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New Building Reforms Deliver Consumer Protections

Building Reforms Introduce Consumer Protections

A senior couple sits at an office desk consulting with a female professional who is explaining details from a document held in her hand.
A couple reviews document details with a consultant, illustrating the new consumer protections and mandatory home warranties being introduced under the government’s building consent reforms.

The Government has introduced measures to protect building owners through a revised building consent system.

Building and Construction Minister Chris Penk stated that changes earlier this year aimed to address risk-averse behaviour that slows productivity and delays the delivery of homes, public buildings, and commercial projects. The reforms involve replacing the current joint and several liability model with proportionate liability.

Under the existing system, councils can be held fully liable for defects caused by multiple parties, even if their involvement was limited to signing off the work. This often results in ratepayers covering damages for mistakes made by others. Proportionate liability will ensure each party is responsible only for the work they performed, streamlining consenting and reducing the financial burden on ratepayers.

New Measures for Building Professionals and Homeowners

Key measures include:

  • Mandatory professional indemnity insurance for architects and engineers involved in building design.
  • Compulsory home warranties for all new residential buildings up to three storeys and renovations valued at $100,000 or more, covering a one-year defect period and a 10-year structural warranty.
  • Increased disciplinary penalties for Licensed Building Practitioners (LBPs), raising the maximum fine from $10,000 to $20,000 and maximum suspension from 12 months to 24 months.

Penk highlighted that home warranty schemes, widely available in New Zealand, can scale to meet new demand, enabling homeowners to select coverage suited to their projects. Professional indemnity insurance ensures building designers are financially accountable for their work. Strengthening LBP disciplinary penalties addresses concerns about substandard work affecting industry reputation.

These measures aim to protect building owners, enhance accountability, improve consent processing, and support a more efficient building system.

Implementation and Legislative Details

Home warranty and professional indemnity insurance changes will be implemented through the Building Amendment Bill, expected in early 2026, with a one-year implementation period after passage. Increased LBP penalties will take effect through a separate Bill in 2026. Mandatory home warranties apply only to residential construction involving Restricted Building Work requiring consent. All home warranty providers must register with the Ministry of Business, Innovation and Employment (MBIE) and meet minimum regulatory standards. New offences under the Building Act will cover non-compliance with warranty and insurance obligations.

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