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Are Our Building Standards Improving?

There is no question that the reputation of New Zealand’s residential building industry has declined since the 1980’s.

  • 6 November 2007
  • Author: Geoff Hardy
  • Number of views: 1151
  • 0 Comments
Are Our Building Standards Improving?

There is no question that the reputation of New Zealand’s residential building industry has declined since the 1980’s. This has been graphically illustrated, of course, by the leaky building crisis that first came to prominence in 2001. 

There are many possible reasons for that state of affairs. There was a trend towards light-handed regulation over that period, the idea being that market forces would weed out the good builders and the good buildings from the bad. It is a reasonable theory, but it assumes consumers make rational, fully-informed decisions, which in practice is far from the truth. So bad builders and bad buildings continue to flourish. 

Coupled with the relaxation of the previously tight standards, came a virtual collapse of the apprenticeship system, a decline in Council review and inspection standards, and a proliferation of unproven building products. There was also the growing popularity of Mediterranean-style plaster-clad houses, using untreated framing timber, with inadequate eaves or flashings, and no wall cavities. 

The extreme competitiveness of the building market led to reduced margins and consequential financial collapse of many tradesmen and building companies. The industry was also characterised by constant disputes and bully-boy tactics as those at the top of the supply chain in a building project fought to retain control of the most precious commodity – dollars. 

However, some say that by far the biggest reason for declining standards is the fact that anyone can pick up the tools and go into business as a builder, regardless of their training or lack of it. 

The current Government has introduced a number of meas-ures to counter these trends. 

The Construction Contracts Act 2002 tackled the financial problems bedevilling the industry, which were highlighted when the Hartner Group collapsed. This Act made it possible to get the money flowing down the chain quickly, to where it was needed. It also set up a system to resolve building disputes quickly and cost-effectively. 

At the same time, the Weathertight Homes Resolution Services Act 2002 did the same thing for owners of leaky homes. This Act has its critics, but it is a far better option for the owners of low-to-medium-value, stand-alone homes than going to the courts. 

Finally, the old Building Act 1991 was replaced by the Building Act 2004, since amended in 2005 and about to be amended again. The new Act not only tightened the pre-viously permissive standards, but it introduced the concept of builder licensing. Coupled with this, the Building Code that sets out in fine detail how various aspects of construction should be done, is currently under-going a comprehensive review. 

It is builder licensing that has got the construction industry in a spin at the moment. Licensing means requiring builders to demonstrate that they have the necessary skills and expertise, ensuring they develop that expertise by undertaking continuing education, subjecting them to a complaints and disciplinary regime that is accessible to the public, maintaining a public register of their qualifications and disciplinary record, and requiring that only licenced builders do complex building work. 

This sounds fairly draconian, but it is no different to what many other professions and occupations face, including doctors, lawyers, accountants, engineers, architects, and real estate agents. 

There are different categories of designer or builder licences for different categories of build-ings, and from 1 November 2007 people have been able to apply for licences, on a voluntary basis. Compulsory licensing (for those who want to design or build more complex buildings or critical components of buildings) is intended to come into force in November 2010. 

These reforms will have the advantage of ensuring that most builders are properly qualified and continuously develop their skills, so consumers should have more cause for confidence, and the standards of our housing should improve as a result. 

However, there is one sticking point the Government is currently grappling with. As in other comparable countries, we have a strong history of “do-it-yourself” construction, and New Zealanders jealously guard their right to do up their own kitchen, erect their own garage, or even build their own house. 

If all house construction became the exclusive domain of licenced builders – which over time would improve the standards of our housing stock – then this would kill the DIY industry. And in this country, that is decidedly not a vote winner. Hence the Government is struggling to find the right balance between preserving our DIY culture while at the same time not defeating the purpose of the reforms. 

Present indications are that DIY’ers will be permitted to do everything up to and including constructing a standard uncom-plicated building. To ensure that subsequent buyers of the building know what they are letting themselves in for, it is proposed that the building will be identified in the Council records as one that was not constructed by a licenced builder. What that will do to its resale value is debatable. 

But the hardest part of introducing such a system is in defining what a standard uncomplicated building is, and then policing the system. When similar systems have been introduced overseas, two trends have emerged. 

First, a whole industry develops around designing homes that come just under the “licenced builder” threshold - an industry which has an incentive to promote DIY construction. 

Secondly, the volume of DIY construction as a percentage of all building activity typically increases astronomically, virtually overnight. Why is this? It is because all the cowboy builders who did not have the qualifications or expertise to become licenced, simply become DIY builders in disguise. 

The challenge for the Government is to throw out the bath water (rogue builders and defective buildings) while retaining the baby (DIY). The decision on where the line will be drawn has been deferred, and it will now be defined by regulation rather than by statute. It may happen soon, or it may take another three years to resolve. So watch this space.

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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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