22 Oct 2015

Changes to construction laws

3:47 pm on 22 October 2015

A just passed law will bring greater security and fairness to the construction sector.

New housing in Upper Hutt.

Photo: RNZ / Alexander Robertson

The Construction Contracts Amendment Act was passed this week in Parliament and comes into effect in December.

Under the Act, money that has been retained by a main building contractor or developer to ensure sub-contractors do the job to standard must be held in trust and in the event of a building firm's collapse cannot be taken by banks or receivers.

Sub-contractors lost more than $18 million in retention payments when Mainzeal collapsed in 2013.

The new system means the main contractor or developer can hold up to 10 percent of the sum due to a sub-contractor, interest free, for up to two years.

The Act's coverage will be expanded from September next year to include architects, engineers and quantity surveyors, and there will be an adjudication system for disputes about their professional services and fees.

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