Chris Penk: Building and Construction Minister on the new 'home warranty' rules designed to protect homeowners

New rules aimed at protecting homeowners should be formally introduced next year.

The Government's announced plans to require all warranties for new homes three storeys or less, and all renos worth at least $100,000.

Building and Construction Minister Chris Penk admits homeowners will pay a bit more, but it's worth it.

"It's around half of one percent of the cost of a build, so I think that's a lot of of peace of mind - so I think that's a good trade off for the council not having to be involved in ratepayers being on the hook to the extent that they are now."

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Episode Transcript

Speaker 1 (00:00):
Afternoon. The government has filled in the missing pieces of
its Building and Construction reform. The outstanding question has been
who would pay for defective work if the trade can't
cover it. The answer is the homeowner. The homeowner will
have to take out a warranty to cover the work.
Chris Pink is the Building in Construction min a stand.

Speaker 2 (00:15):
With us now, Hi Chris, Hello Heather.

Speaker 1 (00:17):
How much one of these warranties cost?

Speaker 2 (00:20):
Well, actually, mostly people have warranties or guarantees in place
already now, so in those cases actually nothing at all.
But roughly speaking, it's around half of one percent of
the cost of a build. So we think that's a
lot of peace of mind and it's a good trade
off for the council not having to be involved in
rate payers being on the hop to the extent they
are now.

Speaker 1 (00:41):
So if you're doing a million a million dollar bild,
you're looking at about five thousand dollars exactly. Okay, how
would you have it if you already have it?

Speaker 2 (00:50):
Oh, because these products are already available, So think certified
builders have a guarantee called Halo. Register Master builders have
their own one, and there's an insurance outfit called Stamp
that provides building defect insurance.

Speaker 1 (01:02):
So if you're using one of those builders, they're already
covered by it.

Speaker 2 (01:06):
Yeah, that's right, And to be honest, most of the
reputible ones are. And if there's some builders who aren't
able to satisfy the insurers or the guarantee providers that
they're good enough quality that they want to stand behind them,
then maybe you don't want them doing your work anyway.

Speaker 1 (01:17):
How far can that, let's take master builders, how far
can that warranty go, because let's say that there was
something as massive as the leaky building situation all over again,
would they be able to cover all of that?

Speaker 2 (01:29):
Yeah, well, basically they will have to register with MB
to make sure that we've got visibility that they would
have the resources and the event of a large scale
defict kind of claim. So, as you say, that's an
important consideration. But we're working through that detail now, but
we're really confident from the week that we've done with
them already that they will be able to get there
and provide that assurance hold.

Speaker 1 (01:49):
And so why would they have to register with the MB?
Would the government be the backstop here?

Speaker 2 (01:53):
No, the government's not the backstop, but the government is
saying we require work north of one hundred thousand dollars
based to have one of the approved guarantees or warranty
or insurance systems and saying, well, you know, we need
those to be robust because they need to be available
when the proverbial hits the fan?

Speaker 1 (02:11):
Does master builders run out at a million dollars?

Speaker 2 (02:13):
Like?

Speaker 1 (02:14):
Is that the cap on the warranty?

Speaker 2 (02:16):
I shouldn't speak for what the details of the scheme are,
but I know that they in certified builders have both
been working really proactively and constructively with en BETA to
work out the details. And some of it's the devil
in the detail about when you can claim and who
can claim, you know, how much experience they will want
the builders to hap and so forth. So we're going
through that detail now.

Speaker 1 (02:34):
Is you are you putting the onus on the homeowner
because builders cannot get insurance?

Speaker 2 (02:40):
No, it's the builders who would get the insurance or
the cover, but they would have it, you know, effectively,
they would pass that cost on to the homeowner. So
the point is that it won't be the rate payers
in general who are subsidizing poor building practices. It's actually
the homeowner who would you know, effectively, pay a bit more,
but have that peace of mind and take the councils
out of the equation, or at least not to the

(03:01):
full extent that they.

Speaker 1 (03:02):
Are now Okay, Chris, I appreciate your time. Chris Pink,
Building and Construction Minister.

Speaker 2 (03:06):
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