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Whatever Happened To Risk-based Consenting?

Whatever Happened To Risk-based Consenting?

In 2010 the (then) Department of Building and Housing announced its final round of building law proposals that arose out of the leaky building crisis.

  • 3 September 2015
  • Author: Geoff Hardy
  • Number of views: 2941
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Whatever Happened To Risk-based Consenting?

In 2010 the (then) Department of Building and Housing announced its final round of building law proposals that arose out of the leaky building crisis. The proposed reforms were broadly intended to achieve two objectives. The first was to ease the burden on Councils, who were inheriting the lion’s share of liability for the cost of leaky home repairs, and were getting overly-cautious and risk-averse as a result. The second was to encourage homeowners to be better informed when embarking on building projects and to give them more rights and remedies when things went wrong. 

That first objective (ease the burden on Councils) was intended to be achieved by a thing called risk-based consenting. That meant that building consents were going to be divided into four categories – low risk, simple residential, standard, and commercial – and the degree of Council involvement in those projects was going to be determined by how much risk of building failure there was. The idea was to pass responsibility for code-compliance onto everyone else involved in the project – the owners, designers, builders and suppliers – and away from the Councils, in all but the “standard” category of building consent. These proposals all became part of the Building Amendment Act 2012. 

The second objective (give homeowners more rights and remedies) was intended to be achieved by adding more teeth to the existing implied warranties in the Building Act, introducing a new 12 month defect warranty, and requiring residential builders to produce a lot more paperwork in the form of checklists, disclosure statements, written building contracts, and instruction manuals on completion. These proposals all became part of the Building Amendment Act 2013. 

Both the 2012 and the 2013 Amendment Acts were many years in gestation before they were finally passed. Some of the 2012 Amendment Act came into force on 13 March 2012, but not the risk-based consenting part. Most of the 2013 Amendment Act (the homeowner rights and remedies) came into force on 1 January 2015. Ironically, it is the risk-based consenting provisions of the 2012 Act that will be the last to come into force. 

To be fair, they are pretty radical reforms. In a low risk project (such as a free-standing garage or large rural shed), Councils will not have to check code compliance or inspect the work at all, and will incur no liability if they don’t. In simple residential projects (such as a simple single-storey house built using proven methods and design with low structural and weathertightness risks), Councils will only have to check code compliance in certain limited respects, and only do limited inspections. 

In a commercial project, there will be less active Council intervention required because these projects are designed and constructed by experienced specialists, who have a lot to lose if they get it wrong. Instead, heavy reliance will be placed on the risk profile of the project, and the quality assurance system that will be adopted, both of which will have to be approved and monitored by the Council. 

It is only if the project is classified as standard (such as a multi-story house of complex design), that the Council involvement will be comparable to what it is today, and they will have to check code compliance, and carry out appropriate inspections. 

The Government has said all along that it wanted to defer implementation of risk-based consenting until there was greater awareness and understanding of the Building Code, there was a good base of competent licensed builders, the homeowner rights and remedies were in place, and compliance with the new rules could be effectively monitored. But it’s also no doubt true that these reforms are not regarded as a priority, and the Regulations that underpin them are proving a lot harder to prepare than was anticipated. 

In the meantime, the new regime has at least been given a trial run in Christchurch, after the City Council lost its accreditation as a building consent authority in 2013 due to delays in processing applications. The Crown Manager who was appointed to take over, implemented a new “Streamline Consenting” residential scheme along the lines of the 2012 Amendment Act, and a “Quality Assurance Commercial Consenting” scheme. Councils have power under the Building Act to dispense with a building consent where the work is likely to be code-compliant or is unlikely to endanger people or any building, and that is the exemption that was used. 

That trial appears to have been largely successful, although admittedly it was done in response to a crisis where there is a much greater sense of urgency than normal. The residential scheme was trialled with five low-risk group home builders and was limited to strictly defined qualifying buildings, with heavy reliance placed on the involvement of licensed builders. The requirements were strictly enforced and non-complying applications were rejected, although if further information was required, this was done by phone call rather than written request. Some new technology was adopted that improved efficiencies, and the overall result was that streamlined requests were processed in an average time of 4 hours, and no later than 24 hours of receipt. 

The Crown Manager’s recommendation was that the Government investigate applying a similar system to a wider range of builders and a wider range of building types, on a national basis. The Regulations that are due by the end of 2015 will hopefully lay the platform for that to happen.
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Geoff Hardy

Geoff HardyGeoff Hardy

Geoff’s academic qualifications and his background as a former partner in New Zealand national law firm Simpson Grierson, means that we can confidently handle any commercial law matter, no matter how complex.

This newsletter is not intended to be relied upon as legal advice.

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