New designations for buildings that fail their warrant of fitness have started to be used around the country, with early childcare centres in Auckland particularly concerned a previous workaround to hold onto their licence is no longer available. 

But the Ministry of Business Innovation and Employment says nothing has changed with the Ministry of Education adding it would only close a centre if it were dangerous. 

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The uncertainty stems from new forms created by the Business Ministry to be handed out when a building fails its warrant of fitness over a relatively minor issue that does not necessarily mean the building is unsafe.  

Under the Building Act a single missed or unrecorded inspection in the past 12 months, for example, would prevent the issue of the warrant. 

A building would instead be issued new forms to show there had been non-compliance, and there would be no way to obtain a warrant of fitness until the next year. 

Auckland Council had previously issued a “report in lieu” to building owners if this were the case and a warrant of fitness could still be obtained.  

But last month the council stopped using the lieu reports and began using the new forms, meaning the workaround was no longer available.  

Early childhood council chief executive Simon Laube said a centre’s licence was conditional on operating out of a building that complied with the Building Act, which for a large number of Auckland centres meant having a building warrant of fitness.

He said there was concern the Ministry of Education would be heavy-handed with following the letter of the law, if centres did not technically have one. 

“The Ministry of Education are taking licenses off providers for a lot less than this, anything in the kind of grey areas they’re moving in really heavy-handed, so something that’s black and white like this … we just know what the Ministry of Education is like and they don’t go lightly.”  

He said centres often leased their premises so had little control over the building’s maintenance and keeping on top of compliance requirements such as monthly inspections.  

He said though the issue would affect centres nationwide, with more than half of its members based in Auckland and a large number of buildings in Auckland required to have a warrant of fitness, it was now critical to get an assurance of what the new system would mean for centres’ licences.  

Ministry of Education Operations and Integration leader Sean Teddy said the department had no plans to come down hard on centres.  

“We review services on a case-by-case basis, assessing whether a service is safe in the context in which it operates, even though it may be technically non-compliant.  

 “Any enforcement action we take is related directly to the risk the non-compliance has on the health and safety of children. 

“The regulatory framework provides a reasonable opportunity for services to demonstrate compliance before cancelling a licence is considered.” 

He said so far the ministry had come across one non-compliant centre but had ascertained the service was still safe and no further action was required.   

“Our local offices are here to help, and we encourage any early learning services who have concerns to get in touch with them.” 

Not every building requires a warrant of fitness – only those that contain specified systems that include things like sprinklers, lifts or air conditioning systems.  

These systems have a compliance schedule, which includes regular inspections during the year to make sure they are working.

Ministry of Business Innovation and Employment Building System Assurance national manager Simon Thomas said the law regarding building warrants had not changed, however strengthened guidance around missed inspections had been in place since 2020 and the forms were to help with this. 

Auckland Council opted to only start using the forms in October to give building inspectors time to adjust and update their software systems. 

“It is something that councils and [building inspectors] have been asking for, and we have communicated the guidance through several avenues.” 

He said though the administration of early childhood legislation and the function of licensing lay with the Ministry of Education, his staff met with staff from the Education Ministry to discuss the potential impacts of the missed procedure guidance on centre licensing requirements.  

“MBIE was satisfied that MOE understood the concerns of [Early Childhood Council] and the intent of the guidance and that their proposed approach for managing centres that do not have a building warrant of fitness is in line with MBIE’s thinking. 

“The situation of buildings potentially not having a [building warrant] is an issue that has existed for over 30 years, and MOE have been managing the potential impacts of this in relation to centre licences accordingly on a case-by-case basis during that time.” 

Property lawyer isn’t convinced 

Pidgeon Judd director Joanna Pidgeon, who specialises in property law, said there was a huge flow-on effect from the changes. 

“We need to lift everyone’s game but it does seem that this change in the interpretation is going to have a big impact.”

She said the new forms created by the ministry were not in the legislation  

“They’re just forms that MBIE have created. It’s not a statutory regime it is just department policy effectively coming up with this.” 

She said the consequences of not having a building warrant of fitness, and not being able to get one, were substantial. 

“It is an offence for the building owner not to have a building warrant or fitness, and they can be liable for fines for an individual up to $50,000 for a case of a body corporate or a company they can be fined up to $150,000.” 

Pidgeon said initial indications from insurance companies was that they would continue to rely on their own risk-based assessments which would not necessarily mean the absence of a warrant of fitness would prevent building owners from securing insurance.  

“So that’s good news but for other entities where it’s like do you have a building warrant of fitness, yes or no tick the box, you’re not going to be able to tick the box … So what is the impact going to be? Will they allow the issue of a [new form] to be enough to continue or not? 

“It also affects standard warranties in the sale and purchase agreement for selling properties so people will need to be checking these things when they go to market as well as when they lease properties, and it also impacts on body corporates and so on.” 

She said the Ministry of Business should have consulted with the wider sector before making any changes.  

“We want people to be safe in buildings. But people will, all of a sudden, be in a situation where they’re in breach and then possibly can’t operate their businesses, even though all the systems are working well and are properly maintained. It seems like a disproportionate outcome. 

“MBIE are downplaying it.”

Laube said it was good news that common sense had been promised by the Ministry of Education but agreed consultation should have occurred. 

“MBIE needs to do better and appreciate they don’t necessarily know best. We recommend consulting with local authorities and any other Ministry that regulates industries with buildings before tinkering with building regulations. This situation should have been avoided altogether, but we’re pleased with where things are at now.”

Emma Hatton is a business reporter based in Wellington.

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