A housing expert has warned that the post-Covid surge in home-renovations could lead to code compliance nightmare for buyers and sellers.
Bill McKay, senior lecturer in architecture and planning at the University of Auckland, says that too many homeowners are failing to get their Code Compliance Certificates (CCC) after finishing their build or renovation.
He says the lack of CCC will come back to bite homeowners when they go to sell their property, noting that buyers will expect significant discounts if the correct paperwork is absent.
“The onus is on the householder to apply for a CCC at the end of the work,” says McKay. “Building jobs are never quite finished. Owners think CCC doesn’t matter because they got a building consent.”
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McKay says the uptick in home renovations over the past two years is fuelling the issue.
According to Stats NZ, a record 48,899 new homes were consented in 2021, up 24% on 2020, while separate data from Auckland Council shows that the number of CCCs issued for new dwellings in 2021 was 13,470.
Owners have two years from the issue of building consent to apply for a CCC from the council . If it’s left too late, the best an owner can get is a Certificate of Acceptance, which some buyers do not view as valid.
The problem is that renovators are usually completely over it by the time the builders leave, says McKay. Yet it's the owner’s responsibility to see through getting the CCC. The builder or designer will have arranged building consent at the outset, then manage all the inspections including a final inspection, but the CCC is the homeowner’s responsibility.
McKay has seen the problems arising from CCC failings in his own architectural practice more times than he’d like to remember.
Even if homeowners are within the two-year deadline, a whole lot of paperwork is needed, says McKay. The applicant must provide details of the people who carried out the work, including registration numbers if applicable, and provide a record of the building work.
Bill McKay says homeowners are ultimately responsible for obtaining CCC. Photo / Nick Reed
“You have to run around looking for the electrician, plumber, gas-fitter, carpenter etc. Quite frequently, all you've got for them is a mobile number, and half the time that may not work or you find that the contractors have retired or gone to Australia.”
Property lawyer Nick Kearney says getting CCC tends to be less of an issue for new builds from large group builders such as GJ Gardner, Lockwood and Universal Homes, who will manage the process. Legally, the landowner is responsible under the Building Act 2004 for getting CCC and a sale and purchase can’t proceed until it is obtained.
Where possible Kearney will insert a clause holding back a final sum such as $30,000 until CCC is obtaine d just to be sure.
Sometimes builders and buyers agree to contract out of that requirement, which puts the onus on the homeowner. It can be problematic if the builder goes bust before getting compliance.
Renovations are trickier. “A lot of homeowners often take advice from builders and plumbers who tell them consent isn’t needed. They don't get legal advice on it because it's just $20,000 of work,” Kearney says.
Homeowners usually only become aware of the problem when they go to sell, or when they have been approached by the council. Owners who ignore the council at that point do so at their own peril because they could be prosecuted.
Homeowners who fail to get CCC within the two-year deadline are required to bring their building up to standard of the latest rules, not the ones in place when the work was done in order to get a Certificate of Acceptance.
Even Certificates of Acceptance can sometimes put buyers off, as well as banks and insurers. “Buyers get nervous about this stuff,” says Kearney.
REA chief executive Belinda Moffat says agents should walk away from homeowners who ask them not disclose CCC issues. Photo / Supplied
Standard sale and purchase agreements include vendor warranties that the owner has obtained building consents for work done and CCCs, says Chris Egden, senior associate at Mortlock McCormack Law. A vendor who was unaware that work they’d done needed building consent and CCC would still be in breach of warranty under the sale and purchase agreement.
Egden says a lack of CCC is usually fairly easy for the buyer’s lawyer to discover at the time of purchase. “When the lawyer looks at the LIM, it'll say that building consent has been applied for. LIM and title are two of the standard documents that are reviewed by any solicitor.”
If the works did not involve a consent, they won’t show on the LIM. A builder’s or engineer’s report may highlight the work, as could a good study of the plans and the full council file. “A builder or engineer would be more likely to be able to tell that that wall has been replaced recently and then start asking questions,” says Egden.
Real estate agents are required by law to disclose what they know about a property. If they deliberately hide this information, they can be censured and fined by the Real Estate Authority (REA).
REA chief executive Belinda Moffat says agents must conduct proper inquiries about the property and declare relevant information such as the lack of CCC to the buyer. "So, if you don't have that code of compliance, it ought to be disclosed,” she says.
“A vendor could tell an agent not to disclose. If that occurs, then our requirements are that the agent really should walk away from that sale.”
