MBIE’s consumer protection guidance for builders details new regulations

New consumer protection measures, included in the Building Amendment Act 2013, came into force on 1 January this year.

According to MBIE, the new measures have been adopted in response to consumers having little ability to distinguish between practitioners who have a good business history and repeatedly turn out quality building work, and those who use low-skilled labour, take shortcuts and do not stand behind their work. This type of behaviour creates an imbalance in the sector, as poorly performing practitioners often experience competitive advantage over their better-performing counterparts.

MBIE suggests that this is largely due to consumers often selecting building contractors on the basis of price alone, with little value placed on a practitioner’s overall credentials and in-service track record. The government seeks to rebalance this lack of transparency through the implementation of the new consumer protection measures.

“A ‘contractor’ is any person or business contracted directly by the client to do residential building work (the construction, alteration, demolition or removal of a building), whether they are doing all or part of this work

To outline the new measures and reiterate other changes that have occurred over the past two years, guidance has been released. It is divided into four parts:

1. New consumer protection measures
2. Before building work starts
3. Once building work finishes
4. What if things go wrong?

Under Construction will feature this content over the next few editions, as well as the Acceptable Workmanship guide when it is released later in the year.

New consumer protection measures

From 1 January 2015, you must:

• Provide a written contract for residential building work costing $30,000 or more (including GST) whenever you are given the job directly by the homeowner.
• Provide a standard checklist to potential clients if they request it, or if the building work is likely to cost $30,000 or more (before signing a contract).
• Give your clients a disclosure statement, including information about your skills, qualifications, licence status and the insurance or guarantees you provide in a disclosure statement before you sign a contract. You must provide this if the work will cost $30,000 or more, or if the client requests it.
• Give your clients information about any ongoing maintenance requirements, insurance policies and guarantees or warranties once the building work has been completed.

Other changes include:

• An automatic 12-month defect repair period starts when the work has been completed. The contracting party must arrange to fix any defects they’ve been told about in writing.
• The homeowner has new ways to take action when implied warranties in the Building Act have not been met.
• You can be fined if you don’t comply with the law.

Who is considered a contractor?

A ‘contractor’ is any person or business contracted directly by the client to do residential building work (the construction, alteration, demolition or removal of a building), whether they are doing all or part of this work.

What is considered building work?

‘Building work’ covers many different trades and is any work for, or in connection with, the construction, alteration, demolition or removal of a residential building. Note that ‘buildings’ include structures that are not occupied by people, such as fences and retaining walls.

Remember, all building work must comply with the Building Code, even if the work does not require a building consent. Check out updated guidance on work that does not require a consent at www.mbie.govt.nz.

Changes to the Building Act and supporting regulations

The consumer protection measures are included in a new part of the Building Act 2004 (Part 4A) which comes into force on 1 January 2015.

Other changes came into effect in November 2013, including an updated list of work on homes and outbuildings that do not require a building consent (in Schedule 1 of the Building Act). More low-risk work has been exempted, but there are limits on who can do some potentially higher-risk work; for example, certain plumbing and drainlaying work can be done without a consent but only by authorised people (as defined in the Plumbers, Gasfitters and Drainlayers Act 2006).

NOTE: These changes relate to residential building work only.