What’s in store for Prefabricators and Product Suppliers?

In a previous article (“More Building Law Reforms Are Coming”) I told you about the big changes to the Building Act that the Government was proposing. Well some of those changes have already happened, and they are to be found in the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Act 2021 that came into force on 8 June 2021. Only a few of its provisions came into effect immediately, and the rest have been deferred until September 2022, unless the Government chooses to bring them in sooner.

These changes were first floated in a 190-page discussion paper released by MBIE in April 2019. Some of them were quite radical, such as extending licensing from the purely residential into the top end commercial sector, and reducing the number of specialist license categories but increasing their technical competence requirements. Another proposal was to require you to get a special supervision licence before you could supervise restricted building work. And it was also planned to make it compulsory for every residential project above a certain value to be covered by an insurance policy or guarantee issued by a third party.

In addition to those radical proposals there were a number of more conventional changes planned, that nonetheless will be quite significant for the industry. It is those more conventional changes that have found their way into the Building Act this time around, whereas the others are either a work in progress or they have been abandoned because they are too impractical.

The changes that are in force already, mostly relate to increasing the penalties for committing an offence under the Building Act. In some cases these increases are substantial, particularly where the health and safety of the public is at risk, in which case the maximum fine for a company is $1.5 million and for an individual it is $300,000. For example, those maximum fines apply if someone who is in the business of on-selling homes that they either built or acquired for the purpose of resale, completes the on-sale or allows the purchaser into possession before a CCC is issued. That is, unless they have contracted out of that requirement with the purchaser.

The Building Act changes that are scheduled to come into force by September this year, are these:

1. The prefabrication industry is going to get some muchneeded help. There will be something like the product certification system for “modular components” so that those manufacturers just need one approval for their process, and not a separate consent each time their product rolls off the production line. That will simplify things and mean that the prefabricator will mainly need to focus on the consent required for installation on site.

2. Importers, manufacturers and distributors of building materials will have to provide a lot of technical data and make statements about the codecompliance of their products, which they can be liable for, if false or misleading. That will expose them to considerable costs and then potential liability which they will not be able to contract out of.

3. The product certification scheme is to be strengthened so that it weeds out the charlatans without imposing too much additional cost or liability on the reputable suppliers, but of course it is all more red tape and greater regulation.

These changes could have a major impact on the joinery industry. For example if your products carry the CodeMark seal of approval, or you are considering getting it, it is going to be a lot harder to qualify for that in the future. And whether or not you use CodeMark, you are going to have to provide a lot more information about your products and be more accountable for their performance. On the other hand, if the products you manufacture fall within the definition of modular components (kitchens, bathrooms, etc.) then you will be able to get a special certification, so that Building Consent Authorities will automatically accept your products as being code-compliant. And that means designers are more likely to prescribe them, property owners are more likely to choose them, and head contractors are more likely to seek you out. So there are downsides and upsides for you in this legislation.

The 2021 Amendment Act doesn’t tell you much about these changes, because the detail is in the Regulations and Rules that are due to be released right about now. Of all the people in the building industry who should become familiar with them, it is the building materials suppliers, the prefabrication plants, the kitset suppliers, and the joinery manufacturers.

As you are probably aware, building products bearing the CodeMark certificate have to be accepted by Building Consent Authorities as being codecompliant. But the reason the rules around CodeMark are being beefed up, is that there has been abuse of the system. Some of the Product Certification Bodies have been a bit slack and some of the suppliers of the certified products haven’t been held to consistent standards. That is all about to change, and the tougher rules will take effect just three months after the Regulations commence.

It’s different for the minimum mandatory information requirements for building products, because that is a completely new regime. At the moment suppliers don’t have to provide any information about their products, beyond what they choose to disclose for promotional purposes, or what the Council requires from them when the building consent is applied for. Soon they will have to disclose (among other things) the scope and limitations of use of each of their products, and their design, installation and maintenance requirements. Once the Regulations commence later this year, manufacturers, importers, distributors and retailers will have 18 months to comply. That is because there is a huge amount of work involved in putting it all together.

The good news for joinery manufacturers is the new certification scheme that will fast-track the consenting process. You can choose to join it or not, but if you do opt in then you will be subjected to a rigorous assessment process that covers design, manufacture, assembly, transportation and installation on site, both before you obtain your certificate and for long as you continue to use it. Assuming you pass muster, then the only aspects of the individual project the Council needs to concern itself with, are the site works, foundations, and connections to plumbing, electrical, sewerage and stormwater. The Regulations underpinning this system are due any day, and they will commence three months after. However there will then be a lengthy introductory period while the organisations that test you, and the organisations that approve those testing bodies, are appointed.

If you are a joinery business and you think you will be covered by these new laws, don’t delay –check them out now.