NZ Government announces plans to reform building consent system, impacting modular builders

Modular builders set to benefit from NZ building consent system overhaul.

The New Zealand Government has unveiled plans to reform the country’s building consent system, focusing on improving efficiency and consistency across the sector. New Zealand’s Building and Construction Minister Chris Penk highlighted that New Zealand’s housing market remains among the least affordable in the world, driven by high building costs and a complicated consent process.

Hon. Chris Penk, New Zealand’s Minister of Building and Construction.
Hon. Chris Penk, New Zealand’s Minister of Building and Construction presenting at OffsiteNZ’s COLAB24 conference.

At the core of the problem lies the fragmented building consent system, currently handled by 67 Building Consent Authorities (BCAs) with varying approaches. Minister Penk noted that this inconsistency creates challenges, particularly for modular builders, prefab builders, and other large-scale homebuilders who operate across different regions. He stated, “There are many instances of builders submitting the exact same plans to different BCAs and finding considerable additional costs and delays resulting from differing interpretations of the building code.”

This inefficiency is a significant obstacle for builders who rely on modular and prefabrication methods. The current system’s lack of consistency affects not only productivity but also cost predictability, making it difficult to scale up construction projects. A recent survey by the Master Builders Association revealed that 80 per cent of its members had to navigate multiple BCAs, while 66 per cent reported experiencing delays.

The Government’s reform plan offers three potential pathways to resolve these issues:

  1. Voluntary Consolidation: Councils would be encouraged to group together to handle building control functions. Although some councils already pool resources, barriers to full integration exist, and the Government aims to remove these obstacles.
  2. Regional BCAs: Replacing the existing 67 BCAs with fewer, larger regional authorities to drive consistency and economies of scale. This option would significantly benefit modular builders by reducing the variation in consent processes across different areas. 
  3. Single Point of Contact: A centralised system where builders submit their plans to a single entity, with building inspections contracted out to either BCAs or private providers. This would streamline the process and create competition, likely improving service quality and reducing costs.

Minister Penk commented that the current system is “not serving New Zealanders well” and that the proposed changes would incentivise innovation and productivity, especially in the modular building sector, which requires consistency across regions to operate effectively.

The reforms will also address liability within the building system. Under the existing framework, councils bear significant risk under joint and several liability rules. This can result in councils being held financially responsible when building defects arise, making them highly conservative in their approach, which contributes to delays. Minister Penk remarked that the Government is reviewing these settings to reduce the burden on councils and increase flexibility in the consenting process.

In addition to overhauling the BCA system, ongoing reforms are already in place to simplify the current consent process. These include removing consent requirements for building granny flats, increasing remote inspections, and eliminating barriers to using overseas building products.

Leonie Freeman, Chief Executive of Property Council NZ, welcomed the announcement, stating, “Our members are reporting building consent wait times stretching beyond two months, while resource consents are facing delays of six to 18 months depending on the scale of the project. This creates a level of uncertainty that drives up costs, slows progress, and ultimately puts home affordability further out of reach.” Freeman added that the Government’s commitment to addressing these issues is a positive step towards a more predictable and cost-effective development process.

The reform plan is now open for feedback, with the Government encouraging industry stakeholders to propose additional or hybrid options. As modular builders increasingly contribute to New Zealand’s housing market, these reforms are seen as crucial in removing existing barriers and improving overall efficiency in the construction sector.

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