In the last few months, a raft of initiatives have been announced and in late May 2025 the first private building consent authority, Building Consent Approvals (BCA), was launched. Its director stated that BCA would initially target low hanging fruit in focussing on low-risk residential bulk house builders, with building consents issued within 10 workings days, 30% of inspection undertaken remotely, and code compliance certificates issued within 2 working days.¹

Is history repeating?

Clearly something needs to happen in terms of the costs and delays in consenting building work, the Auditor-General last year finding just 3 of the 67 councils meeting the statutory 20 working days to process consents.² Also the level of failed inspections is still unacceptably high, notwithstanding the introduction of the licensed building practitioners regime.³ But are we not repeating history by devolving the statutory powers under the Building Act 2004 of consenting, inspections and code compliance certification to private entities? And that history was within the last 30 years: the leaky building crisis.

That crisis was described by the Supreme Court as leading “to substantial litigation on an unprecedented scale.”, with, sadly, the only ‘winners’ being lawyers and experts. This passage is taken from the Supreme Court’s decision in McNamara v Auckland City Council [2012] NZSC 34. That case involved the homeowners of an expensive monolithic clad leaky home in Remuera, Auckland, pursuing the council for it accepting from a private certifier a ‘defective’ code compliance certificate.⁴ Under the then Act (Building Act 1991) private certifiers were permitted to perform the functions of council in approving the issuing of building consents, performing inspections and approving the issuing of the code compliance certificate. Those private certifiers were vetted by the Building Industry Authority (BIA), who also dealt with any complaints. The BIA could limit the private certifier’s powers by excluding certain elements of the Building Code, and ultimately withdrawing approval altogether. The BIA had to maintain a register of all private certifiers. Applicants had to provide evidence they had insurance in a scheme, approved by the BIA, indemnifying them against any insurable civil liability arising out of its role as a private certifier.

The election whether to go through the council or engage a private certifier was the owners. They paid the private certifier, and not the council, for those services. In doing so the council was absolved of responsibility. The Act both mandated the council to accept what the private certifier provided, and protected it from civil action. If, as in McNamara, the private certifier was negligent, and insolvent by the time the costs of remedying the defects were incurred, owners were left to fend for themselves. In the same year the Supreme Court also considered the BIA’s liability to councils and homeowners in performing its duties. The Supreme Court in North Shore City Council v A-G [2012] NZSC 49 held that the BIA did not owe the claimed duties of care.

While the devil will be in the statutory detail, the trifecta of private building consent companies, self-certification by builders and remote inspections does not bode well.  Human nature is always looking for the cheaper and quicker option. But the risks of the trifecta are enormous. Back in 2002 the Hunn Report painted a stark picture of the extent of the crisis, with PWC estimating in 2005 the costs to be $1 billion and by 2009 estimating $11.3 billion⁵, while other commentators had suggested double this figure. With rampant cost escalation in building materials and labour over the last five years, let alone since 2009, imagine the costs of a new building crisis dragging into the 2030’s.

Remote inspections and self-certification

If the regulatory costs and delays to building in New Zealand can be fixed by turning to technology and the private sector, why can they not be fixed by adopting those initiatives within the council regime?  Remote inspections are already being adopted by councils, and not only those with a large geographical area and a low population density. Auckland Council was already using remote inspection technology immediately prior to the Covid 19 lockdowns and was able to perform some 400 technology assisted remote inspections during the first Level 4 lockdown.⁶ This technology is now being widely adopted.

But what of builders self-certifying? Self-certification has worked for many decades for electrical and gasfitting work. The Government has announced that the self-certification scheme would be available to trusted builders, plumbers and drainlayers on an opt-in basis. For builders, the scheme would be targeted at reputable building companies delivering large numbers of near-identical houses each year. Similarly with plumbers and drainlayers, they could certify their own work when performed on “simple residential dwellings”.

Profit over independence

The fact is the only party in the building life cycle that is not driven by profit is the council. All other parties are driven by the need to generate profit. Homeowners do not escape criticism as they are looking for the cheapest build cost. Councils have no financial ‘skin in the game’, other than covering their costs. Their role is purely regulatory. They are the first and last independent voice in ensuring compliance with the Building Code. You might be thinking, and how did that pan out during the early 2000’s? I agree, not well. But as the Hunn Report identified, this was not due solely to council’s regulatory failings, far from it, but due to a multitude of factors leading to systemic failings in the entire system.

Mention has been made by several commentators⁷ of this initiative introducing competition. But competition for what? Councils do not actively market their services in the sense of a business model that generates profit. They are mandated by statute to perform that regulatory role. It is not competition that is being welcomed, but solving the inability of councils to find enough building inspectors, and reducing their liability as last-standing deepest-pocket defendants in court. While the short-term savings in cost and time may be achieved, though this remains untested, this will be a small byproduct of the real driver for the approval of private consenting companies – reducing costs and liability to councils.

And the trifecta has all the hallmarks of repeating history. Yes builders (licensed building practitioners) can be censured and even have their licenses cancelled, and private consenting companies can face loss of approval by MBIE. But who will bear the costs to remedy all the defects? Not the council if the owner chooses to use the private consenting company. Will that consenting company and/or the builder be around? As many homeowners found to their dismay during the leaky building crisis (as did the McNamara’s) private certifiers and builders were no longer around, having been placed in receivership and/or liquidation. The owners will bear the financial loss.

It could succeed if…

So, what is the answer? The changes announced by the Government are clearly needed and remote inspections are already being widely utilised by councils. To be successful, self-certification needs to follow the model for electricians and gasfitters – structured education and training, practical and technical examinations, ongoing training and license renewals. As for private consenting companies, a step change is required in the oversight of their processes and responsibility to all affected. And if they get it wrong is MBIE going to be the financial backstop (the BIA was not under the old Act)? Highly unlikely and especially given the statutory protection in section 390(2) of the Act. Further debate is needed on a Government backed mandatory insurance scheme as such a scheme cannot be left to the private sector. Even private insurers can fail, as did HIH in 2001 in Australia leaving thousands of builders without insurance cover (which was mandatory in most states and territories). Almost $2 billion of construction activity was placed on hold while builders sought replacement, and more expensive, cover.⁸

Change is good and anything to streamline the building process is welcomed. But independence and accountability need to be ensured and not be diluted by the need to be profitable. The trifecta should not be allowed to be the next building crisis.

1. Government launches new private building consent authority”, RNZ News, 3:41 pm on 28 May 2025 https://www.rnz.co.nz
2. https://oag.parliament.nz. These figures account for the available statutory pause in the 20 working days, allowed under section 48(2) of the Building Act 2004. The announcement by the Minster for Building and Construction, Chris Penk, on 5 June 2025 as to improved figures presumably looks at the 20 working days without acknowledging the pause periods.
3. See for example the LinkedIn posts of Jeff Fahrensohn, building inspector manager, Auckland Council.
4. Defective in the sense the private certifier did not have approval from BIA to issue the CCC for the E2 works performed.
5. Department of Building and Housing Weathertightness – Estimating the Cost”, 29 July 2009, PricewaterhouseCoopers.
6. https://www.building.govt.nz, https://ourauckland.aucklandcouncil.govt.nz
7. Most recently, Nick Hill, CEO of the Building Officials Institute of New Zealand, Maria Slade. Property editor, Business Desk, 4 June 2025.
8. https://treasury.gov.au