The Government wants to move to proportionate liability where each party only ever pays their share. (Source: 1News)<\/p>\n
\u201cMore misery for homeowners.\u201d That\u2019s the stark warning from building insurance expert Duncan Colebrook as the government pushes ahead with its shake up of the building industry. <\/p>\n
The goals sound positive: speed up building consents, and stop councils \u2013 and ratepayers \u2013 from footing huge bills, as seen during the leaky homes crisis. But critics say the way ministers plan to get there could backfire badly. <\/p>\n
![\"Duncan](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/duncan-colebrook-EEDFQNCNUNDZTN7MF6DGQXVDE4.jpg\")
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Duncan Colebrook (Source: 1News)<\/p>\n
One of those critics is Duncan Colebrook. He\u2019s the Director of Stamford Insurance, New Zealand\u2019s only insurance-backed builder\u2019s guarantee. He\u2019s been involved in discussions with successive governments about these changes and, in his view, the latest proposals spell disaster. <\/p>\n
He\u2019s particularly worried about plans for remote inspections and to allow \u201ctrusted\u201d builders to sign off their own work. He says it risks undoing hard-won gains. \u201cThe victories of the past 20 years have been the improved training of inspectors and the stricter consent process. And I think it would be foolish to throw that away.\u201d <\/p>\n
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Prime minister Chris Luxon announced the changes saying, “We are determined to get the building and construction sector firing on all cylinders and that requires bold change.” (Source: istock.com)<\/p>\n
And who exactly counts as a \u201ctrusted\u201d builder? Homeowner advocate John Gray points to the case of John MacDonald, a former Master Builders national president, ordered to pay hundreds of thousands in costs this year after using clients\u2019 money to invest elsewhere and delaying court proceedings. \u201cIt’s a cesspit. I know there are some really good builders out there, but these scumbags drag them down\u201d. <\/p>\n
They drag families down too. As reporters on Fair Go, time and again, we saw the impact of builds that went wrong. Families left with huge costs, houses that couldn\u2019t be sold, builders vanishing or simply refusing to pay. <\/p>\n
![\"Gill](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/gill-higgins-reporting-for-fair-go-with-dunedin-homebuilders-SBDD2F26ONEJ5HRR6HN2VZXU3Q.jpg\")
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Gill Higgins, reporting for Fair Go, with distraught Dunedin home owners whose home needed an almost total rebuild. (Source: 1News)<\/p>\n
Gray says that even with proof of fault, \u201cthe only way to get justice is for homeowners to spend money they don\u2019t have. And these companies know that.\u201d <\/p>\n
But the government reforms affect more than just how inspections are carried out. <\/p>\n
The Building and Construction Minister Chris Penk wants to change who should pay for faulty work saying, \u201cit\u2019s time to put responsibility where it belongs\u201d. <\/p>\n
![\"Building](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/building-and-construction-minister-chris-penk-SYMMBMJ3GZDXXP2SN7UC2LUMKI.png\")
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Building and Construction Minister Chris Penk (Source: rnz.co.nz)<\/p>\n
The proposal is to shift from the current liability model where the financial burden can rest with just one of the parties at fault, if the others have gone into liquidation or disappeared. In practise, this leaves councils at risk as it\u2019s builders and developers who may be insolvent. <\/p>\n
To avoid this, the government wants to move to proportionate liability where each party only ever pays their share. The idea is to create more personal responsibility. <\/p>\n
![\"A](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/crying-home-builder-RFLWXUBUZFBZ7CNNGMONEQV4UU.jpg\")
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A homeowner who was left out of pocket by $500,000 when her builder went into liquidation cries on her daughter’s shoulder. (Source: Fair Go)<\/p>\n
Better homeowner protection needed<\/p>\n
Research provided to the Ministry of Business, Innovation and Employment (MBIE) showed that between 2008-2018 an estimated $332 million was paid by councils and other consenting authorities for the costs of defects incurred by other insolvent parties. <\/p>\n
But for context, these consenting authorities also paid $668 million during this period for defects incurred by their own faulty inspections, while receiving $75 billion for work issuing building consents. <\/p>\n
In contrast, spare a thought for the blameless homeowners who were estimated during this period to be out of pocket by $458 million. <\/p>\n
Does Australia hold the solution?<\/p>\n
Chris Penk acknowledges better homeowner protection is needed. He says the solution is to \u201ccopy Australia\u201d, where warranty schemes fill the gap. <\/p>\n
![\"Building](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/building-and-construction-minister-chris-penk-MDEDRA3KTFHNFGWIRVD2FVZ56M.jpg\")
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Building and Construction Minister Chris Penk (Source: 1News)<\/p>\n
But critics say that\u2019s little comfort: in most Australian states, payouts only apply if a builder dies or disappears and, even then, they\u2019re capped, mostly at AU$200,000 to 300,000. Colebrook gives an example from New South Wales, \u201cThe cap on policies there is AU$360,000. That goes nowhere if you’ve built a house for $1.5 million.\u201d<\/p>\n
What\u2019s more, the rising number of claims in Australia has driven some insurers out of the market entirely. <\/p>\n
![\"A](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/09\/australian-apartment-advocate-samantha-reece-ECENS4DFJZCTZK3MDGZ2HHNKXY.jpg\")
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A better system? Australian apartment advocate Samantha Reece, talking on ABC, says she receives calls from people who feel let down by both their builder and the government “on a daily basis”. (Source: 1News)<\/p>\n
After consideration of all these factors, the Law Commission and a previous National government warned against such a move back in 2014. Colebrook too remains unconvinced. <\/p>\n
\u201cThe proportionate liability system just doesn\u2019t work. It would make it almost impossible for homeowners to bring a successful action.\u201d <\/p>\n
However, Penk says he has the backing of many in the industry and that the research provided to MBIE in the past few years supports a shift. <\/p>\n
In Gray\u2019s view it could work, but only if insurance or guarantees are compulsory, the insurance kicks in even if the builder is solvent, and payment caps are high enough to cover the costs of rebuilding. <\/p>\n
The government has yet to decide on the details but insists its proposed changes are sorely needed to get the construction industry back on its feet. <\/p>\n