28 Nov 2025
Engineering New Zealand welcomes the Government’s announcement on building reforms and proportionate liability.
“New Zealand has been grappling with a flawed liability framework that can unfairly burden certain parties – often leaving councils footing the bill,” says Engineering New Zealand Chief Executive Dr Richard Templer.
“And it’s not just councils – engineers are also targeted for compensation due to the perception of having ‘deep pockets’. The current joint and several liability model does not deliver fair accountability, so we welcome this shift to proportionate liability.”
Under proportionate liability, each party is only responsible for the share of the loss that reflects their actual level of fault. This approach better reflects individual accountability - spreading risk across the sector and reducing the incentive to pursue the ‘easiest’ party rather than the most responsible.
A key challenge with proportionate liability is that homeowners may face shortfalls if a responsible party can’t pay. To address this risk, Government recently announced measures that support this shift and ensure those involved in the process, including homeowners, remain protected.
“We welcome the new additions announced this week – including mandatory home warranties for all new residential buildings three storeys and under and for renovations $100,000 and above, covering a one-year defect period and a 10-year structural warranty.”
“This will help deliver confidence and protection for homeowners, while offering certainty and objectivity for designers and contractors.”
“We also welcome the requirement for professionals contributing to building design to hold professional indemnity insurance. A significant proportion of engineers already hold this. Proportionate liability should make things fairer for engineers generally so that they are only contributing to their “portion” of an issue.”
Although Engineering New Zealand supports these announcements, the success of this will depend on the details, which will be in the draft legislation due early 2026.
There will need to be a focus on ensuring the insurance market is equipped to manage increased demand. Proportionate liability also comes with a risk of increased litigation, and more reliance on the court system could delay resolutions and increase costs for homeowners.
As this reform will have a significant impact on engineers and other industry professionals, we will keep actively engaging with this as it develops to advocate for a fair, workable system for everyone.
