Modular homes and faster construction

  • Legal update

    19 March 2021

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The Government currently has a number of initiatives underway that aim to balance the need for more efficiency in the construction of residential dwellings, with the need to maintain quality and environmental protection measures.

Recently much discussion around these initiatives has focused on the proposed reform of the Resource Management Act 1991 (read our summary of this reform here), however, a variety of other less extensive measures are also being considered.  One of the intentions behind the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill (the Bill), which passed through the Select Committee earlier this month, is to facilitate the safe and efficient use of non-traditional methods of construction that may be quicker or more cost-effective, such as modular homes.

Modular homes in New Zealand

Modular housing involves the construction of ‘modular components’ – in essence, sections of houses – which are built off-site and shipped to their final location for assembly. The process is substantially faster and typically less expensive than ordinary construction methods, but is heavily reliant on good quality control processes during initial construction of the modular components, to ensure delivery of high-quality homes.

While the existing building regime in New Zealand is technically able to respond to the use of modular components, the absence of tailored quality controls for modular homes has to led to some inconsistency and uncertainty within the industry and Councils around the appropriate consent process to be followed.

Faster construction

There are several features of the Bill geared towards improving the efficiency of non-traditional building methods, with specific reference to modular homes:

  1. A new scheme for the certification, registration and regular auditing of Modular Component Manufacturers (MCMs). MCMs will be certified to produce specified modular components (ranging from individual units, such as bathrooms, to entire houses);
  2. Registered MCMs will be able to issue manufacturers’ certificates for the modular components they are certified to produce, which will be evidence of compliance with the Building Code (the Code), without the need for further inspection; and
  3. Building consents will not be required for the off-site construction phase of modular components, and processing times for consent applications that relate to the installation of a single modular component will be reduced to 10 working days (down from 20 working days).

There are no explicit restrictions in the Bill around registration of off-shore manufacturers as MCMs, so, under the current regime, registered MCMs could be based overseas provided they meet the certification requirements. This said, the Bill permits the Chief Executive (of MBIE) to make rules around the MCM certification scheme, which may establish some more specific rules around certification of off-shore manufacturers.

Stronger product certification and increased penalties

The Bill also aims to:

  1. Strengthen the existing product certification scheme for building products and building methods (known as CodeMark) by increasing oversight and ensuring quality through registration of product certification bodies. This system essentially operates in the same manner as the MCM certification scheme and aims to increase uptake on the scheme and thereby improve efficiency, since certified building products and methods will also be ‘deemed to comply’ with the Code; and
  2. Increase a number of fines for beaches of the Building Act, and bring in provisions distinguishing between individuals and body corporates in the application of maximum fines (body corporates having a higher maximum fine threshold)
Next steps

With many developers, including Kāinga Ora – Homes and Communities, looking into the use of modular components and off-site manufacturing generally, the intended reforms may be a welcome step towards establishing a clear, consistent, and efficient process for building modular homes.

The Select Committee recommended that the Bill be passed with certain amendments. As a next step, the Bill will go to a second reading, the date for which is not yet confirmed.

If you have any queries on the Bill, the intended changes, and/or the potential impact on your business, please contact one of our team.