Broker Opinion: Why NZ deserves a better warranty scheme for housing

Broker Opinion: Why NZ deserves a better warranty scheme for housing | Insurance Business

Broker Opinion: Why NZ deserves a better warranty scheme for housing
Broker Duncan Colebrook, of Stamford Insurance, has the sole rights to a Lloyd’s-backed building warranty product in New Zealand. He explains why new government proposals which could see builders forced to offer mandatory guarantees of their work is a good thing for the country.

By Duncan Colebrook

Councils and central government have paid out tens of millions of dollars to the victims of leaky homes and Dr Nick Smith wants to prevent that happening again.
Smith clearly has two objectives:
  1. To protect Councils from liability for defective buildings in the future
  2. To provide homeowners with better protection from the costs to remedy defective buildings.
But they have paid out only a fraction of the true cost to homeowners and with the financial assistance package due to end soon, many owners will miss out, having being unable or unwilling to make a claim for compensation, either through ignorance or a desire to sweep any problems with their home under the carpet.
New Zealand needs and deserves a better warranty scheme for housing. You would not buy a new car or even a new TV which did not come with a warranty, and yet over half of all new homes come without an independent warranty.
Dr Smith rightly points out that there are question marks over some products and I suspect he is referring here to the most well-known building guarantee which has no financial rating or insurance backing of any kind. Their most popular guarantee does not even cover weather tightness failure.
I do not believe that making warranties compulsory would drive builders out of the industry at a time of high demand. The vast majority of builders are trained, experienced professionals, achieve very high standards and build excellent homes and we are welcoming them into our warranty programme on a daily basis.
If a minority of builders cannot achieve the standards of quality assurance and technical competence to be able to register with a warranty provider, then maybe they should not be building houses without better supervision. One answer would be to join with other builders so that they can together improve their office administration and site supervision which in turn will improve their quality and performance.
The Building Act 2004 makes builders potentially liable for defects for up to 10 years, but is that fair? It places a huge burden on small tradespeople and also encourages builders to ‘flip’ their companies to try to leave these risks behind. Far better to have everyone buy into the concept of universal, reliable, affordable warranties.

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