New build home fails - why new doesn’t mean perfect

Sunday, 16 March 2025

A new build can be riddled with defects, but still have a Code Compliance Certificate, building inspector Phil Tuttle says.

Auckland-based building inspector Phil Tuttle wants people to know that while newly built homes may be new, many are far from perfect ‒ despite having passed the necessary council inspections.

Tuttle, who is the owner of Cornerstone Property Inspections Services, has been an inspector for 19 years. He has seen many new builds that are riddled with defects but have their Code Compliance Certificate (CCC).

But when he returned to work after time off for an injury a few years back, he conducted a spate of inspections where 35 out of the 40 homes needed significant remedial work before settlement.

That prompted him to become more vocal about the situation, he says. “Most people are innocents, and don’t know what to look out for. They listen to the agents, and think a lovely, brand spanking new home automatically means no problems.”

The reality can be very different. On Monday, for example, he inspected a newly built home. The agent told him the final inspection had been done and it had its CCC, but he identified numerous areas that were improperly finished and problematic.

Another example came from a recent inspection of one of five separate but almost identical new builds on adjacent properties in Remuera. A key feature in one room was a large bifold window, but opening it caused damage to the door, which meant the steel system was not up to scratch, he says.

“I checked the neighbouring property and it had the same problem, so it was probably across all five, and it was an issue that could ruin the aesthetic and function of the finished product.

The quality of a new build comes down to the individual builder’s ability and standards, Tuttle says.

“To fix it you would need to open the wall up and insert a new lintel support. But the builder said it was just the frame and a few more nails would fix it. That’s wrong, and it will affect the quality of the home.”

The issue is that to get a CCC a property has to be weathertight, tick the structural boxes and meet a minimum standard, but the rest of the build comes down to the individual builder’s ability and quality, and that means results vary widely, Tuttle says.

“Some builders are good, do quality assurance, and work to a high standard. But the scary part is the builders who are not as good expect others to find any failures, only remedy the easier fails, and then just press on with construction.”

In Auckland, the council’s building inspection team is aware of the issue. The team’s data shows that last year 32% of framing work and 25% of cladding work failed inspections, for example.

Jeff Fahrensohn is the team’s manager, and he says that overall the final inspection fail rate is sitting about 25%, and that is above the historic average of 15% to 20%.

In Auckland about 25% of builds fail their final council inspection, Auckland Council’s Jeff Fahrensohn says.

“It is on the bad side of normal, but it has improved from 2018 when there was a fail rate of about 40%. So it is not a panic station, but it could definitely be better.

“The new LBP [Licensed Building Practitioner] regime is helping, and the situation should continue to improve. We do about 200,000 inspections a year, so we’ve got a wealth of data at our fingertips and we use it to drill into any issues we identify, and focus on addressing them.”

The failures are often because a property is not ready for inspection, and the people working on it have rushed to get things done, he says.

“If a property fails an inspection, we’ll reinspect once the issues have been addressed, and most builds will pass if the remediation work has been successful.

“But our inspectors are on site for an hour on average, and they cannot see everything. They rely on the professionalism of the LBP, and sometimes defects can slip through the net.

“Our inspections do capture a significant amount of the problems, but there is always the chance that something gets past us.”

Some builders take quality assurance very seriously and have a team member dedicated to overseeing it, and those builders have a very low inspection fail rate, he says.

New build council inspection fail rates are not consistent around the country.

“But there are lots of builders who use our inspections as quality assurance checks, and they’ll call us when they finish the build, see what the inspector picks up, and address those issues alone.”

Fahrensohn says discussions with his peers on other councils suggest inspection fail rates are not consistent around the country, and vary widely.

“It’s worth noting that in smaller towns where a builder’s reputation is a critical part of successfully running their business, the result is often good work and less fails.”

Canterbury-based construction expert Mike Blackburn agrees inspection fail rates vary around the country, but says it is hard to get specific numbers.

While councils track the information it can be challenging to get the data, and they often report it in different ways, he says.

Data sent to him by Waimakariri District Council shows a 10% inspection fail rate over 2024, while Horowhenua District Council’s numbers are monthly and show a 41% inspection fail rate in January, for example.

His conversations with inspectors in the Canterbury region suggest that while there are inspection failures, builders are generally doing a pretty good job, he says.

New build buyers expect perfection, but that’s often not what they get, property law specialist Kristine King says.

But property law specialist Kristine King, from DK Law, says the problem is complicated by buyer expectations and warranty timeframes.

That is because while there is a compliance system under the Building Act, the Building Code sets a minimum standard rather than a perfect or a gold standard.

Developers and builders tend to work to that minimum standard, especially if money is tight, and they are not necessarily inclined to work towards a gold standard, she says.

“So you do get new builds that may not be of great quality, or finish, but they meet the minimum standard, and they have a CCC.

“The result can be very upsetting for buyers. They expect perfection, but they get something that does not live up to that expectation, and if it's after the CCC has been issued, there’s not much they can do.”

To make matters worse, when someone buys off-the-plan there are usually clauses in the sale and purchase agreement which mean they are obligated to settle irrespective of the build’s quality and finish, she says.

“There is usually a 12-month maintenance and warranty period, but developers often use this to their advantage.

Bad builders need to be held accountable for their mistakes, says John Gray from the Home Owners and Buyers Association.

“So it gets to settlement, the buyer inspects and makes a list of concerns, and the developer says ‘you’re obligated to settle so suck it up’, and there is a 12-month deferral period for work to be completed in.”

An additional issue is that the 12-month warranty period often runs from when a new build is “practically completed” not from settlement, so a buyer may ‒ unwittingly ‒ be six months into the 12-month period by the time they settle, she says.

“If there are liabilities to be remedied, they have to be done in a reasonable period of time, but that’s not defined in the Act.

“So a developer may say they will deal with it after settlement, and the buyer has to hope that they won’t then go under, leaving them with the problems.”

King says a good proportion of her new build buying clients are not satisfied with the finish and quality of their property, or have encountered serious defects.

John Gray, from the Home Owners and Buyers Association (Hobanz), is not surprised by that.

He says Hobanz is called on to deal with a significant number of new builds that are defective, and too many of them have made it through the inspection process.

A good example is a new build he viewed in Te Atatū in Auckland last week. “The agent gleefully said it had its CCC, but it was not finished to a standard where I’d be confident to tell someone they should buy it.

“There were patently obvious defects from outside, so who knows what was behind the cladding. The developer has gone bust, and the builder is looking shaky, so who's responsible?”

The fundamental problem is that the LBP regime is not stringent enough, and bad builders are not truly held accountable for their mistakes, he says.

“Auckland has the highest amount of residential building going on, so the fail numbers are higher, but the problem of defective new builds is spread around the country.

“And it’s disturbing because there is no liability if something goes wrong. Often if a build has defects, the building company will be liquidated, and then pop up in another form. It’s like whack-a-mole.”

A robust licensing system where defects are reported and there are significant consequences for builders when they get things wrong is the answer, Gray says.

But he is concerned the Government’s plans to move forward with self-certification for builders and remote inspections have the potential to open the system up to greater risk and more problems.