Homefirst: 10,000+ Independent Builders Guarantees

Homefirst tops 10,000 independent builders guarantees on New Zealand homes

26th September 2012

Today Builtin New Zealand announced it has issued more than 10,000 Homefirst Builders Guarantees for residential building work since launching the scheme in New Zealand 10 years ago.

Builtin says demand has increased over the past few years, despite the downturn in the building industry, driven by media reports of poor workmanship and increasing numbers of builders going bust and leaving their clients in the lurch.

Indeed, such is the problem that the Government is currently considering amendments to the Building Act that will require builders to provide mandatory warranties for their work, obliging them to fix problems for up to 12 months after the work is completed. The problem with this, says Builtin’s Managing Director, Jim Rickard, is that it provides no protection to homeowners in the event that their builder goes bust, either during or after construction.

“The building industry is hugely competitive, margins are tight and customers very price focussed”, he says. “This is a dangerous mix given the fragmented nature of the industry and the temptation to under price to win work. We see it all the time, the builder thinks he’ll make his money back through variations, but it only takes one missed or disputed payment and his cashflow is stuffed. He’s then in a position of having to rob Peter to pay Paul, which is unsustainable.”

It means the insolvency of the building contractor is a significant risk factors in any building project, yet the proposed changes to the Building Act do not provide any protection from this. Legislation in the Australian states of Victoria, Queensland and New South Wales means builders are obliged to take out a builders guarantee on behalf of their clients for most of the work they do. This protects the homeowner in the event their building contractor goes into liquidation, or simply disappears. 90% of the claims received by the NSW Home Warranty Insurance Fund are as a result of contractor insolvency.

The Homefirst Builders Guarantee is available from all members of the Certified Builders Association and from other Builtin accredited builders that meet their criteria for financial solvency, qualifications and experience. It reassures homeowners that their investment is protected by an independently insured guarantee. It also means that the insurer will repair defects in the work if the original builder is no longer trading, or has moved away and can’t be found.

The Homefirst Builders Guarantee is underwritten by CBL Insurance Limited, a licensed New Zealand insurer, who is New Zealand’s largest and longest established specialist bonding, financial risk and surety company. CBL have more than one million homes under guarantee worldwide and are rated B+ (Good) by A.M. Best.

Builtin & CBL also provide the WaterTight Warranty (www.watertightwarranty.co.nz), which gives 10 years protection from structural defects in leaky home remediation work.

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