The Building Amendment Bill (“the Bill”) was introduced to Parliament on 29 June 2026 and passed its first reading on 2 July 2026.
The Bill proposes some significant changes to the Building Act 2004 (“the Building Act”) and reflects a wider government effort to address longstanding industry challenges in New Zealand’s construction and building sector, including high costs, delays in delivering work and unclear liability arrangements.
While the Bill has only passed its first reading, the select committee is due to report by 30 December 2026. If passed, the changes could come in effect in early 2027.
What are the proposed changes?
The Bill proposes a range of amendments to the Building Act that reshape how liability is allocated, how consumers are protected, and how key regulatory processes operate.
Proportionate liability
Perhaps the most significant change, is the introduction of a new proportionate liability model for defective building project work. Under this model, each defendant is liable only for the share of loss attributable to their own conduct.
The move to proportionate liability would mark a major shift from the current joint and several liability model in New Zealand. At present, a claimant can recover the full loss from any defendant responsible for the defective work, regardless of that defendant’s share of fault.
In practice, joint and several liability can result in the cost of defective work falling on those with the financial means to pay, rather than those most responsible. As a result, councils (and subsequently their ratepayers) as well as insured professionals, have often borne a disproportionate share of that burden. The shift to proportionate liability is intended to redress that imbalance.
The proposed shift would align New Zealand more closely with Australia, where proportionate liability has operated in the construction industry for more than three decades.
How does proportionate liability reconcile with adjudication?
The Bill leaves open important questions about the relationship between proportionate liability and the adjudication framework under the Construction Contracts Act 2002. At this stage, it remains unclear how any inconsistencies between the two regimes will be addressed.
Adjudication is typically a two-party process between parties to a construction contract. By contrast, determining liability on a proportionate basis generally requires consideration of all parties responsible for the loss, including those who are not party to the adjudication or the relevant contract.
This raises questions about how adjudicators will manage these practical difficulties, particularly when dealing with absent concurrent wrongdoers (a concurrent wrongdoer is one of two or more parties whose acts or omissions, whether independently or jointly, caused the loss or damage claimed).
The Bill makes it clear that, for the purposes of proportionate liability, it does not matter that a concurrent wrongdoer is insolvent, is being wound up, or has ceased to exist or died – they may still be considered in the liability assessment.
In court proceedings, the Bill provides for costs to be awarded against a defendant who fails to identify other concurrent wrongdoers. It remains unclear whether, or how, a similar approach would apply in adjudication.
Can you contract out of proportionate liability?
For residential building work on standalone houses and small-to-medium apartment buildings (that is, residential-only buildings under 10 metres in height), the Bill prohibits contractual terms that exclude or limit a party’s liability.
In other words, parties to those projects cannot contract out of the proposed proportionate liability regime. Any attempt to limit or exclude liability for defective building work will be ineffective, regardless of what the contract provides.
The position is different for commercial projects and larger residential developments. For those projects, parties will generally retain freedom of contract.
Home Warranties and Professional Indemnity Insurance
In an effort to balance the shift towards proportionate liability (which would likely make it harder for claimants to recover loss), the Bill introduces new consumer protection measures, including new requirements for home warranties and professional indemnity insurance.
Home warranties will be required for new residential buildings up to three storeys, and for residential building work valued at $100,000 or more. These warranties must cover (at minimum) a one-year defect period and a 10-year structural warranty period.
Design professionals (architects, engineers, surveyors etc.) who contribute to building projects valued at over $100,000 will also be required to hold professional indemnity insurance.
The Bill creates new penalties for non-compliance with these new insurance obligations, with proposed fines of up to $50,000 for individuals and $150,000 for body corporate for non-compliance with the new warranty provisions.
Change for Territorial Authorities
The Bill removes the requirement for Territorial Authorities (“TAs”) to maintain Building Consent Authority (“BCA”) accreditation or registration, if a TA transfers its consenting functions to another BCA. Further, certain consent-related functions can be delegated from a TA to a stand-alone BCA (provided it is a council-controlled organisation).
This likely means more flexible, and potentially more efficient, consenting pathways, which may help reduce delays and create greater consistency in how building consent applications are processed.
Fast-track BCA consenting for eligible residential buildings
The Bill introduces a new fast-track building consent pathway for eligible residential buildings of up to three storeys with solar electricity generation or other specified sustainable features.
BCAs are required to process these applications within 10 working days, a significant reduction from the current standard 20 working day timeframe.This fast-tracks process aims to support a more efficient consenting process that encourages sustainable residential developments.
Off-site construction of granny flats
The recent Building and Construction (Small Stand-alone Dwellings) Amendment Act 2025 amended the Building Act to allow certain small stand-alone dwellings (under 70m²) to be built without a building consent, provided specified conditions are met, including obtaining a project information memorandum (“PIM”).
The Bill builds on these changes by allowing off-site construction of these dwellings to begin before a PIM is obtained, provided certain conditions are met. This is intended to improve construction efficiency and reduce delays.
When these changes will come into effect:
| When? | What |
| 1 day after Royal assent | Changes applicable to BCA’s, sustainable buildings and solar buildings come into force. |
| 1 month after Royal assent | Changes for BCA and eligible residential buildings. |
| 3 months after Royal assent | Rules for registering home warranty providers with MBIE take effect. |
| 1 year after Royal assent | Changes to proportionate liability.New requirements for professional indemnity insurance.New home warranty requirements. |
| 1 April 2027 | New levy rules come into force. |
Concluding comments
The Bill has now been referred to the select committee for consideration. If enacted, it would represent the most significant overhaul to New Zealand’s construction and building sector since the introduction of the Building Act in 2004.
While the proposed changes are wide-ranging, the introduction of proportionate liability is likely to have the greatest impact on participants across the construction sector. Given the proportionate liability regime introduced under the Bill is heavily informed by Australian legislation, Australian case law may provide valuable guidance in understanding how these reforms could develop in New Zealand.
Looking ahead, businesses operating in the construction sector should consider reviewing their contractual arrangements, insurance cover, risk allocation provisions and project delivery structures to ensure they are well positioned for the proposed changes.
If you would like to discuss how the proposed reforms may affect your business, please contact Jaesen Sumner.
Frequently asked questions
The Bill was introduced on 29 June 2026 and passed its first reading on 2 July 2026. The select committee is due to report by 30 December 2026, and if passed, changes could come into effect from early 2027 – with different provisions phased in from 1 day, 1 month, 3 months and 1 year after Royal assent (see the effective dates table above).
Under the Bill’s proposed proportionate liability model, each defendant is liable only for the share of loss attributable to their own conduct. This replaces the current joint and several liability model, under which a claimant can recover the full loss from any defendant responsible for defective work, regardless of that defendant’s share of fault.
No, not in all cases – for residential building work on standalone houses and small-to-medium apartment buildings under 10 metres in height, the Bill prohibits contractual terms that exclude or limit liability. However, for commercial projects and larger residential developments, parties generally retain freedom of contract, meaning they can usually agree to limit or exclude proportionate liability.
Yes, but only for projects over $100,000. Design professionals – architects, engineers, surveyors and others – who contribute to building projects valued at over $100,000 will be required to hold professional indemnity insurance under the Bill.
The Bill proposes fines of up to $50,000 for individuals and $150,000 for body corporates for non-compliance with the new home warranty provisions.
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