All three-storey homes, and any alterations costing $100,000 or more, will be required to get a home warranty under indemnity changes under the Building Act.
Architects, engineers and other building design professionals will be required to have indemnity insurance, and fines for Licensed Building Practitioners will also be doubled.
In August, the coalition government announced it was changing the building consent system to ease the liability load on local councils and speed up consenting.
Under reforms through the Building Amendment Bill, expected to be introduced in early 2026, councils will no longer be the last man standing dealing with building defects. Instead, under "joint liability", each party will be responsible for repairs for their share of the work.
Building and Construction Minister Chris Penk. Photo: Marika Khabazi / RNZ
There have been concerns raised that under the new regime owners could be left vulnerable to costs if parties - such as the builder - disappeared.
On Monday, Building and Construction minister Chris Penk revealed the new consent system would require professionals contributing to building design - such as architects and engineers - to hold professional indemnity insurance.
It will also be mandatory for all new residential buildings three storeys and under, and for renovations over $100,000, to have insurance that covers a one-year defect period and a 10-year structural warranty period.
Disciplinary penalties for Licensed Building Practitioners (LBPs) will increase from a maximum fine of $10,000 to $20,000, and the maximum suspension period will increase from 12 months to 24 months.
Malcolm Fleming, CEO of the New Zealand Certified Builders Association (NZCB) with Building and Construction Minister Chris Penk. Photo: RNZ / Marika Khabazi
"Home warranty schemes are already widely available across New Zealand, and the sector has assured me it can scale to meet new demand, allowing consumers to shop around to find coverage best suited to their build," Penk said.
"Requiring professional indemnity insurance for building designers ensures these professionals are financially able to stand by their work, giving building owners confidence. This requirement does not extend to other building trades."
Penk said these measures provided strong protections for the reform, while boosting consent productivity.
Speaking at the announcement, New Zealand Certified Builders Association chief executive Malcolm Fleming said the changes would set the building industry up for growth and support better supply and quality of homes.
"The previous arrangements were unfair to local councils and ultimately to ratepayers also, as they were the ones that had to pick up the bill if something went wrong with a bill down the track and the builder wasn't able to put things right.
"Understandably, this has led to councils taking a cautious approach to the building consents, which has snailed up the system, causing delays and unnecessary costs to have been imposed on the homeowners.
"This move to proportional liability means that whoever has made a mistake is responsible for putting it right. It sounds simple enough and it is, but the key to making it work is having an effective home warranties in place to protect the homeowner should a builder not be able or willing to rectify any issues that may arise."
Earlier, the Insurance Council of New Zealand said there could be challenges for insurers with the new approach, and it looked forward to further discussions with the government.
A property lawyer had told RNZ it was not clear who would underwrite the insurance - highlighting that insurers had been reluctant in the past to insure for weather tightness defects.
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