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The Building Amendment Act 2013 became law on 1 November 2013. Some changes came into force immediately and some came into effect on 1 January 2015.
The changes that became effective immediately include changes to the types of work that do not require building consent. More low-risk work is exempt from building consent and there are limits on potentially high-risk work.
Schedule 1 of the Building Act (the Act) has been split into three parts:
The Ministry of Business, Innovation and Employment (MBIE) online guidance contains examples of these exempt works: http://www.dbh.govt.nz/bc-no-consent.
Remember, even if building work does not require a building consent, the work must comply with the Building Code.
Other immediate changes include: higher penalties for work done without proper consent; more power to restrict entry to buildings that are near other dangerous buildings; more power to hold building consent authorities to account; and changes to the way dams are defined and measured.
Changes that came into effect on 1 January 2015 include new measures to protect consumers who are building a house or making major renovations to their home.
Written contracts have become a legal requirement for all residential building work over $30,000 (including GST, and including work undertaken by sub-contractors), and building contractors can be fined if they don’t comply.
The legislation also sets out the minimum provisions that all contracts must contain – these reflect standard building contracts, but check your own contract to make sure it covers all required provisions. If there isn’t a written contract, or your contract doesn’t include all the provisions, there are standard contract provisions that will apply.
Prior to signing a contract, building contractors will also have to give consumers:
At the end of the build, building contractors must also provide information on insurances and maintenance.
There is a new 12 month ‘defect repair period’ when building practitioners will have to fix any defects they have been told about, without question or additional charge. MBIE is developing guidance to assist identifying what is a ‘defect’.
If you are a residential builder, and you only read one article I ever write, then read this one. Because on 1 January, assuming the Government stays true to its word, new laws are going to come into force that are going to have a bigger impact on your business than licensing did. BY GEOFF HARDY, AN AUCKLAND COMMERCIAL LAWYER
The changes on 1 January will be “bigger” because licensing created a lot of extra paperwork for you, but it did not actually increase your liability, other than by exposing you to the risk of being disciplined by the Building Practitioners Board. These new laws, which are part of the Building Amendment Act 2013, not only increase your liability but they also increase your paperwork substantially, and for many of you they completely alter the terms on which you contract with your clients.
So what does the Building Amendment Act 2013 do? Well among other things, it does this:
I suspect there are many of you overwhelmed by all the recent reforms, and are unaware that this is just around the corner.
These changes have been in the pipeline since as early as 2010 so it is not as if they have just been sprung on the industry. I have been writing articles and presenting conference papers on the subject for the past 5 years, and merchants like ITM and trade associations like Certified Builders and Master Builders have been informing their customers and members for some time. But despite that, I suspect there is a huge percentage of the residential building industry that is overwhelmed with information overload, or a bit shell-shocked by all the recent reforms, and are unaware that this is just around the corner.
What are the practical steps you can take in order to be ready for 1 January? Two things mainly – get to know your obligations under the new laws, and gather together the documents you will need to have in place by the New Year. Remember that some of these requirements apply regardless of whether the building project is going to cost $30,000 or more.
As far as learning the law is concerned, you can get plain-english, user-friendly newsletters from the websites of MBIE, your merchant, your trade association, or my firm Madison Hardy. In addition, MBIE, your merchant, and your trade association will be conducting educational meetings over the next few months, as will many of the larger building franchises and group home building companies no doubt.
To be ready, do these two things: Get to know your obligations under the new laws, and gather together the documents you will need to have in place by the New Year.
As far as the documents are concerned, there are four of them, and they are:
Where do you get those from? On the MBIE website you will be able to get the checklist and the template for the disclosure statement. Your merchant, franchisor, group home building company, trade association or insurance broker should be able to help you with those, as well as the end-of-project documents. But as far as your building contract is concerned, if you don’t belong to Certified Builders or Master Builders or the bigger franchises or group home building companies, don’t risk it. Take it to construction law experts such as my firm Madison Hardy and make sure it is compliant once and for all.
Geoff Hardy has 38 years’ experience as a commercial lawyer and is the senior lawyer in the Auckland firm “Madison Hardy”. He guarantees personal attention to new clients at competitive rates. His phone number is (09) 379 0700, fax (09) 379 0504, and e-mail firstname.lastname@example.org. This article is not intended to be relied upon as legal advice.
With the new rules coming into force next year, we take the time to explain some of the most common insurance and guarantee options for builders, and highlight some of the common exclusions.
New Building Act rules that come into force from 1st January 2015 will require builders to declare to customers the insurance and guarantees they have, including limits and “relevant exclusions”. As it stands it’ll be up to individual builders to decide which exclusions are relevant. But should you be expected to know this, and what if you get it wrong?
It should be noted that these guarantees are purely to protect the customer. They provide no benefit to the builder, other than differentiating you from builders who can’t offer them.
The best way to assess your specific insurance needs is to conduct a risk assessment of your situation. An insurance broker (preferably one with experience of the construction sector) is a good place to start.
Once the new regulations come into force you will be expected to disclose to your clients the relevant exclusions in your insurance. We recommend taking advice now to ensure you get this right from day one.
This article is not exhaustive and there are other policies to cover different risks. In addition, individual policy wordings from different insurers may vary. You should refer to the specific exclusions in your own policy wordings and discuss your situation with an insurance professional if you are unsure.
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