Kerre Woodham: Can you have confidence in buying a new build with partial liability?

Two stories in the Herald today - one about the announcement from Christopher Luxon and Chris Penk yesterday, changing the building liability settings so ratepayers aren't burdened with picking up the tab that shonky developers, builders, or architects are responsible for. In the Herald story, they cite a case in Queenstown: the Oaks Shores body corporate filed a $160 million claim for weather type defects. The developer had been placed into voluntary liquidation and was not sued, so that meant every ratepayer in the Queenstown District was liable for the bill. If the case hadn't been settled privately, ratepayers could have faced rates increases of $300 a year for 30 years. I hate to think of what it's cost the Auckland Council when it comes to remediation of weather type defects, and it's still going on.  

Under the new rules, described as the biggest change to the building consent regime since it came into force in 2004, there'll be partial liability amongst the various parties involved in the development. At the moment, not only is it the cost, but councils have become increasingly risk averse because they don't want to sign off building consents and inspections if it means that they are liable if anything goes wrong and then ratepayers will have to pay.  

There's a real blockage in the system, Chris Penk says, and by having everybody share in the liability then that will help (they hope) clear blockages in the current system. Currently building owners can claim full compensation from any responsible party if there's something wrong with the home. If one of the parties can't pay because they've gone into voluntary liquidation, you can go to the other two, and usually that's the Council – deepest pockets, no option to walk away. The government's going to scrap the current framework and replace it with proportionate liability. Under this new model each party will only be responsible for the share of the work they carried out, which is great for ratepayers, great for councils, great for builders. Is it great for the homeowner? I wouldn't have thought so – you can only get the money back if the company is still there to sue. And if they've gone bust and if the Council's only liable for its bit, then you're not going to ever get anywhere near what you paid for a shonky building.  

This comes into the spotlight because we're looking at intensification and higher density of houses, which means throwing up more houses quickly. Chris Bishop, the RMA Reform Minister, has already told councils in our larger cities that they can opt out of the medium density residential standards that were introduced by the last government, that allowed for three storey developments on almost every residential property. But you can only abandon that if you adopt new planning rules to allow for an equivalent number of homes.  

In Auckland, that will mean the Council has to come up with two million homes over the coming decades. And how are they going to do that? Well, they've decided that they will build them along the transport lines, which makes sense. The suburb of Kingsland, for example, will see the removal of around 70 to 80% of the special character designation that preserves the cottages and villas, and 15 story apartment buildings will be thrown up in their instead because the suburb is close to the station on the Western line. Ten storey and 15 storey developments will be allowed within a 10 minute walk of some train stations, rapid bus stations, the edge of town centres. In Auckland, there's 44 walkable catchments. Height limits will be raised to six stories along more major transport corridors. And 12,000 properties will be down zoned, meaning it'll be harder to put new developments on them, or they won't be permitted at all because of natural hazards like flooding. If adopted, the plan will be open for public submission —this is specifically for Auckland— before the Council makes a final decision later this year.  

Auckland councillor Christine Fletcher is one who is vocal in her opposition to the density requirements, concerned that if it's not done well, it will give intensification a bad name. And when you look at some of the horrors that have been constructed around Auckland, you can understand why there would be concern. Bad enough to have a 15 story apartment building next to your bungalow bathed in all day sun, but if it's just in a constant state of remediation and fixing and disrepair and people having to abandon their apartments because it hasn't been done right and can't be fixed, it'll be even worse.  

It does have to be done right. There are areas of extreme ugliness, hideous apartments, townhouses jammed together with very little in the way of green spaces, no public transport nearby, few amenities. But then you have developments like Stonefields and Hobsonville Point in Auckland, which I would argue have been done very well. You mi

Episode Transcript

Speaker 1 (00:06):
You're listening to the Carrywood and Morning's podcast from news Talks.

Speaker 2 (00:10):
He'd be two stories in the Herald today, one from
the changes that were announced by Christopher Luxen and Chris
Penk yesterday changing the building liability settings so rate payers
aren't burdened with picking up the tab that shonky developers

(00:30):
or builders or architects are responsible for. So in the
Herald story they cite the case in Queenstown, the Oaks
Shaw's Body Corporate filed a one hundred and sixty million
dollar claim for weather type defects. The developer had been
placed into voluntary liquidation and was a not sued, so

(00:53):
that meant every ratepayer in the Queenstown district was liable
for the bill, and if the case hadn't been settled privately,
rate payers could have faced rates increases of three hundred
dollars a year for thirty years. I hate to think
of what it's cost the Auckland Council when it comes
to remediation of weather type defects and it's still going on.

(01:16):
So under the new rules, described as the biggest change
to the building consent regime since it came into force
in two thousand and four. Just about every single announcement
Crispy makes around construction seems to be the biggest change
since then there'll be partial liability amongst the various parties

(01:42):
involved in the development. So at the moment, not only
is it the cost, but councils have become increasingly risk
averse because they don't want to sign off building consents
and inspections if it means that they are liable if
anything goes wrong and then will have to pay. So

(02:08):
there's a real blockage in the system, Chris penk says,
and by having everybody share and the liability then that
will help, they hope, clear blockages in the current system. Currently,
building owners can claim full compensation from any responsible party

(02:31):
if there's something wrong with the home, So if one
of the parties can't pay because they've gone into voluntary liquidation,
you can go to the other two and usually that's
the council deepest pockets, no option to walk away. So
the government's going to scrape the current framework and replace
it with proportionate liability. Under this new model, each party

(02:55):
will only be responsible for the share of the work
they carried out, which is great for great payers, great
for councils great for builders, Is it great for the homeowner?
I wouldn't have thought. So you can only get the
money back if the company is still there to sue,

(03:20):
and if they've gone bust, and if the council is
only liable for its bit, then you're not going to
ever get anywhere near what you paid for a shonky building.
And this comes in to basic into the spotlight basically
because we're looking at intensification and higher density of houses,

(03:40):
which means throwing up more houses quickly. And Chris Bishop,
the RMA reform Minister, has already told councils in our
larger cities that they can opt out of the medium
density residential standards that were introduced by the last government
that allowed for three story developments on almost every residential property.

(04:02):
But you can only abandon that if you adopt you
planning rules to allow for an equivalent number of homes.
So an Auckland, that will mean the council has to
come up with two million homes over the coming decades,
and how are they going to do that while they've
decided that they will basically build them along the transport lines,

(04:23):
which makes sense. The suburb of Kingsland, for example, will
see the removal of around seventy to eighty percent of
the special character designation that preserves the cottages and villas,
and fifteen story apartment buildings will be thrown up in
their stead because the suburb is close to the station
on the western line. So a one hundred and twenty

(04:46):
year old cottage that sat there forever and ever. You're
not worried about water tightness or defects or sewing the builder.
The builder will be a lovely marble gravestone and a
graveyard near you. You're fine, But up goes the fifteen
story apartment building. Where where is the assurance that that

(05:07):
will be there in one hundred years? Ten story and
fifteen story developments will be allowed, with it within a
ten minute walk of some train stations, rapid bus stations,
the edge of town centers. In Auckland, there's forty four
walkable catchments. Height limits will be raised to six stories
along more major transport corridors, and twelve thousand properties will

(05:32):
be down zoned, meaning it'll be harder to put new
developments on them more they won't be permitted at all
because of natural hazards like flooding, So if adopted, the
plan will be open for public submission specifically for Auckland,
this one before the council makes a final decision later
this year. Auckland Councilor Christine Fletcher is one who is

(05:56):
a vocal in her opposition to the density requirements, concerned
that if it's not done well, it will give intensification
a bad name. And when you look at some of
the horrors that have been constructed around Aukland, you can
understand why there would be concern bad enough to have
a fifteen story apartment building next to your bungalow bathed

(06:17):
nordays shun. But if it's just in a constant state
of remediation and fixing and disrepair and being people having
to abandon their apartments because it hasn't been done right
and can't be fixed, it'll be even worse. It does
have to be done right. There are areas of extreme ugliness,

(06:42):
hideous apartments, townhouses jammed together with very little in the
way of green spaces, no public transport nearby, few amenities.
In some places there's not even room for a fire station,
so if one goes up, it's all up, really, But
then you have developments like Stonefields and Hobsonville Point in Auckland,

(07:05):
which I would argue have been done very well. And
you might be able to point to parts of Hamilton
Napier where there has been intensification of housing. Outside of
christ Church farmland has become residential in its nature with
developments there. Those that have done well are done very well.

(07:27):
Those that are done poorly are just a blight on
the landscape and a burden around the neck of anyone
who buys them. How on earth are you going to
have any confidence and buying a new build when partial
liability is being introduced when you can't you can't get

(07:51):
back what you spent because each party is only responsible
for their little bit, and so many of them will
be able to do a flit.

Speaker 1 (08:02):
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