Building system reform
The Government is progressing a range of reforms to New Zealand’s building system. Building system reforms aim to change how building defects are managed and how earthquake-prone buildings are regulated. Proposals include changes to liability, insurance and warranties, and updated seismic rules. The reforms seek to improve clarity and consistency, while raising questions about costs, risk and impacts on owners and councils.
Proposed changes to building liability and earthquake-prone buildings
Changes focus on two key areas:
- How responsibility is shared when building defects occur.
- How earthquake-prone buildings are identified and managed.
Together, the reforms aim to create a fairer, more practical system that protects building owners, supports safe construction, and reduces unintended financial risk for councils and ratepayers.
Changes to building liability
What is proposed
New Zealand currently uses a “joint and several liability” system. This means that if multiple parties are responsible for a building defect, any one of them (often a council) can be required to pay the full cost, even if they were only partly at fault.
The Government is proposing to move to a “proportionate liability” system. Under this approach, each party involved (such as designers, builders, developers, and councils) would only be responsible for their share of the fault.
Protecting building owners
To help ensure homeowners are not left out of pocket, the Government has proposed several safeguards, including:
- Mandatory warranties for new homes and major renovations.
- Compulsory professional indemnity insurance for designers (such as architects and engineers).
- Stronger penalties for Licensed Building Practitioners who breach their obligations.
These measures are intended to make it easier for owners to recover costs if something goes wrong.
Why this matters
The proposed changes aim to create a fairer system, where responsibility better reflects who caused the issue.
For communities, this means:
- Greater confidence that repair costs can be recovered.
- Reduced likelihood that ratepayers end up covering costs for mistakes made by others.
What this means for councils
For councils, proportionate liability could significantly reduce financial risk, as councils would only be responsible for their share of any defect.
This may:
- Reduce pressure on council insurance and legal budgets
- Support a more balanced, risk-based approach to processing building consents
Councils will still need to maintain strong inspection and compliance systems, as we will continue to be one of the parties held accountable when issues occur.
Timing and next steps
Some details are still being worked through, including how warranties and insurance will operate in practice and how costs will be managed.
A Building Amendment Bill is expected in 2026, with a new system likely to come into force after a transition period around 2027.
Earthquake-prone buildings
What is changing
The Government has also proposed updates to how earthquake-prone buildings are identified and managed.
Key changes include:
- Focusing the national system on buildings that pose the highest risk to people
- Removing lower-risk buildings and regions from the national framework
- Replacing the current New Building Standard (%NBS) rating with a simpler, risk-based method
Timeframes and requirements
The proposed legislation would:
- Allow councils to grant longer timeframes, up to 15 years, for completing seismic strengthening.
- Remove the requirement for fire and accessibility upgrades when owners are only undertaking seismic strengthening work.
What happens next
Public submissions on the Building (Earthquake-Prone Buildings) Amendment Bill have now closed.
The Bill is currently being considered by the Transport and Infrastructure Select Committee. Updates will be shared as the process progresses and further information becomes available.
If the changes become law, all buildings currently identified as earthquake-prone will need to be reassessed. Councils would then be required to issue new notices by 1 July 2027.
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