Kerre Woodham: Can you have confidence in buying a new build with partial liability?

Two stories in the Herald today - one about the announcement from Christopher Luxon and Chris Penk yesterday, changing the building liability settings so ratepayers aren't burdened with picking up the tab that shonky developers, builders, or architects are responsible for. In the Herald story, they cite a case in Queenstown: the Oaks Shores body corporate filed a $160 million claim for weather type defects. The developer had been placed into voluntary liquidation and was not sued, so that meant every ratepayer in the Queenstown District was liable for the bill. If the case hadn't been settled privately, ratepayers could have faced rates increases of $300 a year for 30 years. I hate to think of what it's cost the Auckland Council when it comes to remediation of weather type defects, and it's still going on.  

Under the new rules, described as the biggest change to the building consent regime since it came into force in 2004, there'll be partial liability amongst the various parties involved in the development. At the moment, not only is it the cost, but councils have become increasingly risk averse because they don't want to sign off building consents and inspections if it means that they are liable if anything goes wrong and then ratepayers will have to pay.  

There's a real blockage in the system, Chris Penk says, and by having everybody share in the liability then that will help (they hope) clear blockages in the current system. Currently building owners can claim full compensation from any responsible party if there's something wrong with the home. If one of the parties can't pay because they've gone into voluntary liquidation, you can go to the other two, and usually that's the Council – deepest pockets, no option to walk away. The government's going to scrap the current framework and replace it with proportionate liability. Under this new model each party will only be responsible for the share of the work they carried out, which is great for ratepayers, great for councils, great for builders. Is it great for the homeowner? I wouldn't have thought so – you can only get the money back if the company is still there to sue. And if they've gone bust and if the Council's only liable for its bit, then you're not going to ever get anywhere near what you paid for a shonky building.  

This comes into the spotlight because we're looking at intensification and higher density of houses, which means throwing up more houses quickly. Chris Bishop, the RMA Reform Minister, has already told councils in our larger cities that they can opt out of the medium density residential standards that were introduced by the last government, that allowed for three storey developments on almost every residential property. But you can only abandon that if you adopt new planning rules to allow for an equivalent number of homes.  

In Auckland, that will mean the Council has to come up with two million homes over the coming decades. And how are they going to do that? Well, they've decided that they will build them along the transport lines, which makes sense. The suburb of Kingsland, for example, will see the removal of around 70 to 80% of the special character designation that preserves the cottages and villas, and 15 story apartment buildings will be thrown up in their instead because the suburb is close to the station on the Western line. Ten storey and 15 storey developments will be allowed within a 10 minute walk of some train stations, rapid bus stations, the edge of town centres. In Auckland, there's 44 walkable catchments. Height limits will be raised to six stories along more major transport corridors. And 12,000 properties will be down zoned, meaning it'll be harder to put new developments on them, or they won't be permitted at all because of natural hazards like flooding. If adopted, the plan will be open for public submission —this is specifically for Auckland— before the Council makes a final decision later this year.  

Auckland councillor Christine Fletcher is one who is vocal in her opposition to the density requirements, concerned that if it's not done well, it will give intensification a bad name. And when you look at some of the horrors that have been constructed around Auckland, you can understand why there would be concern. Bad enough to have a 15 story apartment building next to your bungalow bathed in all day sun, but if it's just in a constant state of remediation and fixing and disrepair and people having to abandon their apartments because it hasn't been done right and can't be fixed, it'll be even worse.  

It does have to be done right. There are areas of extreme ugliness, hideous apartments, townhouses jammed together with very little in the way of green spaces, no public transport nearby, few amenities. But then you have developments like Stonefields and Hobsonville Point in Auckland, which I would argue have been done very well. You might be able to point to parts of Hamilton and Napier where there has been intensification of housing. Outside of Christchurch, farmland has become residential in its nature, with developments there.  

Those that are done well are done very well. Those that are done poorly are just a blight on the landscape and a burden around the neck of anyone who buys them. How on earth are you going to have any confidence in buying a new build when partial liability is being introduced? When you can't get back what you spend because each party is only responsible for their little bit and so many of them will be able to do a flit? 

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