is changing the liability rules in the building and construction sector. Changes to legislation, expected to take effect in 2027, will shift Aotearoa New Zealand’s liability settings from joint and several to proportionate liability, and introducing three key supporting measures.
Under proportionate liability, each party will only be accountable for the work they undertook. This will speed up consenting and ease the burden on ratepayers unfairly footing the bill for damages. It also aligns with the Australian practice.
Home warranties will be required for all new residential buildings up to three storeys and renovations $100,000 or above that involve restricted building work and require a building consent. These warranties will cover at least a one-year defect period and a 10-year structural warranty.
Warranty providers will need to:
register with MBIE
meet minimum standards set in regulations
report regularly to MBIE
publish clear, easy-to-understand product information.
Professionals involved in building design work, such as architects, designers and engineers, will need to hold professional indemnity insurance.
Disciplinary penalties haven’t changed since 2007 and these are being increased to act as a stronger deterrent against poor practice, giving homeowners confidence in their investment and quality work.
Maximum fine will increase from $10,000 to $20,000
Maximum suspension term will increase from 12 months to 24 months
The Building Amendment Bill to introduce home warranty and professional insurance requirements is expected to be progressed in 2026
The changes will become operational one year after legislation has passed, to allow smooth transition and stakeholder engagement.
Stronger LBP penalties will be progressed through a separate Bill in 2026.
Read the full details here: https://www.building.govt.nz/about-building-performance/all-news-and-updates/proportionate-liability-changes-coming-to-accountability-for-defective-work
Read the Press Release here: https://www.beehive.govt.nz/release/building-reforms-deliver-consumer-protections which includes a fact sheet link.