Building regulatory system

System description and objectives

The building regulatory system provides for the regulation of buildings, building work and various occupational groups in the building industry, and the setting of building performance standards.

Objectives

The building regulatory system seeks to achieve the following purposes, which are set out in the Building Act 2004:

• people who use buildings can do so safely and without endangering their health
• buildings have attributes that contribute appropriately to the health, physical independence, and well-being of the people who use them
• people who use a building can escape from the building if it is on fire, and
• buildings are sustainably designed, and constructed, and able to be used in ways that promote sustainable development.

The Act also describes the accountabilities of owners, designers, builders, and Building Consent Authorities – all of whom have responsibilities to ensure that building work complies with the Building Code, which is a key piece of regulation.

Building Act 2004(external link) — NZ Legislation website

Building Code(external link) — NZ Legislation website

In 2020, MBIE published the first iteration of the Building System Regulatory Strategy - Building for the Future. Building for the Future outlines MBIE's vision for the future of building regulation over the next 10 to 15 years and the actions MBIE needs to take to achieve that vision.

For more information and to track the building system’s progress against the Strategy, you can read about Building for the Future below.

Building System Regulatory Strategy

How the system works

Building work must meet certain requirements set out in legislation and regulations. These determine how work can be done, who can do it, and ensure that the system has adequate checks and consumer protection in place.

The requirements of the Building Act are performance-based, to allow development and innovation in building design, technology and systems. The Act applies mainly to the physical aspects of building work and establishes a framework for good decision-making, with checks and balances at each stage of the building or alteration process. The Act provides for:

• requirements relating to building work (the Building Code and building control)
• the functions of MBIE, Territorial Authorities, Building Consent Authorities (BCAs) and their accreditation
• licensing of building practitioners
• mandatory contracts and implied warranties for the benefit of consumers
• defined responsibilities for owners, designers, builders and manufacturers/suppliers
• guidance from the regulator.

A number of regulations provide detail for particular building controls. This includes the Building Code, which sets the minimum performance standards buildings must meet. It is set out in Schedule 1 of the Building Code.  Other controls set out in regulations include prescribed forms, a list of specified systems, definitions of 'change the use' and 'moderate earthquake', levies, fees and infringements.

Schedule 1 of the Building Code(external link) — NZ Legislation website

The Building Act works alongside other legislation affecting the building and construction sector, listed below in key statutes, and council bylaws.

Key statutes

Ministerial portfolio and key statutes

Regulatory agencies and their roles

MBIE is the lead policy advisor to government on the building regulatory system. It is responsible for advice on legislation and regulations, including the Building Code. The stewardship role requires MBIE to look across the system as a whole and provide advice on how to ensure the building regulatory system is high-performing.

MBIE is also the central regulator and manages the rules, procedures, and other key functions for regulating building work. It is responsible for:

• reviewing and maintaining the Building Code
• producing documents that show ways to comply with the Building Code
• monitoring the performance of Building Consent Authorities and Territorial Authorities in the building regulatory system
• investigating significant building failures where buildings failed to perform as expected and did, or could have, caused serious injury or death
• supporting the system under the Building Act for managing buildings affected by emergencies
• investigating complaints
• making determinations about disputes on certain building matters
• aspects of occupational regulation of some professions.

MBIE’s central regulator role is prescribed in section 11 of the Building Act.

Within MBIE the building regulatory system functions are located across two business groups – Building System Performance and Consumer Protection and Standards. This structure provides an appropriate separation between the strategy, policy and system design functions, and the operational compliance, assurance and dispute resolution functions. A memorandum of understanding (MOU) sets out the respective roles and responsibilities of the two groups and establishes governance arrangements.

A Building System Steering Group, comprised of the relevant general managers across both business groups, is responsible for strategic oversight of the building regulatory system, and the following outcomes:

• Achieving (and exceeding) the standards for the MBIE-wide objectives for regulatory stewardship
• Delivering confidence in the building regulatory system to the Minister, co-regulators, the sector and the public
• Applying an appropriate risk lens to functions across the system
• Performing its central regulator and stewardship roles with clear purpose, and with cooperation between participants for the benefit of the system as a whole.

Territorial Authorities and Building Consent Authorities (BCAs) are the frontline of the building regulatory system. They are co-regulators with MBIE, as they also perform regulatory functions, as outlined below.

The Building Act requires Territorial Authorities to keep records about all properties in their area, issue project information memoranda and certificates of acceptance, monitor compliance schedules and follow up notices to fix.

Territorial Authorities also have powers to address breaches of the Building Act. They can issue infringement notices or, in some circumstances, organise for remedial work to be done.

Territorial Authorities also have a role in managing buildings in their area after an emergency event.

Building Consent Authorities are responsible for:

• checking that applications for building consents comply with the Building Code and issuing buildings consents
• carrying out inspections to determine whether building work has been carried out in compliance with the consent and the Building Code, and issuing code compliance certificates certifying this
• issuing notices to fix, which require a person to remedy a breach of the Building Act or its regulations
• issuing compliance schedules, which set out maintenance and reporting procedures for specified building systems (such as cable cars or automatic sprinkler systems).

Most Territorial Authorities are BCAs. They may also contract these services out. Standards of performance are set out in the Building Act. BCAs’ performance against the standards is currently assessed by International Accreditation New Zealand (IANZ) on behalf of MBIE.

Collaboration and information-sharing between regulatory agencies

MBIE has a number of other regulatory functions that have relevance to compliance matters in the building system. MBIE has MoUs that document arrangements for sharing relevant information between regulatory functions when appropriate. The MoUs relevant to the building system relate to regulation of:

• Electrical Workers
• Licensed Building Practitioners
• Employment relations and employment standards, and
• Tenancy standards.

Regulated parties and main stakeholders

Regulated parties and main stakeholders include:

• Territorial Authorities (city and district councils) and Building Consent Authorities
• Professionals and tradespeople, including:
  • Licensed building practitioners
  • Electrical workers
  • Plumbers, gasfitters and drainlayers
  • Registered architects
  • Chartered professional engineers
  • Engineering associates
• Building owners.

Processes for engagement with regulated parties and stakeholders

MBIE is supported in its engagement with the building and construction sector by a building advisory panel (BAP), established under section 172 of the Building Act. The BAP provides independent specialist advice on current trends and issues affecting the building and construction sector. Under the BAP’s terms of reference, members meet quarterly with the purpose of:

• identifying emerging risks and opportunities to the performance of the sector, and advising on the regulatory response
• providing strategic advice on current and emerging trends in building design, building technologies and other factors that may affect the building and construction system
• providing leadership of the regulatory parts of the sector
• ensuring MBIE’s work programme and priorities create a regulatory environment that supports, and drives innovation in, the sector
• providing a channel for constructive dialogue between MBIE and the sector, and identifying critical stakeholders for engagement on specific initiatives.

BAP advice is complemented by other formal and informal ongoing collaborations with sector representatives and regulated parties; for example:

• Building Code Technical Risk Advisory Group (BCTRAG): sector representatives meet at least twice a year to provide advice on technical risks and opportunities in the Building Code to inform the technical work programme and strategic direction.
• Partnership with Engineering NZ: we collaborate with Engineering NZ to access technical expertise and develop strong relationships.
• Participation at Building Consent Authority and Licensing Board fora
• Regular stakeholder interactions to support user-centric design and best-practice consultation processes.

A Construction Sector Accord was launched in April 2019 to establish and communicate a joint commitment between government and industry that will support the sustained transformation of the construction industry. The Accord was co-developed by government ministers and agencies and industry leaders from across the sector. It sets out the agreed vision for the sector, the outcomes we want to achieve and the priority work areas for action. It is a joint response to the challenges facing the sector which include skills and labour shortages, poor risk management, and unclear regulations and pipeline. A steering group consisting of government and industry representatives has been established to drive the next phase of the Accord, which involves obtaining wide engagement and buy-in from the industry and  developing a Construction Sector Transformation Plan to be published in late 2019.

Construction Sector Accord website(external link)

System's fitness for purpose

• Learn more about the fitness-for-purpose assessment and ratings
• Date of assessment: May 2018

Effectiveness

System has some issues against criteria

The building regulatory system is complex, with intricate legal and institutional arrangements. MBIE has made significant progress in embedding an operating model to deliver an effective building regulatory system, and in implementing a framework through which the system as a whole and its interdependencies can be viewed. The 4 ‘P’s – People, Processes, Products and Performance – are the lens through which MBIE analyses impact, prioritises the most vulnerable parts of the system and ensures outcomes for one area do not come at the expense of another.

MBIE’s work programme for 2019/20 has a focus on enabling and supporting the sector to respond to building system challenges (Building System Legislative Reform Programme, Building Code Delivery Framework, Construction Skills Action Plan), as well as defining the long-term strategy (Building System Strategy) and partnering with industry to transform and improve performance of the building system (Construction Industry Accord).

Efficiency

System has significant issues against criteria

The building regulatory system is broad and complex, with multiple compliance pathways making the system challenging to use. Management of the Building Code is being strengthened so it is regularly updated, sets clear minimum performance standards, and allows for sector innovation and best practice. Building Consent Authorities (BCAs) are held accountable for their performance against the standards in the Building Act through an accreditation process carried out via assessments by International Accreditation New Zealand (IANZ). MBIE is now monitoring and evaluating regulatory changes made in 2017 to improve the performance and effectiveness of the BCA accreditation scheme.

Resilience

System has significant issues against criteria

The system’s performance-based design and multiple compliance pathways were intended to allow for flexibility and innovation. Research was undertaken in 2018 with stakeholders in the building and construction Industry to surface user-centric and future-focused compliance pathway opportunities. The outcomes of this research will inform future work to improve the Building Code to make it future-focused and user-centric; enhance clarity, consistency and certainty; and enable system users to unlock productivity opportunities (through innovation and/or technology) while maintaining building quality and performance.

The cross-agency Construction Skills Action Plan, initiated in 2018, takes a future-focused approach to ensuring there is a supply of skilled people to meet NZ’s construction needs.

MBIE has addressed – and research is ongoing – the large-scale recommendations following the earthquakes. New earthquake-prone building legislation is being monitored and evaluated.

Fairness and accountability

System has significant issues against criteria

It can be difficult and costly for home owners to hold building practitioners to account if something goes wrong. The current building system legislative reform programme (set out in the next section) aims to address the balance of risk across the building and construction process, and seeks to better align the regulation of builders, engineers and plumbers with the risk and competence required for the work they do. This includes creating new offences and penalties where appropriate, and reviewing the level of penalties for existing offences, to ensure that there are appropriate checks and balances in the system.