Source:Auckland Council Chief Economist's Office
Mandatory building warranties: Putting risk where it belongs
Auckland Council has paid out $600 million in leaky building claims because New Zealand’s current legislation does not align risk and responsibility for building work.
The current liability framework forces councils to regulate and monitor as much as they can in an attempt to reduce risk.
Auckland is now building more homes than at any time since the leaky homes era. There is evidence of poor quality work and shortcuts, creating risk of similarly large liabilities arising, despite council’s efforts at monitoring building activity.
The best way to resolve this is through a legislative switch to proportional liability, and a mandatory builders’ warranty scheme.
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