Building Amendment Bill: proportionate liability reforms on the way

The Building Amendment Bill, introduced to Parliament on 29 June 2026, is the latest in a series of Government reforms designed to tackle increased costs, delayed delivery and underperformance in the building sector.

Key changes proposed in the Bill include:

• the well-signalled move to proportionate liability for defective building project work;
• mandatory residential home warranties for qualifying residential building work;
• mandatory professional indemnity insurance requirements for design professionals; and
• reforms to the building consent regime, including removing barriers for the consolidation of building consent authorities.

The centrepiece of this Bill is the proposed move from joint and several liability — where any one liable party can be required to pay for the full loss — to a proportionate liability regime for defective building work. This significant shift in New Zealand’s building liability framework will have implications for all those involved in the building sector.

A shift in how liability is allocated

Under the current system, a claimant can recover the full extent of its loss from any one liable party, regardless of that party’s level of responsibility. This has resulted in disproportionate exposure for parties with the financial capacity to meet claims, such as building consent authorities.

The Bill proposes to replace this with a proportionate liability model, under which each party is liable only to the extent of its contribution to the loss. Liability will be apportioned between parties who contributed to the loss on a “just and equitable” basis.

Key features of the proposed regime

At a high level, the proposed framework:

• applies to claims arising from defective building work, including design, construction and consenting functions;
• treats claims as a single apportionable claim, even where there are multiple causes of action (for example, in contract and tort);
• allows courts to apportion liability between multiple parties, reflecting their respective responsibility; and
• does not apply to disputes resolved by agreement, such as mediation or settlement.

The Bill also includes worked examples illustrating how liability may be divided between head contractors, subcontractors and building consent authorities.

What could this mean for the construction sector?

The introduction of proportionate liability will have significant implications across the construction sector.

At a high level, it is expected to:

• rebalance risk allocation between project participants;
• reduce exposure for “deep pocket” defendants;
• increase the risk of under-recovery where one or more parties cannot meet their share of liability;
• influence how parties seek to allocate and protect against risk when entering into contracts; and
• influence how parties approach claims and proceedings, including decisions about who to bring into disputes.

The reforms are supported by related measures, including proposed mandatory professional indemnity insurance requirements for design consultants — although, in practice, most design consultants already hold such insurance.

Where to from here?

The Bill is at an early stage, but the direction of travel is clear. The proposed proportionate liability regime has already generated significant discussion, and this will only continue now the detail is available to be worked through and tested.

While the shift to proportionate liability may be welcomed by many in the industry, it is crucial that sufficient consumer protections are put in place to ensure accountability is not compromised.

We will publish a more detailed article in the coming weeks examining the proposed regime and its practical implications, including for contractors, consultants and owners.

In the interim, read our previous commentary on building reform and proportionate liability.