The Building Amendment Bill (Bill) was introduced to Parliament on 29 June 2026¹ and is set to deliver significant reforms to the New Zealand building industry.

The Bill’s most significant change is a fundamental shift in New Zealand’s liability settings for the building and construction sector, to proportionate liability.

Liability in the sector currently operates under a joint and several liability model in which claimants can recover the full cost of defective building work from any one liable party, regardless of that party’s relative contribution to the defect. While liable parties can seek contribution from other parties, this mechanism breaks down when such parties are insolvent or absent. The remaining solvent party, often a building consent authority (BCA), ends up bearing a disproportionate share of liability, even if its relative responsibility for causing the loss was minor. A shift to proportionate liability aims to combat this by making each liable party responsible for only its respective proportion of the loss, irrespective of the solvency of other liable parties.

This change is intended to address current inefficiencies that drive up costs, delay delivery, and constrain performance, through the clearer allocation of roles, responsibilities, and risk.

What will proportionate liability look like?

The proposed proportionate liability regime:

• applies where multiple parties contribute to defective building project work and a claim is pursued through litigation, adjudication, or arbitration;
• treats multiple causes of action arising from the same defective work as a single apportionable claim, for example, claims in both contract and tort;
• requires each party to bear only the share of loss corresponding to their contribution to the defect;
• does not apply to disputes resolved by agreement, such as mediation or settlement (although exposure to claims will necessarily drive settlement discussions); and
• will apply to building project work for which a building consent was issued on or after the first anniversary of Royal Assent.

What is the practical effect of this change?

The shift to proportionate liability will have significant practical consequences for all parties involved in building and construction work, including the transfer of insolvency risk onto the consumer.

A homeowner pursuing a defective building claim will need to join every contributing party to proceedings to recover their total loss, or face under-recovery. This is not always possible or practical.

To counteract the re-allocation of risk and protect homeowners and consumers, the Bill introduces:

• mandatory residential home warranties for residential building work with a total value of $100,000 or more, if the work includes restricted building work and requires a building consent, that provide minimum coverage of at least 1 year for building work that is defective and 10 years for structural defects; and
• mandatory professional indemnity insurance for design professionals who contribute through advice or other services, to the design or compliance of building work.

Building and Construction Minister Chris Penk has said these measures strike the right balance while driving greater accountability across the sector.²

BCAs are likely to benefit the most from the change. The new regime limits their exposure to their actual contribution to the defect. The Government considers this will reduce perceived risk-averse behaviour that has driven delays and additional costs in the consenting process, as the financial consequences of consent decisions become more proportionate to the role BCAs play.

However, the change is also expected to:

• increase the risk of under-recovery where a liable party cannot meet its share of the loss;
• require parties to reconsider how risk is allocated and protected against in their contracts; and
• influence how claims are brought, including decisions about which parties to join to proceedings.

Our view

Joint and several liability undoubtedly creates a situation in which liable parties, including BCAs, can shoulder more than their fair share of the cost of remediating defective building work. The proposed change to the liability settings is a meaningful step in the right direction, and the Bill's mandatory home warranty and professional indemnity insurance requirements are a necessary response to address underlying concerns and the need for robust consumer protections.

While this is a positive response, it may not go far enough. Minimum warranty requirements for non-structural defects are only required to extend for one year. This raises concerns about latent defects, such as weathertightness issues, which may not become apparent within that period. In addition, the proposed home warranty requirements apply only to new houses and small to medium-sized apartment buildings. Consequently, large apartment complexes would not be subject to mandatory warranty coverage.

The detail that follows the introduction of the Bill (and associated regulations) will determine whether the reform achieves what it sets out to do.

What next?

The Bill is still at an early stage and has been referred to the Select Committee.

We will continue to monitor the Bill's progress through the Select Committee and will publish further guidance as the regulations are developed.

If you have any questions about how these changes may affect you, please get in touch with our team.

This article was co-authored by Matthew Gould, a Law Clerk in our Construction and Infrastructure team. 

Footnotes

¹ Building Amendment Bill | New Zealand Legislation

² Hon Chris Penk, "Landmark bill to improve the building system and boost growth" (media release, 2 July 2026) Beehive.