On 18 August 2025, Minister Chris Penk set out sweeping changes to New Zealand’s building consent system. The Government plans the shift to proportionate liability, replacing joint and several liability rules. Each party will pay only for their own share of defect risk instead of leaving councils to cover the full cost when others collapse. In the same announcement, Penk said the Government is exploring homeowner protections such as professional indemnity insurance and home warranties. These would mirror schemes already common in Australia and available here through voluntary providers like Halo and Master Build.
“When government says it is exploring insurance solutions, expect relevant vendors to move now,” says APIA GM Sarina Gibbon, “Builders, lenders and buyers will start pricing in these protections well before Parliament passes anything.”
The practical effect is that councils will no longer act as insurers of last resort. Responsibility will shift into the private market, with insurers and warranty providers deciding who can build and under what terms. Buyers and banks will also begin demanding proof of protection as part of their standard checks.
For investors, the ripple effects will appear quickly. Build costs will rise as premiums and warranty fees are factored into budgets. Insurers will screen contractors and systems with a sharp eye, shutting out those with weak balance sheets or risky methods. Properties or projects without warranty cover will be harder to finance and less attractive at resale.
Different types of investors will experience this shift in different ways. Small developers need to add insurance and warranty costs to feasibility models now and be ready to show banks that cover is in place before funds are released. They should also understand that insurers will check their contractors as carefully as they do themselves. Buyers of new builds should ask for warranty details before signing. A covered property will improve finance approval and support stronger resale value. Landlords planning major renovations should be prepared for some projects to attract warranty or insurance requirements and will need to keep records of contractor cover and quality assurance.
Sarina says: “Insurance and warranties are not just another cost line. They are a way to stabilise the sector and give investors confidence that they will not be left carrying other people’s failures. That is good for landlords, good for tenants, and good for the wider market.”
From our perspective, this is not optional. Insurance and warranties are setting the standard for how the market will operate. Investors who move early will be better placed to secure finance and protect long-term value.
Timing is critical. The Bill is not expected until 2026, but banks and insurers will move ahead of legislation. Many will begin requiring warranty cover and professional indemnity evidence long before any law change. Those who wait risk being locked out of finance or facing weaker resale prospects. Those who prepare now will be in a stronger position to secure lending, attract buyers, and protect long-term value.
This is Part 2 of our three part blog series that help investors make sense of the upcoming reform. Tagsbuilding insurance Chris Penk reforms developer costs home warranties NZ property investors
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