Property

31 Jul 2009

Building Amendment Bill (No.2)

This Bill was passed by Parliament on 28 July and aims to streamline certain aspects of building consent applications. The Bill is intended to leverage off earlier reforms to improve quality in the construction sector, to increase the flexibility and efficiency of the building consent process and to facilitate and increase supply of affordable houses while ensuring that quality homes and buildings are constructed.

In brief:

• The Bill extends the Department of Building and Housing's functions and powers to allow it to issue national multiple use approvals for buildings and dwellings that are to be replicated on a substantial scale;
• Individual building methods or products will continue to be dealt with under the product certification scheme in the Act;
• The Bill reduces the statutory timeframe for processing a building consent application from 20 working days to 10 where the application includes a national multiple use approval;
• The Bill allows for minor customisations to national multiple use approval removing the need to apply for a new building consent.
• The Bill differentiates between major and minor variations to consented building work to support best practice in managing amendments to building consents.

Reasoning Behind Bill

Information from the Registered Master Builders' Federation suggests that approximately 40% of all new homes in New Zealand are built by volume builders. As everyone is aware, building consent applications are assessed on a case by case basis even when the proposed building work is to be replicated within the same subdivision. The Department considers that efficiencies could be achieved if a system of national multiple use approvals was introduced to provide for a streamlined approval process for buildings that are to be replicated several times on a nationwide basis.

Under such a scheme the building design would be approved or consented on a national level. A building consent would be required for each new building at a local level for unique site conditions, eg foundations, connections to water and other utility services. Each building would still be subject to inspection by the local building consent authority to ensure the building work complied with the building consent.

However decision making by the local building consent authority where the building is to be located would be limited to site specific matters and any customisation/variation of a multiple use consent.

The Department considers that this will reduce the time and effort required to process building consents for these types of buildings resulting in quicker approvals. Another benefit is that it will give the designer/volume builder a greater degree of certainty.

Timing

Different sections come into force at different times under the Bill. Sections relating to a national multiple use approval regime and for a less formal method of making minor variations are to come into force on a date to be appointed by Order in Council. This is to allow regulations to be made that will come into force at the same time. The regulations will specify eligibility criteria for obtaining a national multiple use approval and define the sorts of changes that are minor customisations and minor variations.

Substantive Changes

Until such time as the regulations referred to above are drafted the Bill itself merely sets up the mechanics by which this national multiple use approval system will work. Minor customisations and minor variations are also not defined in the Bill and await the drafting of the regulations.

Process

In simple terms the national multiple use approval system will work as follows:

• A national multiple use approval establishes that particular plans and specifications comply with the Building Code. It does not confer the right to carry out building work that requires a building consent without first obtaining a building consent.
• Applications for a national multiple use approval must be made to the chief executive in writing. The form and manner in which an application must be made will be contained in the regulations as well.
• The chief executive has to decide whether to accept an application for a national multiple use approval for processing. The chief executive may refuse to accept an application that does not meet the prescribed eligibility criteria or that includes the use of banned building methods or products. The chief executive must make that decision as soon as practicable after receipt of the application.
• If the application is accepted the chief executive must go on to decide whether or not to issue the approval though no time limit is provided within which the chief executive must make this decision.
• The chief executive must issue an approval if he or she is satisfied that the application meets the requirements in the Act and any prescribed eligibility criteria and does not involve the use of banned building methods or products and the fee has been paid and the resulting building work if properly completed will comply with the Building Code.

Minor Customisations

A party that has a national multiple use approval will be able to submit applications for building consents that are slightly different than those approved where the difference comes within the definition of a minor customisation. The sort of changes that will be considered to be minor customisations will be clarified in the regulations.

Minor Variations

The sort of changes that will be considered to be minor variations will be clarified in the regulations. An applicant can apply for a minor variation to a building consent and will not be required to complete the prescribed form for building consents. The building consent will not be updated but the building consent authority must record the fact of the minor variation in writing.

Summary

It is not clear at this stage how these changes will really impact on the building sector. As site specific issues will still have to be dealt with a case by case basis there may be little cost impact.

Certainly, if the industry was merely passing on the building consent cost then any reduction will (at least in theory) cause an equal reduction in house costs. Our initial reaction is that the market may not necessarily work that way in practice.

Authors

Phillip Merfield

Partner - Property & Infrastructure

DDI: +64 9 977 5096

Mobile: +64 21 935 407

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Michael Scannell

Partner - Property & Infrastructure

DDI: +64 4 924 3416 / +64 3 365 4312

Mobile: +64 21 437 644

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Greg Towers

Partner - Property & Infrastructure

DDI: +64 9 977 5051

Mobile: +64 21 963 653

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Michael Wood

Partner - Property & Infrastructure

DDI: +64 9 977 5329

Mobile: +64 21 772 974

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Greg Allen

Senior Associate - Property & Infrastructure

DDI: +64 9 977 5164

Mobile: +64 21 534 464

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John Craig

Senior Associate - Property & Infrastructure

DDI: +64 4 924 3426

Mobile: +64 21 044 6941

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