Granny flats – does less oversight mean more liability?

The Government has announced that standalone dwellings no greater than 70m² (otherwise known as granny flats) will soon be able to be built without a building or resource consent. In this article, Julia Flattery from law firm Duncan Cotterill explores what it means for builders 

Building Consent Authorities (BCAs) will not check if granny flats comply with the Building Code. This raises the question – who will take on more risk if a granny flat is defective? 

What we know so far 

The legislation to exempt granny flats from building and resource consents is still being drafted, so the final requirements are not yet confirmed. 

The Government’s current proposal includes limits on maximum floor area and height, use of lightweight construction materials, and a requirement that all work be carried out, or supervised by, LBPs and licensed plumbers, drainlayers, gasfitters and electricians. In terms of resource management, SITE coverage, setbacks and other conditions will still apply. 

Homeowners will be required to notify councils before construction and apply for a Project Information Memorandum (PIM). Councils must advise homeowners whether the work is likely to be exempt and, once construction is complete, homeowners must provide plans for council records.  

However, councils will not review these for Building Code compliance. 

As with all building work, the granny flat must still comply with the Building Code. Without a building consent, however, the council will not inspect or sign off compliance. 

What this means for you 

With the rise of granny flats, LBPs and other trades may be concerned about obligations and liabilities now that councils will not be inspecting or signing off these buildings. 

The implied warranties under the Building Act still apply. Builders remain responsible for ensuring work is carried out in a proper and competent manner and must remedy any defects notified within 12 months of completion. 

Currently, New Zealand operates under a joint and several liability model, meaning all parties in a project can be held equally liable if a building is defective. Without council oversight of granny flats, remaining parties may face a greater share of liability. 

However, from mid-2026 the Government intends to replace joint and several liability with proportionate liability. Under this model, each party is responsible only for the share of work they carried out. For builders, this would mean liability is limited to their own workmanship rather than the entire project. 

How to reduce your risk 

• Take extra care on these types of projects, as there will be no council oversight. 

• Continue to build in compliance with the Building Code and supervise subcontractors closely. 

• Encourage homeowners to notify the council and consider any council feedback. 

• Ensure your contracts with clients and subcontractors clearly outline risk and liability. 

• Factor in potential additional costs, including higher insurance premiums. 

• Some homeowners may still choose to seek a consent and code compliance certificate for peace of mind and resale value. 

When will it begin? 

The Government expects the granny flat changes to take effect in early 2026. Timeframes for resource consent changes are not yet confirmed but are expected to align with the same rollout. 

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Duncan Cotterill is one of New Zealand’s leading and longest established law firms, with a nationwide offering and comprehensive legal services. We are consistently ranked as one of New Zealand’s top 10 law firms and work closely with our clients ranging from all sizes, locations, and sectors. With five strategically located offices in Auckland, Wellington, Nelson, Christchurch, and Queenstown, our extensive reach and regional influence empower us to deliver exceptional legal solutions nationwide. 

For more information, contact: 

Julia Flattery: julia.flattery@duncancontterill.com / M: +64275672094 / D: +6433726463 

Jonathan Forsey: jonathan.forsey@duncancotterrill.com / M: +6421905512 / D: +6433726454