The Government is looking to move forward with plans to change who is liable for defective building work, and it's raised questions about what this could mean going forward.
For decades, all parties involved in a build have been jointly liable for problems, with local councils mostly picking up the tab.
NZ Herald Wellington business editor Jenee Tibshraeny explains further.
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Speaker 1 (00:00):
Building industry associations. You're gonna have to talk about them
because they may be the ones carrying the liability for
their registered builders. Soon the government is pushing on with
those plans that we've been discussing to change who is
liable for defective building work. It's become clear that insurance
for builders might not be widely available, so maybe master
builders and certified builders may end up being the ones
carrying the can instead. Jenatib Trany as The Herald's Wellington
(00:22):
Business editor and with us, Hey.
Speaker 2 (00:23):
Your name hi Heather.
Speaker 1 (00:24):
So is this an idea or is this what's going
to happen.
Speaker 2 (00:28):
Well, so, here's the thing. Currently, if you have a
problem with your house, all the parties involved in causing
that problem are jointly liable, so you can take the
council to court for giving consent for the building and
the builder, and if the builder can't afford to pay
you out, the buckstops with the council. That's the current situation,
(00:48):
which means you kind of always get your way because
the council has deep pockets. Under what the Government's proposed,
the liability is split between everyone who's cause the problem,
So that could mean that your builder is liable for
the problem, and the council only plays a small part
(01:09):
or doesn't have to pay a part at all. But
the thing that I'm really worried about if you now
are pursuing your builder, and so is your neighbor because
they have the same problem, and so is the other
person down the road, because they all have the same
problem with the same I don't know, problematic piece of
equipment or something in the house, then that builders pockets
(01:30):
aren't necessarily deep enough. So then what happens is if
that builder doesn't have proper insurance. You might have some
sort of building guarantee for your house for the problem.
But the people who pay out those guarantees they're not registered,
licensed insurers. So how do we know that those master
(01:51):
builder guarantees, certified builder guarantees, How do we know that
they have enough money in the pot to pay out me,
my neighbor, everyone else with the same problem, like was
the case during the leaky home issue in the nineties.
So this is the issue. This is the question I have.
And the government can't answer that question because you know,
(02:14):
they're changing the regime. But the master builders and the
certified builders, they aren't regulated. So the question I have
is should they be regulated? Should they be required to
meet solvency standards like normal insurance companies have to meet.
Speaker 1 (02:30):
Would they not? Why aren't they required to simply take
out insurance in the way that we would have expected
a builder to have to.
Speaker 2 (02:38):
Yeah, look, that's a good question. So I think currently
the government has decided at once to change this regime,
but it's trying to figure out whether to make some
of these things mandatory. So trying to figure out whether
it says to you, as the homeowner, if you want
to get your house built, you have to make sure
you have some sort of a warranty. The question then,
(02:59):
which I'm exploring, is well, if that warranty is mandatory,
should the provider of that guarantee a warranty, should it
be required to have, you know, meet certain solvency standards?
Speaker 1 (03:11):
Yes, you know.
Speaker 2 (03:13):
And so talking to Master Builders certified builders, there are
mixed views. So the CEO of Master Builders he's quite
open to being regulated, you know. He and Katshama, he says, well,
they already work with actuaries to make sure they have
enough money in the pot. Basically. Certified builders, on the
other hand, Malcolm Fleming, the CEO, took to him and
(03:36):
he said, you know that the main thing is to
make sure that the building standards are high enough, because
that's the real issue. Make sure the building standards are
high enough so there's not a problem to begin with.
Speaker 1 (03:45):
Oh well, I mean that's just that's just dreaming, isn't it.
There's always going to be a cowboy.
Speaker 2 (03:50):
Well, I mean I think so. And he also said
that actually, if there was to be a widespread problem,
because that's when the solvency issue really becomes a problem,
if there was to be a widespread problem, it would
probably be with the building material. And if it is
with the building material, then I guess you can sue
the manufacturer of the material, so you're not necessarily tapping
into the pot of money run by certified builders. But
(04:15):
I think, I mean stepping out here, I'm sort of
going right into the weeds here, but stepping back, I
think if the government is changing the liability regime for housing,
which is where all of our money is tied up,
then we need to make sure the stuff is rock
solid so that if we have a problem, we need
to make sure whoever we're chasing actually has money to
(04:37):
pay it that. Yeah exactly, yeah, and yeah.
Speaker 1 (04:41):
Yeah, I mean it is alarming to me, I think probably,
and by the sounds of things, to you as well.
It is alarming to me that we're taking that away
without actually replacing it with something of equal certainty. Jane,
thank you. I appreciate you talking us through and you're
doing all the work on it. Janet tib Charani, the
Herald's Wellington business owner. To keep an eye on this.
This is Chris Pink is an Laura. It's Chris Pink
during this yet keep an eye on it. For more
(05:03):
from Hither Duplessy Allen Drive. Listen live to News Talks
it B from four pm weekdays, or follow the podcast
on iHeartRadio.
Building industry associations. You're gonna have to talk about them
because they may be the ones carrying the liability for
their registered builders. Soon the government is pushing on with
those plans that we've been discussing to change who is
liable for defective building work. It's become clear that insurance
for builders might not be widely available, so maybe master
builders and certified builders may end up being the ones
carrying the can instead. Jenatib Trany as The Herald's Wellington
(00:22):
Business editor and with us, Hey.
Speaker 2 (00:23):
Your name hi Heather.
Speaker 1 (00:24):
So is this an idea or is this what's going
to happen.
Speaker 2 (00:28):
Well, so, here's the thing. Currently, if you have a
problem with your house, all the parties involved in causing
that problem are jointly liable, so you can take the
council to court for giving consent for the building and
the builder, and if the builder can't afford to pay
you out, the buckstops with the council. That's the current situation,
(00:48):
which means you kind of always get your way because
the council has deep pockets. Under what the Government's proposed,
the liability is split between everyone who's cause the problem,
So that could mean that your builder is liable for
the problem, and the council only plays a small part
(01:09):
or doesn't have to pay a part at all. But
the thing that I'm really worried about if you now
are pursuing your builder, and so is your neighbor because
they have the same problem, and so is the other
person down the road, because they all have the same
problem with the same I don't know, problematic piece of
equipment or something in the house, then that builders pockets
(01:30):
aren't necessarily deep enough. So then what happens is if
that builder doesn't have proper insurance. You might have some
sort of building guarantee for your house for the problem.
But the people who pay out those guarantees they're not registered,
licensed insurers. So how do we know that those master
(01:51):
builder guarantees, certified builder guarantees, How do we know that
they have enough money in the pot to pay out me,
my neighbor, everyone else with the same problem, like was
the case during the leaky home issue in the nineties.
So this is the issue. This is the question I have.
And the government can't answer that question because you know,
(02:14):
they're changing the regime. But the master builders and the
certified builders, they aren't regulated. So the question I have
is should they be regulated? Should they be required to
meet solvency standards like normal insurance companies have to meet.
Speaker 1 (02:30):
Would they not? Why aren't they required to simply take
out insurance in the way that we would have expected
a builder to have to.
Speaker 2 (02:38):
Yeah, look, that's a good question. So I think currently
the government has decided at once to change this regime,
but it's trying to figure out whether to make some
of these things mandatory. So trying to figure out whether
it says to you, as the homeowner, if you want
to get your house built, you have to make sure
you have some sort of a warranty. The question then,
(02:59):
which I'm exploring, is well, if that warranty is mandatory,
should the provider of that guarantee a warranty, should it
be required to have, you know, meet certain solvency standards?
Speaker 1 (03:11):
Yes, you know.
Speaker 2 (03:13):
And so talking to Master Builders certified builders, there are
mixed views. So the CEO of Master Builders he's quite
open to being regulated, you know. He and Katshama, he says, well,
they already work with actuaries to make sure they have
enough money in the pot. Basically. Certified builders, on the
other hand, Malcolm Fleming, the CEO, took to him and
(03:36):
he said, you know that the main thing is to
make sure that the building standards are high enough, because
that's the real issue. Make sure the building standards are
high enough so there's not a problem to begin with.
Speaker 1 (03:45):
Oh well, I mean that's just that's just dreaming, isn't it.
There's always going to be a cowboy.
Speaker 2 (03:50):
Well, I mean I think so. And he also said
that actually, if there was to be a widespread problem,
because that's when the solvency issue really becomes a problem,
if there was to be a widespread problem, it would
probably be with the building material. And if it is
with the building material, then I guess you can sue
the manufacturer of the material, so you're not necessarily tapping
into the pot of money run by certified builders. But
(04:15):
I think, I mean stepping out here, I'm sort of
going right into the weeds here, but stepping back, I
think if the government is changing the liability regime for housing,
which is where all of our money is tied up,
then we need to make sure the stuff is rock
solid so that if we have a problem, we need
to make sure whoever we're chasing actually has money to
(04:37):
pay it that. Yeah exactly, yeah, and yeah.
Speaker 1 (04:41):
Yeah, I mean it is alarming to me, I think probably,
and by the sounds of things, to you as well.
It is alarming to me that we're taking that away
without actually replacing it with something of equal certainty. Jane,
thank you. I appreciate you talking us through and you're
doing all the work on it. Janet tib Charani, the
Herald's Wellington business owner. To keep an eye on this.
This is Chris Pink is an Laura. It's Chris Pink
during this yet keep an eye on it. For more
(05:03):
from Hither Duplessy Allen Drive. Listen live to News Talks
it B from four pm weekdays, or follow the podcast
on iHeartRadio.
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