Malcolm Fleming: Certified Builders CEO on the Govt changing liability rules for building consents

Praise for new building consenting rules.  

The Government will change liabilities, holding parties responsible for their share of work.  

Certified Builders Chief Executive Malcolm Fleming says the building guarantee or building system should be mandated.  

He told Ryan Bridge that will add cost to the price of building, but it's minuscule in the scale of things.  

Fleming says on a $500,000 project, a guarantee would cost just $1,500.  

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Episode Transcript

Speaker 1 (00:00):
Local councils set to save some cashes the government scraps
building consent rules. Building Minister Chris Penk says councils are
reluctant to grant building consents because they're the ones responsible
to pay the building owner if a construction company goes
bally up. Now each party is liable for only the
work that they were responsible for. That's the change they're
pushing for. It's proportional. Malcolm Fleming, Certified Builders CEO, with

(00:22):
me this morning.

Speaker 2 (00:22):
Malcolm, good morning, Good morning Ryan.

Speaker 1 (00:24):
So what proportional builders do you recon currently don't have
aren't covered by a warranty like an industry backed warranty,
or have insurance.

Speaker 2 (00:37):
So if we look at the minister's announcement, it talks
about exploring two things professional and deemnly insurance cover and
home warranties. Now, professional insurance and demnly insurance is covered
by what is available to the architects, the quality surveyor
as the engineers, etc. That's already in the market. The
piece that he's looking at is home warranties and that

(01:00):
is provided by a portion of the market. And also
insurance is a guess probably about sixty percent of the
market is.

Speaker 1 (01:08):
Covered by it, right, So for the other forty percent,
if something you know of my wall caves in, what happens.

Speaker 2 (01:17):
For those who are not covered by it? They are
left to the homeowners, therefore dealing the builder if they're around,
getting them back to fix it. If they're not around,
they got a longer term problem.

Speaker 1 (01:28):
So this is looking to go to proportional. So whoever
did it badly pays for it their share of that?
Is that a good correctly?

Speaker 2 (01:37):
Yes? At the moment, we've got joint and several so
everybody's bound together to take one hundred percent of the
loss in the case of an issue arising on a
building project. So if, for example, when a claim comes forward,
if one of the player is not there, and it
could be the architect, it could be the builder, the
rest of those including the council, needs to altogether to

(02:01):
cover that's part of the claim where the builder, the architect,
whomever is not there. What this talks about is making
it very clear that the assessed proportion which is liable
to each party, is attribute to each party. It must
be met beage party. The piece that's been missing over
the decades that this has been running is the building

(02:23):
warranty insurance builders currently professional and mty insurance which covers
all their projects. So a build consumer product like a
guarantee which applies to the house is the best way forward.
And the good news is that there's those products here
in the market. There is the Association Backed to Guarantees

(02:44):
NGCB New Zealand CIFY builders had to guarantee, and the
Master Bill Guarantee for the Master builders. And there's also
an insurance product out there as well for building warranty
insurance Malcolm.

Speaker 1 (02:54):
The Aussies went proportional in the nineties and they mandated
these warranties that you're talking about. If we mandated them here,
would that mean we're going to pay more for our
building work, our housing.

Speaker 2 (03:05):
So they mandated in Australia and that's the key. The
insurance must be mandated. It will be a cost that
gets passed on for homeowner. To give some context around that,
say for a five hundred thousand dollars renovation, which is
pretty standard these days, the cost of a guarantee product
is in the order of fifteen hundred dollars. If you

(03:25):
don't mandate it, it won't be picked up and there
won't be any cover there for the homeowner in case
things go wrong.

Speaker 1 (03:33):
Roger Malcolm got that. Thank you. Malcolm Fleming, Certified Builders
Chief Executive. For more from Early Edition with Ryan Bridge,
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