Tough line pushes up house prices

By ANDREW LAXON

New houses will cost more because of builder registration, compulsory insurance and other tougher building rules planned by the Government in response to the leaky homes crisis.

But Commerce Minister Lianne Dalziel says the stricter controls are necessary to give homebuyers a better deal.

Announcing the proposed changes at an Auckland building site yesterday, she said she was shocked when the final Hunn report on leaky buildings last year concluded that New Zealanders knew more about the pitfalls of buying a used car than a new home.

"The used car market has better safety and quality performance, warranty and consumer protection. That to me is a real wake-up call for better regulation of the industry."

The biggest changes recommended in the discussion paper are:

* Registration for all building professionals, who could be struck off if they do not meet standards.

* Insurance to protect homeowners - either a compulsory warranty, a guarantee fund paid for by an industry levy or performance bonds.

* A certification system, requiring all major new building products (such as the new plaster finishes which have been involved in most leaky building failures) to be independently tested.

The paper, Better Regulation of the Building Industry, says the Building Act should place much greater emphasis on consumer rights and homeowners' health and safety, and the Building Code should have more specific "how to do it" standards.

It says the Building Industry Authority should play a more active role, building inspectors and certifiers should be officially assessed and accredited, and given greater powers.

The paper sets out a range of options for registration of all building professionals, from voluntary to compulsory for all projects requiring a building consent.

The authors add: "On balance we have a preference for a mandatory regime."

Lianne Dalziel said she did not yet know how much registration and other measures would add to the cost of a new home but analysts were preparing this information.

Last month Insurance Council chief executive Chris Ryan said the Government might have to contribute tens of millions of dollars if it wanted to start a guarantee fund.

The paper acknowledges that consumer protection plans are difficult because insurers lack confidence in the building industry.

Consumers Institute chief executive David Russell said he agreed with many ideas in the paper, but the Government would have to be careful that registration did not hurt amateur builders.

The solution would have to balance consumer protection against the traditional freedom that New Zealanders enjoyed "to knock their own boat together".

National MP Wayne Mapp said widespread registration and a compulsory insurance scheme were unnecessary and expensive.

He accused the Government of not getting rid of the Building Industry Authority's incompetent leadership - in particular, chief executive Bill Porteous.

The Government has not sacked Dr Porteous, but he has been effectively sidelined.

Former Ministry of Economic Development chief executive Paul Carpinter is completing a review of the BIA, senior Government official Richard Martin is running the transition plan and yesterday's reaction welcoming the Government's plans came from authority chairman Barry Brown.

The story so far

* April 2002: The Herald reveals the extent of the leaky building crisis - thousands of rotting homes and hundreds of millions of dollars estimated in repairs.

* September 2002: A report by former State Service Commissioner Don Hunn confirms the potential for "systemic breakdown" in the building industry.

* November 4, 2002: An adjudication and mediation service is started for affected home owners.

* November 28, 2002: The final part of the Hunn report urges an overhaul of the building industry.

* March 2003: The Government presents its discussion paper on building industry reforms.

Tougher rules for builders

Following the leaky buildings crisis, the Government is proposing the following changes.

The Building Act

* Will give more emphasis to consumer rights, home owners' health and safety and the durability of building materials.

The Building Code

* Will have more detailed performance standards.

* Will provide more approved "off-the-shelf" methods for builders, with tougher scrutiny of alternative methods put forward by builders themselves.

The Building Industry Authority

* Could issue warning notices or bans on designs, building methods or products.

* Could insist on a certain building method being used, if necessary.

* Would have to formally consider short-term costs and long-term benefits of any change to building regulations.

Building products

* Will have to be passed ("certified") as fit for use. Council inspectors and private certifiers

* Would have to be accredited by an independent body.

* Could issue parking ticket-style "infringement notices" on builders.

Building professionals

* May have to be registered and tested by a board, which could deregister those guilty of misconduct. It leans towards a compulsory system for all work requiring a building consent.

Home owners

* May gain protection from leaky or faulty buildings from one of the following.

* A compulsory home warranty scheme.

* A guarantee fund paid for by a new industry-wide levy.

* Performance bonds for all building contracts.

* However, all these options create extra costs and may not be supported by an increasingly nervous insurance industry.

* The full

discussion paper

* Submissions are due by April 11.

* If you have information about leaking buildings,

email the Herald

or fax (09) 373-6421.

Herald Feature: Leaky Buildings