The housing property development industry wants the “red tape” of building consents cut, giving builders the chance to “self-certify” instead of relying on local government housing inspectors.
In September 2024 the Court of Appeal decided Cridge v Studcorp a leaky homes case involving 149 homes. The Court found that not one of the 149 had been built in accordance with the plans and with the Harditex Instructions. And we are going to allow builders to certify? A joke surely. Here’s the link to Cridge:
Yes, we did sue Council for failed repairs. Their lawyer, via their insurer, was a prominent person in the mediation! The builders got off scott free though - transferred their liability (from another matter) and their potential liability with us into another company which they closed down just before the mediation. No way they were liable then! Crazy really!
As a leader in this Class Action, it has been devastating to see the fault being pushed onto the builders with nothing we’ve put before the Court landing regarding the product or the system. Everyone knows the product rots and I’ve seen it on my place, as have many other home owners who have struggled to repair or sell these properties. With changes to regulations and an increasing role for insurance companies with building firms etc (and no liability with councils) the homeowner is left high and dry. Before the Class Action me and my neighbours repaired and then had failed repairs. We received some compensation via mediation with Council being one of the parties. Our townhouses have now been demolished after we sold them for land value. 15 years of fighting to get compensation. We are currently seeking leave to appeal to the Supreme Court.
Very sorry to hear your hideous experience. I’m a retired barrister and saw this sort of thing in practice too. What are your thoughts about the proposal to allow builders to self-certify?
Thanks Alan for your comments. Having just had a small renovation done and seen the building consent and code of compliance process up close, it is difficult to navigate. My very experienced builder said it’s pretty random what will be picked up by the building inspectors. Home owners are very vulnerable to the whole industry really - we dont know what’s good or not good. Lots of cowboys around. So I’m worried about self-certification but also know that there are few protections for home owners currently. I think the insurers will be the key decision-makers here if it comes to pass. They’re not going to want to indemnify cowboys - maybe just the big companies will get to self-certify? This wont solve system failure like leaky homes though. That comes back to manufacturers, BRANZ etc. This govt is trying to simplify complex issues which will inevitably leave many exposed.
An advantage of the current system is that the owner, including subsequent owners, can sue the council as the certifying body, and you may already have experience of the council being the last man standing in these situations. Unless there’s a compulsory insurance requirement in relation to self-certifying, this situation will disappear. Councils and their insurers of course desire this change!
Apart from obvious quality worries, my biggest concern frankly is that the change could turn into monopolisation by larger building companies, forcing out the smaller guys who don't have the resources to pass the requirements for self-certification and for whom access to a now diminished pool of certifiers is even slower and possibly more costly than it is now. To avoid this there has to be a reasonable basis for all firms and individuals to qualify to self-certify, not just large "trusted" companies. Quality might be assured for example by unannounced random checks on the validity of self-certifications with significant penalties involved for breaches including self-certification being suspended or removed. More generally there is no free lunch to achieving quality in any sphere.
The comparison with automotive manufacturers is fascicious because cars are produced on a factory line in their 10’s of thousands and involve huge corporate oversight and customer desires for safety etc.
Self certification therefore is easy to follow but mistakes (falsehoods) still happen. Look at VW for the emissions debacle.
House building in NZ is largely a contractors based industry using imported products. Larger builders can shift responsibility to these contractors if they all get it wrong or the materials used are/were substandard.
Whilst current regulations are onerous, if the government were serious about speeding up the process, then rewriting the replacement regulations should be the priority.
We had a house destroyed by the Christchurch earthquakes. After years of debate with EQC and our insurers we eventually were paid out thanks to great support from our lawyers and an advocate inside our insurer. Builders were hard to find, eventually we found one who came with glowing references and photos of previous work. Unfortunately, all out of Christchurch on reflection. We insisted that our builder (who was certified) join one of the building associations. Four months into the build I asked why we hadn't been asked to pay for the membership, and to my horror, found he hadn't joined. This was remedied by me, and we were then covered by the group insurance. The council inspectors were very critical of the work and, eventually the builder walked off the site in anger. We then found that many of the subbies had not been paid, even though we had paid the builder for their services. All our later payments were checked by a Quantity Surveyor after we became suspicious of the build not being up to spec. Eventually, we received $170k from the insurance policy to remedy some of the defects in the build.
I feel suspicious of many of the big building companies. Much of those working on the construction are subbies who come in and perform their function and go. Much of the framing is constructed in factories and generally is of good quality. However, framing often sits waiting in the weather to be installed and often I have heard gib fixers and plasterers moaning about walls which are not straight or horizontal. The whole construction of homes has been destroyed by poor apprentice training and large operators who are basically coordinators of subbies and in for the dollars at the end rather than having pride in a job well done. Basically, often just a lack of trade pride in doing a good job.
I'm not sure that Minister Penk really understands the setting for the housing industry right. Too often it's just a feeding trough for greedy speculators in for a quick buck. His background is as a military man and as a lawyer. I wonder if he has ever had to use a hammer.....
Are there any statistics from local council inspections teams on failure rates for meeting consent requirements during the course of a build over the last, say, 5-10 years? How much 're-inspecting' do they have to do?
That would give a better knowledge of the quality of builders' construction standards as they are currently than just stating that the 'big firms can be trusted to do it right'.
For example, Jennian Homes is a franchise - are all franchisees actually working to the same level as either other? or maybe some business owners are more thorough/conscientious/have better oversight processes than others .... I don't know that answer to that question so not meaning to malign Jennian Homes, but I would like to know what the inspections statistics/rates of re-checks to meet Certificate of Final Consent are
Given the pressure on the housing market has eased plus the likelihood of a capital (not necessarily gains) tax it seems to me that the need to speed up building consents has evaporated. Anyway, as the ODT says, for mortgage purposes, the Ozzie Banks will not accept self certification
IMO, and experience, the business model of SSO would favour the bigger, long histrical companies.
The smaller builders seem to chnge ther compan name as often as their underpants, leading to questionmarks about whether they will stand behind thier"guarantees".
Until Govt makes certain businesses such as these, are void of limited liability, there is no hope that the smaller guys will get work under a SSO scheme.
All too easy to forget the Labour party exists. Besides identity politics stuff they really bring nothing to the table.
The insurance point is probably the killer for this idea: nothing will get cheaper so may as well just hire more council inspectors. Perhaps paying for it with higher fees for builders as user-pays is the way National seems to like things.
In September 2024 the Court of Appeal decided Cridge v Studcorp a leaky homes case involving 149 homes. The Court found that not one of the 149 had been built in accordance with the plans and with the Harditex Instructions. And we are going to allow builders to certify? A joke surely. Here’s the link to Cridge:
http://www.nzlii.org/cgi-bin/download.cgi/cgi-bin/download.cgi/download/nz/cases/NZCA/2024/483.pdf#page80
The key paras of the judgment on this point are [334]-[343].
Yes, we did sue Council for failed repairs. Their lawyer, via their insurer, was a prominent person in the mediation! The builders got off scott free though - transferred their liability (from another matter) and their potential liability with us into another company which they closed down just before the mediation. No way they were liable then! Crazy really!
As a leader in this Class Action, it has been devastating to see the fault being pushed onto the builders with nothing we’ve put before the Court landing regarding the product or the system. Everyone knows the product rots and I’ve seen it on my place, as have many other home owners who have struggled to repair or sell these properties. With changes to regulations and an increasing role for insurance companies with building firms etc (and no liability with councils) the homeowner is left high and dry. Before the Class Action me and my neighbours repaired and then had failed repairs. We received some compensation via mediation with Council being one of the parties. Our townhouses have now been demolished after we sold them for land value. 15 years of fighting to get compensation. We are currently seeking leave to appeal to the Supreme Court.
Very sorry to hear your hideous experience. I’m a retired barrister and saw this sort of thing in practice too. What are your thoughts about the proposal to allow builders to self-certify?
Thanks Alan for your comments. Having just had a small renovation done and seen the building consent and code of compliance process up close, it is difficult to navigate. My very experienced builder said it’s pretty random what will be picked up by the building inspectors. Home owners are very vulnerable to the whole industry really - we dont know what’s good or not good. Lots of cowboys around. So I’m worried about self-certification but also know that there are few protections for home owners currently. I think the insurers will be the key decision-makers here if it comes to pass. They’re not going to want to indemnify cowboys - maybe just the big companies will get to self-certify? This wont solve system failure like leaky homes though. That comes back to manufacturers, BRANZ etc. This govt is trying to simplify complex issues which will inevitably leave many exposed.
An advantage of the current system is that the owner, including subsequent owners, can sue the council as the certifying body, and you may already have experience of the council being the last man standing in these situations. Unless there’s a compulsory insurance requirement in relation to self-certifying, this situation will disappear. Councils and their insurers of course desire this change!
Apart from obvious quality worries, my biggest concern frankly is that the change could turn into monopolisation by larger building companies, forcing out the smaller guys who don't have the resources to pass the requirements for self-certification and for whom access to a now diminished pool of certifiers is even slower and possibly more costly than it is now. To avoid this there has to be a reasonable basis for all firms and individuals to qualify to self-certify, not just large "trusted" companies. Quality might be assured for example by unannounced random checks on the validity of self-certifications with significant penalties involved for breaches including self-certification being suspended or removed. More generally there is no free lunch to achieving quality in any sphere.
The comparison with automotive manufacturers is fascicious because cars are produced on a factory line in their 10’s of thousands and involve huge corporate oversight and customer desires for safety etc.
Self certification therefore is easy to follow but mistakes (falsehoods) still happen. Look at VW for the emissions debacle.
House building in NZ is largely a contractors based industry using imported products. Larger builders can shift responsibility to these contractors if they all get it wrong or the materials used are/were substandard.
Whilst current regulations are onerous, if the government were serious about speeding up the process, then rewriting the replacement regulations should be the priority.
We had a house destroyed by the Christchurch earthquakes. After years of debate with EQC and our insurers we eventually were paid out thanks to great support from our lawyers and an advocate inside our insurer. Builders were hard to find, eventually we found one who came with glowing references and photos of previous work. Unfortunately, all out of Christchurch on reflection. We insisted that our builder (who was certified) join one of the building associations. Four months into the build I asked why we hadn't been asked to pay for the membership, and to my horror, found he hadn't joined. This was remedied by me, and we were then covered by the group insurance. The council inspectors were very critical of the work and, eventually the builder walked off the site in anger. We then found that many of the subbies had not been paid, even though we had paid the builder for their services. All our later payments were checked by a Quantity Surveyor after we became suspicious of the build not being up to spec. Eventually, we received $170k from the insurance policy to remedy some of the defects in the build.
I feel suspicious of many of the big building companies. Much of those working on the construction are subbies who come in and perform their function and go. Much of the framing is constructed in factories and generally is of good quality. However, framing often sits waiting in the weather to be installed and often I have heard gib fixers and plasterers moaning about walls which are not straight or horizontal. The whole construction of homes has been destroyed by poor apprentice training and large operators who are basically coordinators of subbies and in for the dollars at the end rather than having pride in a job well done. Basically, often just a lack of trade pride in doing a good job.
I'm not sure that Minister Penk really understands the setting for the housing industry right. Too often it's just a feeding trough for greedy speculators in for a quick buck. His background is as a military man and as a lawyer. I wonder if he has ever had to use a hammer.....
So the Govt didn't check with the insurance industry before 'constructing' the policy, bravo
Are there any statistics from local council inspections teams on failure rates for meeting consent requirements during the course of a build over the last, say, 5-10 years? How much 're-inspecting' do they have to do?
That would give a better knowledge of the quality of builders' construction standards as they are currently than just stating that the 'big firms can be trusted to do it right'.
For example, Jennian Homes is a franchise - are all franchisees actually working to the same level as either other? or maybe some business owners are more thorough/conscientious/have better oversight processes than others .... I don't know that answer to that question so not meaning to malign Jennian Homes, but I would like to know what the inspections statistics/rates of re-checks to meet Certificate of Final Consent are
Good news for lobbyests and coalition party donors.
Bad news for everyone else.
Given the pressure on the housing market has eased plus the likelihood of a capital (not necessarily gains) tax it seems to me that the need to speed up building consents has evaporated. Anyway, as the ODT says, for mortgage purposes, the Ozzie Banks will not accept self certification
IMO, and experience, the business model of SSO would favour the bigger, long histrical companies.
The smaller builders seem to chnge ther compan name as often as their underpants, leading to questionmarks about whether they will stand behind thier"guarantees".
Until Govt makes certain businesses such as these, are void of limited liability, there is no hope that the smaller guys will get work under a SSO scheme.
All too easy to forget the Labour party exists. Besides identity politics stuff they really bring nothing to the table.
The insurance point is probably the killer for this idea: nothing will get cheaper so may as well just hire more council inspectors. Perhaps paying for it with higher fees for builders as user-pays is the way National seems to like things.