Building law reforms pass first reading with liability overhaul

Parliament has passed the first reading of legislation that reshapes how liability is assigned when building projects go wrong, shifting to a system where each party bears responsibility only for their share of the work.

The Building Amendment Bill, which Building and Construction Minister Chris Penk describes as the most significant building system reforms in two decades, passed its first reading on 2 July 2026.

Liability system overhaul

Under the proposed changes, the construction sector will transition from joint and several liability to proportionate liability, with parties responsible only for the portion of work they performed.

"At the heart of this bill is a fundamental shift to a fairer liability system for the construction sector – one which ensures accountability for building work sits where it should, while maintaining strong consumer protections," Penk said.

The minister added: "For too long, councils and other parties have been left footing the bill for defects they did not cause. We are moving toward a fairer, more sustainable approach and strengthening protections for homeowners through mandatory safeguards."

Insurance and warranty requirements

Alongside the liability changes, the bill requires professional indemnity insurance for building design professionals and engineers contributing to building design. Home warranties will become compulsory for most new builds and renovations worth $100,000 or more.

The package also creates new offences aimed at deterring non-compliance with building standards.

Consent process changes

Processing times for Project Information Memoranda will drop from 20 working days to 10. A new express pathway will allow building consents to be issued within 10 working days for new residential buildings incorporating solar panels or other sustainable features.

The existing consent exemption for granny flats will be widened to permit factory-built dwellings to be manufactured before a Project Information Memorandum is obtained.

Research funding and consent authority changes

The bill combines the Building Research Levy with the Building Levy and shifts toward a more competitive funding allocation model. It also enables voluntary mergers of Building Consent Authority functions among the 69 consent authorities currently operating across New Zealand.

The reforms follow extensive engagement with the construction sector, insurers, warranty providers and local government during policy development.