Certified Builders introduces mandatory building guarantees

Certified Builders Association of New Zealand has gone one step further than recent law changes that enhanced consumer protections for building work, by introducing mandatory building guarantees. This move comes in advance of a decision by the Government about whether regulations on mandatory building guarantees are needed.

Certified Builders Chief Executive, Grant Florence, says, "Certified Builders isn’t waiting for the outcome of the Government’s review of this issue as part of the wider liability framework, because we believe mandatory building guarantees are in the best interests of both consumers and our members. The reality is the expectations of homeowners have changed significantly over the past few years and there is a need to drive greater accountability within the building industry.

"As a trade association, Certified Builders is focused on promoting best practice and setting a high standard of professionalism within the industry. We’ve moved to introduce mandatory guarantees because it’s the right thing to do, and because it will provide maximum peace of mind for homeowners and our member builders," said Mr Florence.

The Building Act reforms that came into effect in January 2015 included a requirement for there to be a written contract for residential building work over $30,000, as well as requirements around disclosure of guarantee products and warranties for defective work, but stopped short of introducing mandatory building guarantees.

"Under the current system, consumers may not fully understand the guarantee product they are purchasing or may even engage a builder without a guarantee, resulting in loss of cover.

"Given New Zealanders’ homes are often our single biggest investment, it is important that we provide security for homeowners so that if work is not completed to the highest standard, they can be confident that it will be remedied," said Mr Florence.

Exclusive to Certified Builders, the InBuild 10 year Residential Guarantee Insurance scheme is the widest home guarantee insurance cover currently available in New Zealand. It is underwritten by Lloyd’s of London and carries an "A+" rating from Standard and Poor’s. The scheme will apply to every new home build or home building alteration over $30,000 that is undertaken by a Certified Builder, and provides greater protection than other guarantee schemes. For example, cover extends to not only fixing any defects but also the damage caused by the defect.

The new scheme replaces Certified Builders’ former industry-leading voluntary guarantee scheme. Like the previous scheme, the InBuild 10 year Residential Guarantee Insurance scheme is run by an independent insurer, which ensures there is no potential conflict of interest in the management of guarantee claims as could be the case with an in-house scheme.

"While Certified Builders has already moved to introduce mandatory guarantees, we welcome the Government’s continued consideration of regulation of building guarantees.

"Mandatory guarantees should be standard practice for major building and renovation work as this would provide greater security for homeowners. When consumers have confidence in builders it’s good for the industry as whole," said Mr Florence.