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Speaker 1: Local councils set to save some cashes the government scraps

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Speaker 1: building consent rules. Building Minister Chris Penk says councils are

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Speaker 1: reluctant to grant building consents because they're the ones responsible

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Speaker 1: to pay the building owner if a construction company goes

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Speaker 1: bally up. Now each party is liable for only the

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Speaker 1: work that they were responsible for. That's the change they're

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Speaker 1: pushing for. It's proportional. Malcolm Fleming, Certified Builders CEO, with

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Speaker 1: me this morning.

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Speaker 2: Malcolm, good morning, Good morning Ryan.

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Speaker 1: So what proportional builders do you recon currently don't have

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Speaker 1: aren't covered by a warranty like an industry backed warranty,

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Speaker 1: or have insurance.

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Speaker 2: So if we look at the minister's announcement, it talks

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Speaker 2: about exploring two things professional and deemnly insurance cover and

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Speaker 2: home warranties. Now, professional insurance and demnly insurance is covered

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Speaker 2: by what is available to the architects, the quality surveyor

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Speaker 2: as the engineers, etc. That's already in the market. The

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Speaker 2: piece that he's looking at is home warranties and that

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Speaker 2: is provided by a portion of the market. And also

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Speaker 2: insurance is a guess probably about sixty percent of the

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Speaker 2: market is.

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Speaker 1: Covered by it, right, So for the other forty percent,

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Speaker 1: if something you know of my wall caves in, what happens.

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Speaker 2: For those who are not covered by it? They are

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Speaker 2: left to the homeowners, therefore dealing the builder if they're around,

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Speaker 2: getting them back to fix it. If they're not around,

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Speaker 2: they got a longer term problem.

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Speaker 1: So this is looking to go to proportional. So whoever

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Speaker 1: did it badly pays for it their share of that?

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Speaker 1: Is that a good correctly?

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Speaker 2: Yes? At the moment, we've got joint and several so

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Speaker 2: everybody's bound together to take one hundred percent of the

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Speaker 2: loss in the case of an issue arising on a

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Speaker 2: building project. So if, for example, when a claim comes forward,

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Speaker 2: if one of the player is not there, and it

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Speaker 2: could be the architect, it could be the builder, the

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Speaker 2: rest of those including the council, needs to altogether to

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Speaker 2: cover that's part of the claim where the builder, the architect,

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Speaker 2: whomever is not there. What this talks about is making

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Speaker 2: it very clear that the assessed proportion which is liable

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Speaker 2: to each party, is attribute to each party. It must

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Speaker 2: be met beage party. The piece that's been missing over

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Speaker 2: the decades that this has been running is the building

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Speaker 2: warranty insurance builders currently professional and mty insurance which covers

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Speaker 2: all their projects. So a build consumer product like a

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Speaker 2: guarantee which applies to the house is the best way forward.

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Speaker 2: And the good news is that there's those products here

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Speaker 2: in the market. There is the Association Backed to Guarantees

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Speaker 2: NGCB New Zealand CIFY builders had to guarantee, and the

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Speaker 2: Master Bill Guarantee for the Master builders. And there's also

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Speaker 2: an insurance product out there as well for building warranty

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Speaker 2: insurance Malcolm.

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Speaker 1: The Aussies went proportional in the nineties and they mandated

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Speaker 1: these warranties that you're talking about. If we mandated them here,

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Speaker 1: would that mean we're going to pay more for our

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Speaker 1: building work, our housing.

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Speaker 2: So they mandated in Australia and that's the key. The

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Speaker 2: insurance must be mandated. It will be a cost that

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Speaker 2: gets passed on for homeowner. To give some context around that,

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Speaker 2: say for a five hundred thousand dollars renovation, which is

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Speaker 2: pretty standard these days, the cost of a guarantee product

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Speaker 2: is in the order of fifteen hundred dollars. If you

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Speaker 2: don't mandate it, it won't be picked up and there

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Speaker 2: won't be any cover there for the homeowner in case

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Speaker 2: things go wrong.

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Speaker 1: Roger Malcolm got that. Thank you. Malcolm Fleming, Certified Builders

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Speaker 1: Chief Executive. For more from Early Edition with Ryan Bridge,

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