Carl Taylor: Combined Building Supplies CEO on the impacts of the new home warranty rules

The Government is making changes to the Building Act, including bringing in a new liability scheme that means councils won't have to handle building defects on their own.

The law will also introduce a one-year warranty on new residential buildings of up to three storeys and for renovations costing more than $100,000, and a 10-year structural warranty period.

These changes have sparked concerns among builders, who worry these new requirements will unintentionally shut them out of the market.

Combined Building Supplies CEO Carl Taylor joined the Afternoons team to discuss the impact of these changes.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
We're talking about new regulations coming through on warranties for
home defects that will affect most builders and operators out
there very soon. To chat further about this, we're joined
by Carl Taylor. He is the chief executive of the
Combined Building Suppliers Cooperative. Carl, Very good afternoon to you.

Speaker 3 (00:33):
Yeah, good afternoon, guys. How are we very good?

Speaker 4 (00:36):
How is this different from what we have now with
people being part of the Registered Mastered Builders Association, Carl.

Speaker 3 (00:43):
It's almost quite a different scheme, to be honest with you.
There's three current providers out there at the moment. Obviously
you've got Master certified in the Stanford, which are three
very good products when you look at them. The problem
we've got in the market is that there's not enough competition,
and so what I mean by that is that there's

(01:06):
not enough overseason Surer is wanting to come to New
Zealand just because we're too small to be able to
offer what the government requires to meet mb guidelines to
offer this product, so potentially it will lock out a
lot of good operators in the market, and that's where
our concern comes from.

Speaker 4 (01:27):
Right, So is this proposed warranty system Is it likely
to protect homeowners or mainly increase compliance costs?

Speaker 3 (01:37):
Carl, Look, we've needed this for years. I think this
has been a long time coming, and consumers absolutely need protection,
there's no doubt about that. But if we're going to
roll something out as large as this is, this is
going to be the biggest fundamental change this construction sector
has ever seen. It needs to be designed in such

(02:00):
a way that it not only looks after the big guys,
but also looks after the small guys as well, and
that's where our concerns are.

Speaker 2 (02:08):
So just running back to master Builders, CBS and Stanford,
you mentioned there, why wouldn't the builders sign up to
those warranties in the first place? What are the hurdles
there that because as I understand, only forty six percent
of builders do that. I can't understand why every builder
wouldn't sign up to something like that.

Speaker 3 (02:24):
So across the three and that's a great question. Across
the three providers. You know, there's various entry criteria that
you've got to have, so you've got Master Builders good product,
Certified Builders good product, and they're a membership driven product.
And then you've got Stanford, which is backed by a
private insurer. So two very different models. And not all

(02:48):
operators or builders will be able to join the other organizations.
They may not be able to because they may not meet,
you know, the financial requirements to do so. So therefore
they are left out in the cold. And I was
listened to one of your callers just prior and he
talked about the costs. The cost isn't the issue here
at all. The cost is just going to have to
be There's no doubt about that. Consumers need protection and

(03:11):
it's going to cost them, that's just the way it is.
But it's going to lock a lot of guys out
and they'll just close shop and not bother.

Speaker 2 (03:18):
Right.

Speaker 4 (03:19):
So so part of the rationality is to is to
speed up consents. Right, will this change you know, council
delays and consenting or will it just move the bottle
next somewhere else?

Speaker 3 (03:31):
Probably a couple of topics going on here. I think
changing their proportionate liability is a great thing. Obviously, when
there's a dispute, normally the last man standing as the
council because the builder might have folded up and gone
into liquidation, so he's gone. So what they're doing is
they're shifting that and saying, you know, the builder might
be liable for X amount, the council will be liable

(03:54):
for another amount, and another subcontractor for another. It's making
it more fear in that regard and that, you know,
that's only a good thing. I think just.

Speaker 2 (04:04):
On the one hundred thousand dollars cap for renovations, I mean,
do you see some problems with having that cap?

Speaker 4 (04:10):
Karl?

Speaker 2 (04:10):
Is there a potential that some of these builders that
they can't afford to get this warranty under the scheme
as it's written, well, you know, have some shortcuts there,
or try and do whatever they can to get it
under that hundred thousand cam.

Speaker 3 (04:23):
I think the devil will definitely be in the detail,
and we yet to see that. You know, one hundred
thousand dollars doesn't go far. Does a bathroom and a
bedroom extension? It won't go far. Whether or not people
take shortcuts, I don't know. I suspect people will find
gray areas in order to keep operating. I don't know

(04:43):
if they will or not, But they probably won't.

Speaker 4 (04:45):
Yet we're speaking to Carl Taylor Combined Building Suppliers Cooperative CE.
Now a lot of people are texting in what a
government backed warranty model like Queensland's work better in New Zealand?
Why hasn't that been considered.

Speaker 3 (05:01):
The government from fras can I understand, did go to
Queensland have a discussion. You know, if you do look
at a Cousins over there. They've had that model going
for over thirty five years and it works really well.
It's backed by the Queensland State Building Commission, so it's
got a decent bank balance so when something goes wrong.

(05:22):
But more importantly, it's an administered by an insurance company
and I think that's where we would like to see
it again. We support the intent, but if we're going
to roll this out, it needs to be done over
several years, not twelve months like they're proposing. And we
need to keep talking to Australia and I think just
copy what they've done because it works, so why would

(05:43):
you not?

Speaker 4 (05:45):
And what should happen to apprentices and new builders who
want to enter the residential market but cannot meet these
insurance thresholds As this comes through.

Speaker 3 (05:56):
Yeah, that's the pathway for a young apprentice. Apprentice wanting
to come through is obviously quite concerning as well. And
you know when you look at these young guys, they
invest a lot of time in their own money and
they're live to want to become a builder. And if
we make it too hard for these young guys to
come through, then they just don't think they'll bother Again,

(06:17):
the intent is correct, we've just got to get it right.
And the reason why we're speaking up now is that
we're better off to argue it and debate it now
than whether it's after it's been put into legislation, because
there's no one how it will change it once it
comes through.

Speaker 2 (06:33):
Carl, really great to get your expertise and thoughts on
this one. Thank you very much for your time.

Speaker 3 (06:38):
Thank you very much.

Speaker 2 (06:39):
That is Carl Taylor. The Combined Building Supply is Cooperative
ce THO were the guys that ran that survey that
said thirty percent of small builders. We're very concerned about
this new warranty scheme.

Speaker 1 (06:49):
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