Councils dread 'Leaky Buildings II'

 Source: The New Zealand Herald

By Isaac Davison
Monday Jul 30, 2012

New Zealand's biggest councils are imploring the Government to introduce warranties in new building laws or risk "Leaky Buildings 2".

Sue Wells says councils are the last man standing when it comes to dodgy workmanship, and ratepayers pay dearly for it. Photo / APN

Building reforms before Parliament were designed to make sure the construction industry was more accountable for its work, but councils said the changes did not go far enough.

Christchurch and Wellington city councils have urged the Government to introduce a warranty scheme to protect consumers and local authorities from liability when builders do not produce good work.

Christchurch councillor Sue Wells told a select committee: "Councils end up as the last man standing. There is no warranty scheme that will protect the ratepayers or Christchurch or throughout the country in the event that any of these licensed building practitioners undertaking repairs or rebuilds don't do it well."

If the Building Amendment Bill was passed, builders would be required to show their track record before taking on a job, and any defects would have to be fixed within 12 months, no questions asked.

But council submitters said builders regularly shut down their companies and escaped liability, pointing to the fact small construction firms last an average of three years.

Ms Wells said 10,000 new tradespeople were expected to rebuild quake-hit Christchurch and if even a small proportion of them did dodgy renovations, she said, the costs would be enormous.

"We're looking at a $30 billion rebuild. We're looking at 30-40,000 major repairs in our city over the next five years of over $150,000 per dwelling. You start to get a bit of sense of why we have some concerns and why we think there's a gap here ..."

The council wanted a mandatory scheme for new homes and major alterations which was effective for 10 years. To illustrate its concern, the council said an audit of fireplace jobs in Christchurch showed that out of 200 installations in the past two months, 69 had failed inspection.


"That doesn't give me confidence," Ms Wells said.

A review of the Building Act which took place after the $22 billion leaky building crisis recommended a warranty scheme, but it has not been included in the two amendment bills introduced since the review.

Wellington City Council welcomed the bill's attempts to make builders more liable for their work but said the legislation did not go far enough.

John Scott, manager of building consents and licensing services, said: "The remedies need to disincentivise the building sector from avoiding the cost of doing remedial work. And to avoid the cost they really need to stump up with some kind of cost in advance."

He recommended a Government or industry-run surety fund.

Submitter Ben Richard, whose company Builtin ran a warranty scheme, said warranty contracts usually cost 0.4 per cent of the total value of the home, or around $1000 on average.


  • Any building jobs over $20,000 will require a written contract.
  • Building contractors have to provide disclosure statements on their qualifications, track record, skills and licence status.
  • Principal building contractors must fix defects within 12 months.
  • Maximum penalty for building consents raised to $200,000.
  • New powers for local authorities to deal with non-dangerous buildings close to dangerous buildings.

The New Zealand Herald