BC Update: No.7 - Changes to building levy announced

18 Feb 2005: The Minister for Building Issues, Hon Chris Carter yesterday announced changes to the Building Levy. A copy of this announcement follows.

The Department will write to councils next week to outline the practical issues resulting from the changes.

Changes to Building Levy announced
 
Building Issues Minister Chris Carter today announced changes to the Building Levy ready for the implementation of the new Building Act on March 31.

"The levy funds building-related services that help protect people constructing, renovating or buying homes or other types of buildings," Mr Carter said.

"These services have been significantly enhanced in the new Building Act after problems emerged with leaky buildings.

"From 1 April 2005, the new building levy will be set at $1.97 per $1,000 of building work, for which there is a building consent, but it will only be collected on building works valued at $20,000 or more," Mr Carter said.

"For most people, buying or building a home will be the biggest single investment they ever make," he said.

"It is crucial the regulatory framework provided by government gives people the confidence they need to make this investment. The new levy will allow the new Department of Building and Housing to take a stronger, more robust approach to ensuring buildings are built right first time."

Some of the specific services to be funded by the levy include:

• Greater monitoring, examination of and warning about new building methods and products.
• An accreditation and registration regime to ensure people inspecting buildings and issuing consents know what they are doing.
• A registration regime to ensure people constructing buildings know what they are doing.
• Greater capacity to crack down on people operating in the building sector who are breaking the rules.

The levy is subject to promulgation by the Governor-General.

Questions and Answers on the New Building Levy

How much is the Building Levy now and who pays it?

The Building Levy that funds the building controls part of the Department of Building and Housing is currently set at 65 cents per $1,000 of building work for which there is a building consent and is only collected on building works valued at $20,000 or more. The Building Levy was last changed in 1995.

Building consent applicants pay the Building Levy. Territorial Authorities collect the Building Levy on behalf of the Department of Building and Housing.

How much will the Building Levy be after the change?

From 1 April 2005, the Building Levy will be increased to $1.97 per $1,000 of building work for which there is a building consent and will only be collected on building works valued at $20,000 or more.

How will the new building levy affect the cost of my building work?

Estimated Value of Building work

Building costs of $250,000
Old levy: amount payable approximately $163.
New levy: amount payable approximately $493.

Building costs of $1,000,000
Old levy: amount payable approximately $650.
New levy: amount payable approximately $1,970.

Expressed as a proportion of the estimated value of building work, the amount payable from the new levy represents approximately 0.2% of building costs.

Why does the Building Levy need to increase?

On 31 March 2005, the Building Act 1991 will be repealed and the building control provisions of the Building Act 2004 will come into force. The Building Act 2004 provides for a more proactive central building regulator with significantly expanded functions. A higher levy is needed to ensure that it can undertake its functions effectively. An increase in the Building Levy was foreshadowed by government when new building control legislation was first announced in 2003.

What do I get for the extra money?

Under the 2004 Act, amongst other things, the Department of Building and Housing will:

• provide more information and guidance to all participants in the industry on the requirements of the Act and Building Code
• monitor and report annually to the government on current and emerging trends in the industry
• be able to warn against, ban, or require the use of particular building methods or products
• administer an accreditation and registration regime for building consent authorities to allow them to perform functions under the Act
• administer a registration regime for building practitioners
• administer a new product certification regime
• have an expanded role in making determinations on matters of doubt or dispute in relation to building control
• be able to take enforcement action.

The provision of these functions will ensure that the regulatory framework for building can operate effectively. This will help to ensure that buildings are designed and built right first time and will encourage better practices in building design and construction.