However, the Government\u2019s solution is a bit of a gamble. <\/p>\n
It wants to amend the Building Act so that liability for a defective build is split between those responsible. <\/p>\n
Sure, this is only fair. <\/p>\n
But let\u2019s say you have a problem with your home. How do you know how much blame to apportion to your architect, versus the engineer, builder and local council?<\/p>\n
You may need to go through a costly legal process just to decide who\u2019s responsible for what.<\/p>\n
Problem No 2 is the kicker. Your architect and engineer will have professional indemnity insurance to cover at least part of your claim that falls on them. <\/p>\n
But your builder won\u2019t necessarily. <\/p>\n
So, the Government wants to require either your builder to take out insurance for defects, or you to buy a warranty on the building work. <\/p>\n
This way, you can be sure you will get something back for the part of the problem your builder is responsible for. <\/p>\n
The trouble is, the Government can\u2019t force insurers and warranty providers to provide this cover.<\/p>\n
Critics say it is wishful thinking for the Government to assume these players will rush into the market<\/a> and provide cover, when historically they have been hesitant to do so because of the New Zealand market being small and risky.<\/p>\n Builders that are part of big building companies<\/a> and industry associations will be fine. But this only makes up a part of the market, with about 46% of new builds understood to have warranties attached.<\/p>\n You could argue that pushing builders to get accreditation from the likes of Master Builders and Certified Builders, so they can offer their customers warranties provided by these groups, is a good thing.<\/p>\n This would require builders to lift their games. Equally, they will need to be rock solid to get insurance from the only specialist insurer currently in the market, Stamford Insurance. <\/p>\n But is this realistic? <\/p>\n Stamford Insurance and the industry group that represents smaller builders, Combined Building Supplies (CBS) Co-operative, don\u2019t believe it is.<\/p>\n If builders can\u2019t get their work to come under warranty or insurance \u2013 as will be required \u2013 they will up sticks and leave. <\/p>\n A shortage of builders will only increase the cost of housing. <\/p>\n There are other issues.<\/p>\n Lawyers are worried about the robustness of warranties<\/a>. If new warranty providers and insurers don\u2019t enter New Zealand, the market would be concentrated, putting upward pressure on price. Warranty providers are also self-funded, so aren\u2019t backed by reinsurers. <\/p>\n You may be thinking this is a bit of a negative, worst-case-scenario view.<\/p>\n But the Government also recognises the risk of insufficient insurance\/warranties is real. So, it wants to legislate to give itself the power to pause<\/a> making insurance\/warranties mandatory for up to four years. <\/p>\n This would leave owners of homes built in this period completely exposed. <\/p>\n And we haven\u2019t even started talking about the risky end of the market: apartments and homes four storeys or higher.<\/p>\n Insurance or warranties won\u2019t be mandatory on these builds. <\/p>\n So, if you buy a new apartment, find a leak a few years later and fail to pursue the builder because they\u2019ve gone bust, you sit with the problem. <\/p>\n Under the existing law, you would be able to pursue other parties involved. <\/p>\n