Home warranties will soon be mandatory in New Zealand for many construction projects, and professional indemnity cover will be required for experts contributing to building design. 

The home warranty rule applies to new residential buildings up to three storeys and renovations costing more than $NZ100,000 ($86,823). They will cover a one-year defect period and a 10-year structural warranty.  

Building and Construction Minister Chris Penk says “a few cowboys” can damage the industry’s reputation, and penalties are long overdue an update.

“Strengthening them supports skilled professionals by holding to account those who cut corners,” he said.  

“I am announcing measures that support [the] shift in the consent system and ensure those involved in the building process, including homeowners, remain protected.”  

The move follows the announcement in August of building reforms that include adopting proportionate liability.  

Mr Penk says scrapping the current joint and several liability model for building defects will make councils more confident to approve building projects.

“Each party will only be accountable for the work they undertook. This will speed up consenting and ease the burden on ratepayers unfairly footing the bill for damages.”

Legislation is expected to be introduced early next year. There will then be a one-year implementation period before proportionate liability and the warranty and PI requirements take effect.

Penalties for licensed building practitioners will be doubled to $20,000 and the maximum suspension raised to 24 months.

All home warranty providers must register with the Ministry of Business, Innovation and Employment and meet regulatory requirements. Warranties can be guarantee-based or insurance-based.