Government targets cost of building consents

Nick Smith says officials are working on both restoring competition and developing a common information technology (IT) system that all councils and private building consenters would have to use.

Councils may soon face private sector competition for issuing building consents again, as part of a Government drive to make housing more affordable.

Building and Housing Minister Nick Smith says officials are working on both restoring competition and developing a common information technology (IT) system that all councils and private building consenters would have to use.

However, decisions on both issues are waiting for prior decisions on a Law Commission review of building consenters' legal liability for faults found after a building is signed off as complying with the building code.

"The Government has been exploring the implementation of a national building consent system, with a strong focus on whether we can develop a common IT platform nationwide to try and improve the efficiency and reduce the cost of doing consenting," Smith said. "There has also been the option of providing an alternative building consent system to local councils.

"The Government hasn't made decisions on either of those options."

The Law Commission last year recommended keeping the current system, where all parties involved in a building are "jointly and severally" liable for the full cost of any fault.

In practice, this means a council that issued a building consent may be liable for the full cost of repairing a building if its builders and subcontractors are no longer trading.

However, the commission proposed caps on building consenters' liability of $300,000 for a single dwelling and $3 million for a multi-unit development.

The Government has accepted the principle of keeping joint and several liability but has not yet decided on caps. The commission proposed the caps should come into force only after the financial assistance package for leaky building claims expired in July next year.

Private consent authorities have been permitted since the Building Act of 1991. Compass Building Consultants director Maurice Hinton said 18 companies entered the field in the 1990s. But all stopped issuing building consents after the act was rewritten in 2004 - in the wake of the leaky building crisis - to require all consent authorities to carry full civil liability insurance.

Compass and three other companies still do building consent and inspection work but only on contract for councils - with the councils signing off both consents and code compliance certificates.

Hinton said the proposed liability caps could make it feasible for consultants to issue consents and compliance certificates again, and a common national IT system would be useful.

He said private consultants would be cheaper than council staff because of lower overhead costs and flexible location. But Nick Hill of the Building Officers Institute, representing council staff, said 1990s-style competition would be "a race to the bottom on price and quality".