It sounds enticing on paper. Being able to construct a self-contained granny flat up to 70 square metres without needing a building consent - no council inspections or months of waiting, and lower costs.
With New Zealand’s chronic housing shortage, the Building Code exemption that came into play on January 15 this year seems like a major adjustment.
Building and Construction Minister Chris Penk said that the change will unlock up to 13,000 new dwellings over the coming decade, taking pressure off both councils and families.
“That means more jobs for builders, less stress for councils, money saved for homeowners, and greater choice for families and their dependents,” the Minister said.
However, the new legislation isn’t as straightforward as that. Many in the building industry are warning of the various fishhooks facing homeowners who assume that no consent equals no responsibility.
President of the Building Officials Institute of New Zealand (BOINZ) Karel Boakes is just from the industry offering a note of caution.
“I think a lot of people will just sort of leap into it... and that could get them in trouble from various angles,’’ she said.
What does the granny-flat exemption really mean, who benefits from it, and where are the risks?
So what has changed?
A dwelling must be newly built to qualify, fully standalone and limited to a single storey, with a maximum floor area of 70 square metres. Buildings must be constructed using lightweight timber or steel framing, and they must be positioned at least two metres away from legal boundaries and other residential buildings. All of the work must be designed and carried out, or directly supervised, by appropriately licensed building practitioners, and the completed dwelling must comply fully with the New Zealand Building Code.
Perhaps most importantly, while councils must be notified before construction begins and again once the build is complete, they will not inspect or sign off the work. Homeowners are still required to obtain a Project Information Memorandum (PIM) before starting, but a PIM provides information only rather than conferring approval or verifying compliance.
Builders now at the forefront
The legal definition of Restricted Building Work has not changed, but the way it is delivered under the new exemption has shifted significantly. Because councils no longer review designs or inspect construction, Licensed Building Practitioners now carry a far greater responsibility.
Builders and designers must confirm that a proposed granny flat meets every exemption condition, ensure all restricted building work complies with the Building Code, complete and submit the required Records of Work, and clearly explain to homeowners what the exemption covers – and where its limits lie. If any condition is missed or misinterpreted, the build can fall outside the exemption and may be deemed unlawfully constructed.
Guidance from the industry repeatedly stresses that even a minor deviation from the exemption requirements can trigger enforcement action later – potentially years after construction has finished.
The risk has shifted
Industry bodies such as the BOINZ have warned that while the changes remove a layer of regulation, risk is not eliminated – it is simply relocated. Councils once provided a compliance backstop through inspections and formal approvals, and now that responsibility rests with the homeowner and the professionals they engage.
Whether structural defects, insurance disputes, or complications at resale – there is no council sign-off to rely on if issues do arise later. Documentation, professional records, and compliance evidence are critical, and gaps in those records will prove costly.
BOINZ has noted that mistakes may no longer be caught early in the process. Instead, they’ll tend to surface much later, when they are far more expensive and difficult to resolve.
Many potential hooks
There are many other potential pitfalls, including misjudging boundary setbacks, height limits, and hazard overlays, assuming a PIM provides approval rather than guidance, or attempting to bring existing garages, sleepouts, or relocated buildings under the exemption when they are explicitly excluded. Another cost that will still apply is development contributions, which depending upon location can range from several thousand dollars to tens of thousands.
A significant proportion of fully consented and inspected work fails inspection each year Councils say, which just serves to highlight the risks involved when there are no inspections at all.
Still a costly process
While removing the consent process does reduce the upfront fees and delays, there’s still a substantial overall cost involved with building a granny flat. Homeowners must still budget for professional design, LBP construction and supervision, plumbing and electrical work, utility connections, development contributions, and the increased rates associated with creating a second dwelling on the property.
Total project costs can still reach well into six figures in many urban areas. Prefabricated and transportable options offer some efficiencies, but they do not eliminate the need for careful planning and professional oversight.
With open eyes
The exemption certainly does offer genuine opportunities when it’s properly understood and applied. Examples include supporting intergenerational living, allowing older family members to age in place, creating rental income streams, and adding small-scale housing without expanding the footprint of a city.
It’s clear that the policy’s success will depend less on what has been removed from the system and more on how responsibly the remaining obligations are managed. Tightly defined, the exemption is technically demanding and unforgiving of shortcuts.
The last word
Rather than an invitation to build casually or cheaply, the new granny flat rules are instead a test of competence, professionalism, and diligence.
The changes elevate both opportunity and liability for builders. And for homeowners, they demand a far clearer understanding of risk, responsibility, and compliance than the old consenting system required.
If you’re planning to granny flat, make sure you’re informed, professionally supported, and aware of where the legal burden now rests.
- You’ll find more information and the Granny Flats Exemption guide at www.building.govt.nz
