Important reforms proposed for Building Act

Help is on its way for Building Act regulators.

Central Government is proposing sweeping reforms to the Building Act – the most significant since it was introduced in 2004.

MBIE has recognised the long-standing issues with the building regulatory system, many of which we have written about in Straight Up. It has started a consultation process that aims to raise the bar by:

  • significantly increasing financial penalties for Building Act offending;
  • differentiating between penalties for individuals and organisations; and
  • extending the timeframe for councils to bring charges from 6 to 12 months.

We encourage all our council clients to make a written submission in support of the proposals, here, by 5:00pm on Sunday 16 June 2019.

Deterrence through increased penalties and accountability

Deterring illegal building work is the biggest driver for prosecuting under the Building Act.  As we have said previously, not every case of non-compliance needs to be prosecuted.  It is always a balancing act.

To help councils, MBIE proposes to increase the maximum penalties for individuals and companies so they are fit for purpose and reflect the seriousness of the offence.  MBIE has created a “low-medium-high-very high” scale for Building Act offending and maximum fines will range from $25,000 to $1.5 million, depending on the seriousness of the situation and whether the offender is an individual or a company.

Distinguishing between individuals and organisations will incentivise compliance and will bring the Building Act in line with the Resource Management Act and other pieces of legislation.

More time to file charges

As we wrote in ‘If you snooze, you lose’, councils currently have 6 months to lay charges under the Building Act.  MBIE accepts that this is not always long enough, due to the complexity of some cases and the number of people involved.  In our experience, this narrow limitation period is one of the biggest barriers to prosecuting.

Fortunately, MBIE is proposing to extend the timeframe for a prosecution to 12 months.  This will give councils more time to complete their investigations and take appropriate advice on their enforcement strategy.

Impact on building sector and regulators

We are pleased to see MBIE taking action in this space, but it has been a long time coming.  With better statutory tools, it is our hope that local authorities will feel more comfortable in using their enforcement powers and in doing so may prevent – in some cases – significant legal and reputational consequences.

The reform is welcomed and the full discussion paper can be found here.

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