REGULATORY SYSTEMS (BUILDING AND HOUSING) AMENDMENT BILL

Transcription

1 REGULATORY SYSTEMS (BUILDING AND HOUSING) AMENDMENT BILL Departmental Report to Local Government and Environment Committee 9 February 2017

2 The Chair Local Government and Environment Committee 1. This is the departmental report on the Regulatory Systems (Building and Housing) Amendment Bill (the Bill). This report has been prepared by the Ministry of Business, Innovation and Employment (MBIE) with assistance from Land Information New Zealand (LINZ). It is in two parts: Part A is a clause-by-clause analysis of submissions and changes recommended by officials. Part B responds to information requests from the Committee as part of the oral hearing on submissions. Purpose of the Bill 2. The Bill s purpose is to maintain the effectiveness and efficiency of the regulatory systems established by the Acts amended by this omnibus bill and so reduces the chance of regulatory failure and unintended consequences that harm the wellbeing of New Zealanders. 3. The amendments were identified as part of the Ministry of Business, Innovation and Employment s (MBIE) regulatory systems work programme which arises from the chief executive s responsibility to relevant Ministers, under section 32 of the State Sector Act 1988, for the stewardship of the legislation administered by MBIE. 4. The Bill contains one amendment to the Building Act 2004, which will provide clarity around the role of a territorial authority. 5. The Bill contains 16 amendments to the UTA. These amendments remove unnecessary compliance burden and provide clarity to sections of the UTA that relate to: Unit plans; Body corporate operational rules; Reassessment of ownership and utility interests; Registration of easements and covenant; Leases and licenses of common property; and Extraordinary general meetings. 6. The Bill was introduced to the House on 12 October 2016 and referred to the Local Government and Environment Select Committee after its first reading on 18 October The Committee invited written submissions with a due date of 2 December 2016 and heard from submitters on 8 December Overview of submissions 7. The Committee received seven written submissions. The Auckland Council, its subsidiary Watercare, the Auckland District Inc, the New Zealand and the Property Council provided submissions regarding amendments to the UTA. With the exception of the New Zealand that commented on several of the Bill s clauses, submitters comments were general in nature. 8. The Committee received two submissions on the Building Act received from Transpower and one individual. 1

3 Update on wider review of UTA 9. As noted in the initial briefing to the Committee, a wider review of the UTA is underway. The Minister for Building and Construction released a discussion document on 21 December 2016 that proposed changes relating to: Better disclosure rules at the time of purchase; Strengthening body corporate governance; Increasing professionalism of body corporate managers; Ensuring proper maintenance plans; Variable compliance requirements relating to complex size; and Improving the accessibility of dispute resolution. 10. A discussion document was released prior to Christmas, it can be found here: The consultation period will run until Friday 3 March 2017 and include stakeholder workshops in Wellington, Auckland and Christchurch in mid-february Summary of recommended amendments 11. In addition to any further minor, technical drafting adjustments identified by the Parliamentary Counsel Office (PCO), officials recommend three amendments to the Bill (subject to advice from, and drafting by, PCO). All three recommended amendments relate to the UTA. 12. MBIE recommends the Local Government and Environment Committee: Recommendation Clause of Bill Recommended amendment Reference in Part A of report 1 41 Agree to insert a status of examples provision into the Bill, to amend the Act to the following effect: a. Status of examples i. An example used in this Act is only illustrative of the provisions to which it relates. It does not limit those provisions. ii. If an example and a provision to which it relates are inconsistent, the provision prevails Agree to officials working with PCO to review Clause 20 and make any amendments necessary to clarify that: The date a reassessment takes effect, and the new 207 2

4 interest or interests are assigned to each unit is the date set out in the special resolution of the body corporate, or the date of the valuer s certificate, or if both apply, the early of those dates. 3 32,33 and 48 Agree to remove these clauses from the Bill. MBIE will propose regulations to provide timeframes for calling and holding extraordinary general meetings and include them with the Unit Title Regulations 2011 amendments required as a result of this Bill

5 PART A: ANALYSIS OF SUBMISSIONS General comments Submitter Submission Officials comments Iain Refer to the Building Act clause-by-clause table below. Refer to Building Act clause-byclause table below. Property Council New Zealand The Property Council of New Zealand (Property Council) supports the Bill. It also proposes additional changes are made to the UTA in the following areas: 1. The dispute resolution regime; 2. The guidance material made available to bodies corporate; 3. The provisions around staged developments (same as Auckland Council s submission which is summarised below); 4. The default body corporate operational rules; and 5. The process that must be followed when a unit title development is split into two or more separate developments. Noted. The additional changes proposed are not within the scope of the Bill and should not be included. They are not minor and technical in nature but larger policy changes. The changes suggested fall more within in scope of the wider review. With the Committee s permission we will invite the Property Council to make a submission on the wider review. New Zealand The New Zealand (the ) supports the Bill but would like a more comprehensive reform of the UTA. In addition to proposed changes to the drafting of the Bill s clauses (refer to the Unit Titles Act clause-by-clause table below), the proposes a change to the Unit Titles Regulations 2011 as follows: In a previous round of technical amendments to the Act in 2013, section 104 of the Act was amended to say a majority rather than 50% but the Unit Titles Regulations 2011 were not amended at the same time, so Form 13 in those regulations still refers to 50% in relation to section 104. Agree, we recommend officials examine the proposed change to the regulations, along with any others required as a result of the 2013 amendments to the UTA, when the amendments are made to the regulations as a result of this Bill. Given the would like a more comprehensive review of the UTA with the Committee s permission we will invite the Law Society to make a submission on the wider review. Auckland Council Auckland Council (the Council) supports the Bill. It notes that there is an identified need for further reform of the UTA and is aware of the wider review. Noted. Changing the UTA or RMA as proposed is not within the scope of 4

6 Submitter Submission Officials comments The Council would like an additional change made regarding staged developments, their proposal is summarised below: Watercare The UTA enables the development of housing to be held in unit titles to be undertaken in stages. The Resource Management Act 1991(RMA) requires the relevant territorial authority to certify that every existing building (including any building that is under construction) to which the unit plan relates complies with, or will comply with, the building code. The Council submits that LINZ guidance requires this certification to occur at the initial proposed unit development stage and not at any subsequent stages. They consider that this interpretation constrains or restricts developers from undertaking unit title developments in stages because it means they have to have prepared plans and detailed assessments of future units early in the development cycle. The Council propose an amendment to the UTA or RMA to make it explicit that certification can occur at subsequent stages in the development cycle. Watercare supports the Bill, in particular the changes made in respect of easements and covenants (Clauses 25 and 26) which will enable it to acquire sufficient rights for construction, operation and maintenance of its water and wastewater pipelines. It would like an additional change made to ensure that when a unit plan is cancelled any easements in gross granted over units are not also cancelled. this Bill and should not be included. Any change would require further analysis and consultation. This change would fall more within the scope of the wider review. With the Committee s permission we will invite the Council to make a submission on the wider review. Noted. The additional change proposed is not within the scope of this Bill and should not be included. It is not minor and technical in nature but a larger policy change. This change would fall more within the scope of the wider review. With the Committee s permission we will invite the Council to make a submission on the wider review. Transpower Refer to the Building Act clause-by-clause table below. Refer to the Building Act clause-byclause table below. Auckland District Law Society Auckland District agrees with the proposed changes to the UTA. Noted. 5

7 Part 1 Building Act 2004 Item Clause Submitter Submission Officials comments Iain Why is section 12(2)(c) Schedule 1 being replaced with clause 2 of Schedule 1 Section 12 of the Act describes the role of building consent authorities and territorial authorities. This section of the Act contains an incorrect cross-reference. The Bill corrects this cross-reference Iain Change current wording from is likely to must comply Disagree. The submitter is suggesting a substantive change to policy on provisions in the Act that deal with exemptions from the requirement to obtain a building consent Iain Why is section 96(1) (d) being repealed? Section 96(1) (d) of the Act specifies a certain circumstance when a territorial authority may, on application, issue a certificate of acceptance for residential building work already done. This provision is now redundant because it applies to applications for a certificate of acceptance that were required to have been made prior to 31 March Any such applications were, generally, required to be granted or refused in 20 working days Iain How would this section being repealed impact on homeowners? The repeal of this section of the Act is unlikely to have any impact on homeowners for the reasons outlined in item 103. In the unlikely event that any unresolved applications are still in the system, owners have the option of applying to MBIE for a determination Iain There is a typo error Disagree. The submission point relates to proposed changes to an incorrect cross-reference in section 177 of the Act (Application for 6

8 106 7 Iain Change current wording in clause 2 of Schedule 1 from is likely to must comply Transpower Insert a new requirement into either the Building Act or the Building Code for building consent applicants to state whether or not NZECP34 applies to the building work concerned Transpower Insert a new requirement into either the Building Act or the Building Code requiring building consent applicants who have provided a certification that the building meets the requirements of NZECP34, to provide certification by a suitably qualified person that the completed building does comply with NZECP34. Determination). The submitter is suggesting a substantive change to policy on provisions in the Act that deal with exemptions from the requirement to obtain a building consent. Disagree. The submitter is suggesting a substantive change to policy on provisions in the Act that deal with exemptions from the requirement to obtain a building consent. Disagree. This change is not within the scope of this Bill and should not be included. It would require further analysis and consultation with stakeholders. Disagree. This change is not within the scope of this Bill and should not be included. It would require further analysis and consultation with stakeholders. 7

9 Part 2 Unit Titles Act 2010 Item Clause Submitter Submission Officials comments New Zealand New Zealand New Zealand & 18 New Zealand Clause 10(2) should have the words and proposed ownership interest deleted. Otherwise, there is a definition of ownership interest and proposed ownership interest, and a separate definition of proposed ownership interest, which does not make sense. In Clause 12, the replacement section 7(1) (a) could simply read: that is shown as a unit on a unit plan (i.e., the other words are redundant). Clause 16 amends section 38. The replacement section 38(6) should also include a reference to section 41 (which deals with reassessment), as follows: After a unit plan is deposited, the ownership interest or proposed ownership interest of a unit may be reassessed under section 41 of this Act, and the new interest assigned to the unit, as set out this Act. (inserted wording underlined) The concept of utility interests does not work for many bodies corporate. The supports the changes introduced in Clauses 17 and 18, as they resolve some of the problems of terminology and methodology of creating utility interests. However, the considers the concept is flawed as it does not provide the flexibility the Act intended. There needs to be a total rethink in the forthcoming review about the way utility interests are devised and what they are for. In the meantime, some examples in the legislation would assist. Disagree. This appears to be a misinterpretation by the, the words and proposed ownership interest are being deleted by this clause. Disagree. The proposed wording is consistent with other sections of the UTA. Disagree. Section 41 is not the only section of the UTA that permits the reassessment of ownership interests. Sections 69 and 177 also permit the reassessment of ownership interests. The current wording allows all of the relevant sections to be covered by the subsection. Recommend adding a status of example provision as Clause 41 of the Bill introduces an example into the UTA. The provision will also cover the use of examples in the UTA in the future if they are considered necessary. Noted. However, officials do not consider that legislative examples can be drafted in a way that are sufficiently clear and cover the range of possible scenarios. We are currently reviewing the guidance material MBIE provides on its website for bodies corporate and will take into consideration how we can better explain the concept of utility interests there. 8

10 Item Clause Submitter Submission Officials comments New Zealand The words unless section 39(2A) applies should be added to the end of proposed new section 39(2) and the words that different utility interest should be added to the beginning of new section 39(2A) (b). Disagree. On the first point, our view is that this is already clear. On the second point, the words are already in the chapeau New Zealand New Zealand New Zealand The words as a place of residence or business or otherwise can be removed: they are both redundant, and inconsistent with the proposed new section 7(1) (clause 12). Clause 20 amends section 41, in relation to the reassessment of ownership interests and utility interests. Clause 20 as currently drafted is inconsistent with other similar provisions in the Act (such as section 106(3)(b)) and the recommends it be amended, to provide that the date that the reassessment comes into effect is the date that the reassessment is lodged registered with LINZ and recorded on the Supplementary Record Sheet. The proposed repeal of section 48(b) means there is no need to retain the existing reference to section 48(a). (Paragraph (a) can simply merge into the wording at the end of section 48 ending at must.) Disagree. The current wording is consistent with other sections of the UTA therefore officials recommend retaining the current drafting. Noted. Officials discussed this point with the Law Society. We consider it is a wider policy issue and invite the to make a submission on it as part of the wider review. We do however consider the clause could be amended to clarify its meaning. Recommend officials work with PCO to review Clause 20 and make any amendments necessary to clarify that: The date a reassessment takes effect, and the new interest or interests are assigned to each unit is the date set out in the special resolution by the body corporate, or the date of the valuer's certificate, or if both apply, the early of those dates. Disagree. Leaving the subsection marker is common drafting practice. It can be useful when accessing historical legislation & 26 New Zealand Clauses 25 and 26 amend sections 62 and 63 of the Act dealing with easements and covenants. It would be most helpful if an additional subsection was inserted so that where there is a reference to easements or covenants that includes easements in gross and covenants in gross. This would also anticipate the changes in clause 240 of the Land Transfer Bill (which is currently before the House), concerning covenants in gross. Disagree. Officials do not consider the change is necessary as it does not add any clarity to the section, and note that the Land Transfer Bill has not yet passed into law New Zealand In relation to the new section 65(1) to be introduced by Disagree. The policy intent of this section is to only 9

11 Item Clause Submitter Submission Officials comments Clause 27, the agrees in principle with the concept, but believes that as long as the common property is not affected by the redevelopment, changing the number of units should not be an exclusion under new section 65(1)(c). apply to changes to boundaries between units & 33 New Zealand New Zealand New Zealand The does not support the Clause 32 and 33 amendments, and considers that the provisions in relation to calling meetings should be contained in regulations rather than the Act. The wording in proposed new section 105(2) (b) is somewhat confusing. A clearer wording would be: (b) The altered rules when the original owner lodges them for notification with the registrar come into effect at the time of deposit of the unit plan. The does not support the requirement in proposed new section 169(3)(c) that all registered owners deposit a declaration that a merger should occur with large bodies corporate that will simply be impractical. Certification from the chair of a body corporate should suffice. Agree. Recommend removing these clauses from the Bill. MBIE will propose regulations to provide timeframes for calling and holding these meetings. Disagree. Officials consider the current wording is already clear. Disagree. This is not a new requirement being introduced by the Bill, under section 169(3) (b) all unit owners have to be involved in the sale or purchase of leasehold or reversion that gives rise to a merger. Changing this requirement is not within the scope of this Bill as it is not a minor or technical change. 10

12 Part B: Committee information requests Committee s questions Building Act 2004 The Committee asked MBIE to seek advice from MfE about why are housing developments still being planned and developed under electricity lines. The Committee asked MBIE to seek advice from MfE (re: National Policy Statement/National Electricity Statement for Electricity Transmission Activities). What are the barriers that allow residential homes to be planned and developed under electricity lines despite Government providing guidelines and rules? Response from the Ministry for the Environment 13. The National Policy Statement for Electricity Transmission (NPSET) was developed under the RMA and took effect in The NPSET sets out high level objectives and policies to guide local authorities on how to manage the national grid in their decision-making. The NPSET specified that local authorities had four years (to April 2012) to give effect to it by initiating a review or plan-change, in accordance with Schedule 1 of the RMA. The Schedule 1 process allows for public consultation and the balancing of the NPSET against other matters for which the local authority must have regard, such as providing land for housing. 14. As at March 2016, 72 per cent of relevant local authorities have initiated or completed Schedule 1 processes. However, there are a number of local authorities yet to commence a process. We understand that delays in implementation are due to local authorities seeking to align planmaking processes with their scheduled 10 yearly plan reviews with the aim of saving time and reducing costs. 15. In addition, during Schedule 1 plan change processes, the current plan provisions retain legal effect until after appeals on the new provisions are resolved. If a local authority s current plan allows housing development under electricity transmission lines the local authority, despite having to take into account the NPSET, may have limited ability to do so in practice. However, MfE has not carried out a comprehensive analysis of all plans and would need to do so to determine whether this situation is actually occurring. 16. MfE has commenced a review of the NPSET to determine the effectiveness of this national instrument and identify any necessary amendments. This review will be carried out in conjunction with MBIE. The Committee would like MBIE to seek advice from Local Government NZ about local councils engagement with Transpower. The committee would like to know what barriers are preventing the engagement of all non-engaging councils (Transpower said they are only working with about 30 councils that are actively engaging), and what can be done to address this. Response from Local Government New Zealand 17. The Transpower submission suggests there is a need to raise awareness of the Code of Practice (NZCEP 34:2001) not just in Councils but for developers as well. There are opportunities through local government networks and MBIE work with council building clusters to raise the profile of the code of practice. Engagement does not necessarily suggest that the outcomes Transpower is seeking will be achieved however reference to NZECP 34 can be found in planning documents without problem but to determine application is a much bigger exercise. 11

13 Committee has requested advice from MBIE on the disability access review. Response 18. Following the findings of the Building Access Review (the Review), MBIE and the Office for Disability Issues in the Ministry for Social Development have worked with disabled peoples organisations to develop the Accessibility Plan: Public Buildings (the Accessibility Plan). MBIE is the lead agency for the implementation. Background 19. New Zealand building legislation requires all buildings that are accessible to the public (including places of work) to be accessible to people with disabilities. Effective legislation for access to public buildings is important in the context of society s human rights expectations. Some 24 per cent of New Zealand s population have permanent or temporary disability, and the number is expected to rise. The Building Access Review 20. In December 2013, Ministers announced a bi-ministry review of the effectiveness of building legislation for access to public buildings. The review explored issues about building access for people with disabilities through targeted engagement with stakeholder groups. Interviews were completed with a total of 58 organisations representing a range of disabilities. 21. The review concluded that the legislation and supporting documents for building accessibility are generally fit for purpose. The review found there is a lack of understanding by the general public, property owners, developers, building designers, and building managers about the access needs of people with disabilities, and about their obligations to provide for them. Accessibility Plan: Public Buildings 22. The Accessibility Plan has been developed to address the findings of the Review and aims to: Provide the general public with information about the needs of people with disabilities and the legal requirements in relation to building access. Provide building owners, designers, managers, and consenting authorities with information, understanding, and skills to fully comply with the requirements of the Building Act in relation to access. The overall programme will focus on education to raise base knowledge through a range of media. The Accessibility Plan will provide focussed information, guidance and skills development as well as strengthening the regulatory system in relation to building access. 12

14 Unit Titles Act The Committee requested further advice regarding the Tenancy Tribunal. Background information as well as responses to the questions is presented in the following paragraphs. Background Tenancy Tribunal s role in unit titles dispute resolution 24. The UTA provides a four-step dispute resolution system comprised of self-resolution and mediation (provided by MBIE), adjudication at the Tenancy Tribunal and access to the courts. The Tribunal has jurisdiction to hear and determine all disputes arising between any persons who are: the owner or former owner of a principal unit; a future development unit owner; a body corporate; an administrator; a registered valuer; an occupier of a principal unit; a service contractor; a prospective buyer of a principal unit; an original owner; a lessor of base land; or the Chief Executive of MBIE. 25. The Tribunal has powers to: order a party to a dispute to do anything necessary to remedy a breach by that party of the Act, the body corporate operational rules, or any agreement that is binding on that party and relevant to the unit title dispute; order any party to refrain from doing anything that would constitute a breach of an obligation arising under the UTA, the body corporate operational rules, or any agreement that is binding on that party and relevant to the unit title dispute; and make any supplementary orders of a consequential or ancillary nature necessary to exercise or protect the exercise of any of its jurisdiction (i.e. tidy up errors). 26. The Tribunal does not have jurisdiction to: make an order requiring any person or body to pay a sum in excess of $50,000; hear a dispute in relation to insurance money; or hear any dispute relating to title of land. 13

15 27. The policy intent is to provide access to a cost-effective, appropriate and timely disputeresolution process and enforcement regime for unit title disputes. The types of disputes that have been heard at the Tribunal (current until May 2016) is provided as Annex one. Committee s questions MBIE to provide advice on whether the Tenancy Tribunal is the best approach to resolve disputes under the Unit Titles Act for property owners. Would a parallel process work better? Response 28. The dispute resolution regime under the UTA is being examined as part of the wider review. The review includes looking at whether an alternative dispute resolution process (such as a dedicated agency, ombudsman or commissioner) would be more appropriate than the current regime. 29. The Tenancy Tribunal (the Tribunal) offers property owners specialist expertise in the UTA whereas the courts have a wide general jurisdiction. 30. Currently under the Unit Titles Disputes Fees Regulations 2011, the filing fee payable for filing an application with the Tribunal in relation to a unit title dispute is: $3,300 for category 1 proceedings which means proceedings for a unit title dispute that, because of its average or high complexity, is likely to involve a hearing before the Tenancy Tribunal as the principal means of resolving the dispute; $850 for category 2 proceedings which means proceedings for a unit title dispute of a straightforward nature that, because of its low complexity, is likely to involve mediation as the principal means of resolving the dispute 31. MBIE does not consider establishing an alternative dispute resolution regime is a proportionate response to the issues identified or the size of the industry. We are however proposing to lower the fee settings of the Tribunal, and introduce a reduced fee for mediation. This will make the current regime more accessible to unit owners. We also propose changing the name of the Tribunal to the Tenancy and Unit Titles Tribunal to better reflect its actual jurisdiction and increase awareness that the Tribunal has the jurisdiction for unit title disputes. 32. Officials will reflect any feedback we receive in advice provided to the Minister for Building and Construction following consultation on the wider review. The Tenancy Tribunal s $50,000 claim limit is there scope for this to be increased if it is a barrier? [in general, as this is not in scope for this Bill] Response 33. Increasing the $50,000 monetary threshold for cases that can go to the Tribunal has been given consideration as part of the wider review. 14

16 34. Officials consider the current threshold appropriate given that cases heard in the higher courts involve both large sums of money (in excess of the Tribunal s jurisdiction of $50,000) and complex legal issues, for example disputes around buildings with weathertight issues. These appear more appropriate for a court to resolve. 35. Additionally, one of the key principles of the Tribunal is that the parties to disputes do not need to have legal representation. Increasing the limit would see the need for more legal representation at Tribunal hearings given higher value cases being heard. 36. Officials will reflect any feedback received on whether the $50,000 limit is a barrier to dispute resolution in advice that is prepared for the Minister for Building and Construction following consultation on the wider review. 15

17 Annex one: Applications heard at the Tenancy Tribunal by type Applications to the Tenancy Tribunal by type (1 July May 2016) Tribunal Withdrawn Mediation Total Recovery of body corporate fees Not specified Determination of body corporate s assessment of levy Unit owner not following rules Recovery of expenses incurred by the body corporate Constitutional issues Claim for minority relief Maintenance of the common property Failure by unit owner to maintain unit Tenants or occupiers not following rules A unit owner or body corporate s right to undertake maintenance Body corporate not disclosing information Misuse of unit or common property by unit owner Disagreement over a body corporate decision Individuals suing a body corporate Additions or alterations to a unit by the unit owner Body corporate setting ultra vires (outside their powers) rules Additions or alterations to a unit by the body corporate Total