Govt announces offer to buy 5,100 homes in worst-hit Christchurch suburbs

A little bit more certainty?

The government has announced its initial plan to help home-owners in the worst-affected Christchurch areas, offering to buy up to 5,100 houses at 2007 values in the first part of a package that could end up costing about NZ$1.5 billion.

The houses are located in designated red zones in the east of the city and the beach area of Waimakariri District.

The Crown has made two offers to homeowners, one where the Crown buys the entire property and assumes all insurance claims, and the second where the Crown would purchase the land only, while the homeowner continued to deal with insurance matters on their own.

Prime Minster John Key said the government hoped to come to home owners in the red-zone and make an offer in the next eight weeks. Home-owners had nine months to make a decision. The eight week delay was because government had not yet finished discussions with insurance companies.

"It will take a number of weeks (perhaps eight weeks) before we are in a position to provide the details around the individual packages being offered to all homeowners in the residential red zone with insurance. Firstly we need to conclude discussions with the insurers and other parties, and then we need to prepare an offer for each individual property owner, which is no small task," it says in a fact sheet accompanying the announcement.

The government has also included another 10,000 properties in a 'orange zone' - areas where engineers needed to make further assesments due to the aftershocks that hit on June 13. Another 100,000 houses in 'green zones' are free to be rebuilt and will not attract government assistance. A white zone had also been set up for areas including the Port Hills and the central business district, which were still being mapped or were not residential land

See the land information and full red, orange green and white zones here.

A website, www.landcheck.org.nz, has been set up for Christchurch residents to see what zones their homes fall under.

The Treasury says the net cost to the Crown of the initial package could be between NZ$485 million and NZ$635 million, although the final costs were still to be determined. Factors that may alter the final costs included the take-up of the offer, government property valuations and proceeds from insurers.

Prime Minister John Key and Earthquake Recovery Minister Gerry Brownlee made the announcement this afternoon, although the main details of the plan were leaked last night in advance of today's release.

The government had set aside NZ$5.5 billion in its May 2011 budget for costs it expects to incur from the quakes over and above EQC payments of NZ$3 billion, which began on September 4 when a magnitude 7.1 quake hit the city in the early hours of the morning. A magnitude 6.3 quake on February 22 devastated much of the central city, aftershocks on June 13 added more uncertainty to the timing of any rebuild.

Red zone

The homes the government is offering to buy are in a designated 'red zone'. Prime Minister John Key said the minimum period for rebuilding in this area would be three to five years.

Some land in the Christchurch City and Waimakariri District areas has been so badly damaged by the earthquakes since 4 September 2010 it is unlikely it can be rebuilt on for a considerable period of time. Engineers have mapped these areas and categorised them as residential red zone.

These properties are located in:

  • •the east of Christchurch (along the Avon and in related areas usually associated with waterways or former waterways);
  • in the north-east of Christchurch (e.g. Brooklands); and
  • in the beach area of Waimakariri District (i.e. Kairaki Beach).

There are currently about 5000 properties in the Christchurch City Council area and around 100 properties in the Waimakariri District Council area in the residential red zone.

The criteria for defining areas as residential red zone are:

  • There is significant and extensive area wide land damage;
  • Most buildings are uneconomic to repair
  • There is a high risk of further damage to land and buildings from lowlevels of shaking; and
  • •The success of engineering solutions would be uncertain and uneconomic; and
  • • Any repair would be disruptive and take a considerable period of time.

Payment options

For people who owned property with insurance in the residential red zones on 3 September 2010 there will be two options:

  • the Crown makes an offer of purchase for the entire property at current rating value (less any built property insurance payments already made), and assumes all the insurance claims other than contents; or
  • the Crown makes an offer of purchase for the land only, and homeowners can continue to deal with their own insurer about their homes.

See where your property is at www.landcheck.org.nz

For CERA information on the red zone see here.

For CERA information on the orange zone see here.

For CERA information on the green zone see here.

For CERA information on the white zone see here.

For examples of payment scenarios see here.

Reaction

Christchurch resident Vanessa Callaghan, who has two properties in the red zone, and another in the orange, said while she wasn't sure how the buy-out offer would affect the equity in her homes, she was relieved there was a finally decision.

She and her mother were one of several Bexley residents whose home was rendered uninhabitable as a result of liquefaction from the Sept.4 earthquake.

"I'm just in shock really. I knew it was coming but this has been such a long time coming," Callaghan told interest.co.nz.

Stress of not knowing the fate of the neighbourhood - whether the land could be remediated on rebuilt on - and the unrelenting financial obligations in terms of paying mortgages and insurances on homes not fit to be lived in had taken a toll.

She wasn't optimistic that the Government offer would help them recover their losses.

"It'll probably be borderline at the end of the day, I don't think anyone will come out on top like they were before Sept.4," Callaghan said.

Her family would consult with their lawyer and bank to determine the best option. Prime Minister Key, in his announcement, urged residents to work with their insurers and banks to figure out which option would make most sense given their unique circumstances.

Uncertainty to certainty

Insurer IAG welcomed the decision.

IAG CEO Jacki Johnson said it meant that many insured customers could move from uncertainty to certainty around the fate of their home.

"The guidance as to what this means to homeowners, and the options they will have, is equally welcome and will help our response to the needs of our customers in these worst affected areas," Johnson said.

IAG and is affiliates NZI and Lantern would be working directly with customers to sort through the options to help them understand their entitlements, she said.

Clearer picture

Prime Minister John Key said the plan would give people of greater Christchurch a clearer picture of what their future held.

"Since September last year, the government has been working to provide certainty for residents, while recognising many people have their life savings tied up in their homes," Key said.

"Today we have released the most up-to-date information we have about the state of the land in greater Christchurch. Advice from geotechnical engineers has seen all greater Christchurch land divided into four residential zones – red, orange, green and white," he said.

Residential red zones – which involved around 5000 properties – were where the land wass unlikely to be able to be rebuilt on for a considerable period of time. Homeowners in this zone faced lengthy disruptions that could go on for many years, Key said.

For people who owned property with insurance in the residential red zones on 3 September 2010 there would be two options:

  • the Crown makes an offer of purchase for the entire property at current rating value (less any built property insurance payments already made), and assumes all the insurance claims other than contents; or
  • the Crown makes an offer of purchase for the land only, and homeowners can continue to deal with their own insurer about their homes.

"The varying degrees of damage to the houses and land in the residential red zone mean it will take more time to develop these offers," Key said.

"The reason current rating value is used to assess the property value is because this best reflects the value, and is the most up-to-date information available. Current rating valuations, which are what the Council's rates are based on, date from 2007," he said.

"We hope to be able to come back to residents in the red zone with an offer of purchase within the next eight weeks. Residents will then have nine months to consider the offer of purchase. In the meantime, if residents wish to leave their badly damaged homes in the red zone they should talk to their insurers about accessing any unused portion of their temporary accommodation allowances immediately."

Why it took so long

Key said the size, scale and complexity of the issues the government had been dealing with following the earthquakes meant it had taken some time to get information to residents.

"Each subsequent earthquake since 4 September has made an already large and complex challenge more difficult," Key said.

"To put this in context, Treasury has estimated the combined cost of the first two Canterbury earthquakes to be equivalent to about 8 per cent of New Zealand’s GDP," he said.

"Damage from the 1995 Kobe earthquake in Japan was just over 2 per cent of Japan’s GDP, Hurricane Katrina in 2005 cost about 1 per cent of US GDP, and March’s Japanese earthquake and tsunami disaster was an estimated 3-5 per cent of Japan’s GDP.

"This has been a major event and the government is committed to getting things right for the people of Canterbury. We're moving as quickly as we can to give some certainty to those affected," Key said.

Based on conservative assumptions, Treasury had estimated the net costs to the government to purchase all of the around 5000 properties currently in the residential red zone to be between NZ$485 million and NZ$635 million.

The final costs were still to be determined.  Factors that may alter the final costs included the take-up of the offer, government property valuations and proceeds from insurers. The costs were expected to be met from the Government’s $5.5 billion Canterbury Earthquake Recovery Fund.

Brownlee says most up to date info used

Canterbury Earthquake Recovery Minister Gerry Brownlee said the announcement today of zones of land damage in greater Christchurch was the most up-to-date information that can be provided.

"The government will continue to provide the public with timely and accurate information on the state of the land and what it means for residents," Brownlee said.

Red

It was not feasible to rebuild on red-zoned land at the present time, Brownlee said.

"Such wide scale land remediation would take a considerable period of time, and the social dislocation of such massive works would see people out of their homes for at least three years, and in some cases more than five years," he said.

"In some areas we’re talking about the need for up to three metres of compacted fill to bring the land up to compliant height, along with many kilometres of perimeter treatment. Repair in all the red areas would not only require raising the height of the land but also a complete replacement of essential infrastructure like sewer, water, electricity and roading," he said.

"Full land repair in these areas may mean that every house would need to be removed, regardless of its degree of present building damage. The resulting ongoing social dislocation would have major impacts on schooling, transport and employment for whole communities.

"Giving people the ability to relocate on land where they can rebuild immediately is the best option we have," Brownlee said. 

"The government hopes to be able to come back to residents in the red zone with an offer of purchase within the next eight weeks. Residents will then have nine months to consider the offer of purchase," he said.

Green

"The majority of greater Christchurch properties – about 100,000 – have today been given a green light to go ahead with their repair and rebuilding of their homes," Brownlee said.

"Insurers have shown a willingness to work with the government and homeowners as we move forward with Canterbury's recovery. Property owners in the green zone no longer have to wait for the results of any area-wide land assessment reports by EQC or their engineering consultants Tonkin & Taylor," he said.

"There will be some isolated exceptions where geotechnical assessments will be required due to major land damage, but for the most part Christchurch can get on with rebuilding. Repair and rebuilding work should take into consideration the risk of ongoing aftershocks, so some finishing tasks such as brick and driveway concrete laying should be delayed until that risk decreases."

Orange

The orange mapped areas were where engineers needed to undertake further investigation.

"Some of the damage in these areas is a direct result of the magnitude 5.6 and 6.3 earthquakes which struck on 13 June, and has not yet been adequately assessed to provide residents with certainty. We’d have liked to have provided clarity for the hundreds of households in orange mapped areas, but we have listened and responded to the many people saying they want information now. This is the most up-to-date information we have," Brownlee said.

"We will progressively announce the outcome of investigations in these orange areas over the coming weeks and months," Mr Brownlee said. There are about 10,000 properties in the residential orange zone," he said.

White

There were also some areas in white on the map, including the Port Hills and the central business district, which were still being mapped or are not residential land.

Info

From today residents will be able to visit the www.landcheck.org.nz website and enter their address to find out what zone their property has been mapped into, and download a fact sheet on what it means for them. Residents can also contact the government helpline on 0800 779 997 if they are unable to access the website or they want more information. The government has commenced outbound calling to those people in the residential red zone to discuss the announcement with them and an information pack will be mailed out to those residents in the next few days.

This is the largest natural disaster we have ever faced in New Zealand. EQC has now received more than 360,000 claims for all the earthquakes since 4 September, one of the highest numbers ever handled by a single insurer in the world. The previous biggest event for EQC was the Gisborne earthquake in 2007 with 6224 claims. There have been more than 7350 aftershocks since the 7.1 magnitude earthquake on 4 September, including 28 that have been magnitude 5.0 or greater.

The mapping released today does not include the Selwyn District Council area as the land in this district was not badly affected by the major aftershocks. Most of the Selwyn area has been mapped as green. Any properties with land damage in the Selwyn District from the 4 September earthquake or subsequent aftershocks are being dealt with on an individual basis.

"The offers of purchase only relate to residential home owners with insurance in the red zone as they were our first priority. We will be considering uninsured homeowners and commercial property owners in the residential red zone over the coming weeks and will get information to them as quickly as possible," Mr Brownlee said.

Questions and answers

The following are taken from the FAQ sheet provided by CERA for issues not discussed above.

5. What if a home owner doesn't agree with the current rating value?

There will be a process through which any property owners who consider that there is a material discrepancy between the 2007 rating valuation and the market value of their property as at 3 September 2010 (e.g. because of significant subsequent improvements) can raise their concerns.

6. How long will it take for the offers to come through?

We anticipate we will be in a position to make an offer for purchase to home owners within eight weeks.

7. Where can people check their current residential valuation?

Christchurch residents can check their current rating valuation through the Christchurch City Council website http://ratesinfo.ccc.govt.nz and Waimakariri District Council residents through the www.waimakariri.govt.nz website.

These are 2007 valuations, which are the most up-to-date available, and what the Council's rates are currently based on.

8. What can people in the residential red zone expect now?

Every residential property owner in the residential red zone will receive information in the mail in the coming days and the Ministry of Social Development has started outbound calling to people in those areas to discuss the announcement. It will also outline where they can go for further information. Anyone in the residential red zone who does not receive a letter by the end of June should call the Government Earthquake Support Line 0800 779 997.

It will take a number of weeks (perhaps eight weeks) before we are in a position to provide the details around the individual packages being offered to all homeowners in the residential red zone with insurance. Firstly we need to conclude discussions with the insurers and other parties, and then we need to prepare an offer for each individual property owner, which is no small task.

Property owners will have up to nine months to accept any offer, and will be able to choose either an early or deferred settlement date. This should provide time for people to choose their next home.

9. What about those living in the orange and white zones?

Property owners in the orange (hold) zone will also be written to shortly, outlining the anticipated timing for the further assessment of their neighbourhood to be undertaken. We are working as fast as we can to gather sufficient information to provide more clarity.

For those in the white Port Hills zone an extensive geotechnical investigation is underway. However, rock fall issues are of a different nature to those on the plains. We are working hard in this area and no timeframe can yet be set. The white zone includes rural areas outside Christchurch City or the Kaiapoi Ward and residents in those areas should continue the normal individual insurance process.

10. Who decided where the different zones begin and end?

The decisions were made by the Government based on technical advice from engineering consultancy Tonkin & Taylor and policy advice from the Canterbury Earthquake Recovery Authority.

11. Can people living in the residential red zone continue living there?

The land in the residential red zone in unlikely to be able to be rebuilt on for a considerable period of time. However, there is no immediate requirement for people to accept the offer being made by the Government.

12. What does this mean for the uninsured?

Our expectation is that the number of uninsured is low. As they self identify, consideration will be given to their situation. At this stage, our priority is working through the options with those who are insured.

13. What is the situation for business owners in the residential red zone?

We will be working through the options for businesses in the coming weeks and will get information to them as soon as possible.

14. Do you expect any schools to have to close as a result of today's announcement?

Many of the schools which draw students from these areas already face real problems and are operating at alternative sites because of the damage to their facilities. This is another challenge that we will have to work through with the Ministry of Education and the schools.

At the moment no schools are being closed. Decisions on the future of schools will be made in due course as the longer-term schooling needs of Christchurch become clear.

15. What will happen to the land in the future?

That is still to be determined. Any decisions in the future will be determined by detailed engineering investigations. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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60 Comments

Map in there now with the red areas in the east. There are also a few in Waimak, so will try put that in too

Cheers

Alex

Few years back I told my clients they don't need to buy insurance, the TAX payer will pay for their house when disaster happening.

 

Dr Roof Ron 

This all smacks of a rush job.

How is it that the east side of Avondale Rd is green and the west is red, when liquifaction was right across the area and houses only both sides of the street are in similar condition.

Charles St is green?  Yet Sour Dr is red?  Take a look at these areas.  A brand new house in Charles St is down 300-500mm on last Monday alone, yet most of Stour Dr is "relatively" level.

These boundaries are not robust, many green areas are badly damaged.  But some of the red areas could be more easily fixed too.  So why were these decisions made without consultation with owners?

The sites fronting River Rd are red but one door back is green,  these areas only had lateral spread (sometimes large other areas not so large) these properties are of high land value yet the Government wants to write it all off without consultation?

This is a poor outcome for many.  Only offering GV on properties is insane.  Insurance under the EQC Act clearly gives market value (before the event) as the amount to be paid.  This is all just more bungling by people who have no idea what they are doing.

The solution would have been to identify core areas where it wasn't viable in any reasonable timeframe and then consider the marginal areas in consultation.  Instead hard lines are drawn which are based on poor decisionmaking without consultation.

A solution should have also been offered for uninsured owners of vacant land, especially considering a large chunk of one of the red areas is a new half built subdivision.

There is no solution as to what will happen with the very high quality houses to be abandoned and also no help for those in the rest of town.

Another piece of useless bungling by politicians trying to save face.

And they aren't even in a position to make offers to people yet because they haven't actually finished talks with the insurers...

"This is a poor outcome for many.  Only offering GV on properties is insane.  Insurance under the EQC Act clearly gives market value (before the event) as the amount to be paid." 

What?  GV(RV) values at 2007? At the very peak of the property prices cycle? YOU think that is unfair?

Aren't  you being somewhat selfish on this? The "market value " right now or even at Sept 2010 was what Chris? Alot less than in 2007 I bet!

If you don't like the deal then don't take them up on it. Wait for your own insurer  then.

I see many CHCH home owners are even talking about wanting "compensation". For what exactly? Because nature has decided to play hardball? No one is to blame for this event! So talk of compensation is just utterly ridiculous.    

Human nature is human nature, most are comparing the package with what they perceived their property is worth. They will come around to realise they have to look at which option places them in the best position.The land is not fully insured under law for any of us. The provisons also allow for changes in the payout based on RV plus improvements with evidence. Advice from Engineers on land condition at the margins of respective zones is also provided.

Changes in community services need to be made available to households as well, like the proposed school closures to make an informed choice. The Ministry of Education had a briefing yesterday with local school leaders.

You have to say they are trying on this one rather late in the piece. It was rushed because the pressure over the past two weeks has greatly increased. People are now realising this dangerous earthquakes will continue and the mood has changed in the past two weeks across the city. The Government had to put something together... however all the reports I have seen suggested this activity would continue for years..this does not come as a surprised to the informed who have known this for months.

Justice, if you knew the ChCh property market (which obviously you don't), you would know that there is an enormous variation between market value and rateable value. 

In some streets people will be ok, in others they are so far wide of the mark it's not funny.

In areas like Bexley, a section with an RV of 90k could have sold for 180k in 2007, and was probably worth 160k in Sept 10.

We sold a section in Richmond (green zone but close to orange) for 395k in 2007 which has an RV of 240k, current market value would be around 375-400k still.

The EQC Act clearly states market value, so why settle for less.

(By the way we have no red zone properties but have quite a number of orange zone ones.  Some of which have RV's less than half of market value.  Fortunately  our properties are isolated orange zones on streams that CAN BE remedied, so the only option we will accept is repair).

 

"In areas like Bexley, a section with an RV of 90k could have sold for 180k in 2007, and was probably worth 160k in Sept 10."

"We sold a section in Richmond (green zone but close to orange) for 395k in 2007 which has an RV of 240k, current market value would be around 375-400k still."

 

Your dreaming Chris, I put it too you that YOU don't know the NEW CHCH property market!

It's worthless! , so I would take the deal and be happy mate. You CHCH property owners are not the new taxpayer charity cases. Go to your private insurer and ask them for a better deal by all means.  The country has more important issues to deal with as a whole than worrying about people like yourself who think hoarding property is their god given right while things are good, but when things go bad...............you all scream foul bloody murder.

 

EQC is the insurer, Justice, and I wouldn't be surprised to see class actions in the not distant future.

By the way the market is not worthless.  We sold a property last week in Somerfield, with modest liquifaction on the street for a good price a lot more than we paid in 2008.

You all fail to remember that the Government provides insurance for land, it's not a bailout.  In fact the Government is taking a cheap option to get out of it's liabilities by only offering GV, which in many cases is unfair and less than their liability under the Act.

vote the bastards out I reckon

By receiving 2007 GV, homeowners are getting more than enough.

I told you the other day you were greedy and ignorant - you just proved it with your comments. Typical selfish property investor....

As I said the other day, you have no bloody idea. 

WE ARE INSURED, the law is the law, cheap tricks aren't what is needed.

Chris I think I have made my feeling pretty clear on property investors that seek capital gains rather that good yields. If you had a sound property returning positive yields on that investment, then surely you would be in a secure position to negotiate towards an equavalent yielding property from your insurance payout.

I also wonder if you adequately priced in the risk when you purchased these rental properties.

But I am glad I am not in your position, I can't see a good outcome for you all down there.

 

"This all smacks of a rush job" Looks like it:

http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/5192061/Insurance-shock-for-some-residents

"Some Christchurch homeowners were yesterday shocked to discover that the red-zoning of their properties would not entitle them to claim the replacement cost of their house from their insurer.  

One disappointed Tower policyholder reported in a blog that Tower had said it would cover only the cost of repairing the damage to his house, even though he had full replacement cover and his house was in a red zone."  

The Government scheme will be the only choice for some - will it be enough? 

I knew it.....CJ now moaning about it being a rush job...no longer is Cera and Gerry dragging the chain...now they are moving too fast.....

No Wolly, the government has always been providing timely and accurate information.

Canterbury Earthquake Recovery Minister Gerry Brownlee said:

"The government will continue to provide the public with timely and accurate information on the state of the land and what it means for residents".

Wolly, you miss my point.

They should have identified some of these areas in the weeks after Seotember (which would have helped the economy get moving).

Why this is a rush job now, is because of sorting out the absolute "no go" areas, they have tried to draw an exact line where the good and bad meet (based only on political expediency) without having discussed with owners to seek views and see what was viable.

As I said there are green areas in worse condition that red areas which makes no sense.

There should have been a few (probably 2500) that were pretty much "no go" and the rest should have been up for discussion with residents.

I know streets like Brooker Ave and Stour Dr are not good but they are nothing like as bad as Bexley or south of Horseshoe lake.  In fact they were so good after September 4 that construction continued there with no change to foundations at all.  Had homes in this area been built on piled foundations the area would probably be perfectly ok as is (with the exception of a couple of pockets).

There is no other word for it than bungling.

Watch now as the chance to establish an 'island native bush and birdlife' sanctuary fenced off from the cats and rats and grubby humans....is lost for all time. Expect to see rubbish grass and litter with mud trails where local hoons blast motorbikes 24/7 every which way they can...and it'll become the Condom and Neddle Park for want of some planning and investment.

I agree with some of Chris comments, but we have to face facts, there has to be a line drawn somewhere and there will be complaints wherever it is drawn. I don't think it is bungling and think that everyones personal situation will have a big influence on how this report is seen.

I am surprised to say that it seems quite a reasonable considering there is really no right answer or easy solution.

Reaction from the Greens:

The Canterbury earthquake package released by the Government today leaves a number of issues unresolved, says Green Party earthquake recovery spokesperson, Dr Kennedy Graham.

Residents have an option to receive Government payment for land and improvements, or alternatively for land alone with insurance money to cover the buildings.  Either way, if they accept one of these within the mandated nine-month period, they will be required under a settlement agreement to move off the land. 

“The package is good as far as it goes. The offer to residents inside the red zone is fair and reasonable,” said Dr Graham. 

“However, there are still important issues that the Government needs to address.

“First, if a resident declines to leave, the Government has not clarified what it will do.  Will it acquire the land under the powers of compulsion it granted itself in the Canterbury Earthquake Recovery Act.  Or will it leave it to the City Council to cut basic services such as water or sewerage?

“We also need to find out how many residents in the red zone were without insurance and what their situation is. Many of these residents could be left homeless and destitute.”

Dr Graham also said there is not enough information available regarding the fate of the land in the Red Zone.

“It would be a mistake for the Government to make land which is prone to lingering seismic uncertainty available for possible future residential housing.

“Once there is clarity on some of the unresolved issues, it is imperative to move on to developing a vision of a new and vibrant city,” said Dr Graham. 

“The Green Party’s ‘Vision Christchurch’ public forums have shown that many residents want a future eco-city with 21st century values and technology.”

Reaction from Labour:

The Government’s announcement today about the future of Canterbury land provides welcome information, but residents must also have access to free  independent and expert advice to guide their decisions, says Labour’s Earthquake Recovery Spokesperson Clayton Cosgrove.

“People will be grateful to have more certainty about their future,” Clayton Cosgrove said.

Clayton Cosgrove said Labour MPs would now assess the government’s offers and discuss them with constituents.

“What we need to discover is whether what the Government has said today meets the acid tests – John Key’s commitment after September that no one in Canterbury would be worse off; and Gerry Brownlee’s commitment that no one would lose any equity.

“We won’t know if that’s the case until we talk to individual constituents,” Clayton Cosgrove said.

“We have been saying for months that information is currency. That said, there will be many residents who remain confused or worried about their future.

“While it helps to know if you are in a red, orange or green zone, each case is highly individual,” Clayton Cosgrove said.

“While the choice of 2007 rating values appears to be a fair option, there will be people who bought properties after 2007 and paid above valuation, or who have taken out large mortgages.

“There will be many more who have made improvements, and others whose judgment will be affected by personal pressures. And that is why everyone must have that free independent and expert advice – so they can make up their minds about what they want to do at relative leisure,” Clayton Cosgrove said.

“It’s good that Gerry Brownlee is not shutting the door on providing such advice, but until now he’s shown no commitment to making it actually happen.

Now is the time to do so,” Clayton Cosgrove said.

Well if you have no insurance then you need to go to the red Cross etc..everyone who owns a house should realise the importance of insurance..period.

I would say though that 95 percent of those with insurance will take just the payemnt for land, as I would suspect they have full replacement or agreed value of more than the GV..so they will still have to deal with EQC and insurance companies.

But if you want a quick exit they are giving that choice but it may mean you take a financial hit.

My mother is in red zone, so will sit down and punch some numbers, one thing need to find out is who pays for removal of house.

the self promotion crusade continues.......

Another problem with this plan is that property investors are getting bailed out. In all fairness, only those who own the home and were living in it before the earthquake should be eligible for the land bailout. The owners of any houses that were rented on Sep 3 last year should not get the 2007 GV - they should get current land value (not a lot) from the government,  and they can deal entirely with the EQC and insurer for replacement value of the building. Yes, that would mean they be forced to abandon the land and not receive much for it, but hey, earthquakes are a RISK of property investing. 

Property investors are getting bailed out at the expense of the country. It is certainly fair that families and their homes get assistance, but property investors should not be getting assistance in the same way that shareholders don't get assistance (or shouldn't) when a company goes broke.

It's no wonder our economy has troubles. Property investors take this place for ransom.  

rpcas (really small cerebrum and sense) says:

Property investors are getting bailed out at the expense of the country. It is certainly fair that families and their homes get assistance, but property investors should not be getting assistance in the same way that shareholders don't get assistance (or shouldn't) when a company goes broke.

What planet are you on? SCF investors got $1.6 billion, this bailout is only $700million

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10677025

Yes, I know they shouldn't have been bailed out either. Thats why if you read my comment     " shareholders don't get assistance (or shouldn't) when a company goes broke"  thoroughly, you would understand that. Two wrongs don't make a right.

Could very well be... I don't know exactly.

Just watched Campbell Live - and my god are some people thinking irrationally. One guy was complaining that the amount he would receive from the government would not be enough to buy an identical 500 square meter section in another part of town. He thought he was being "shafted by $50,00)". I yelled at the TV when I heard him say that.  Is it not obvious that the government is not buying them new houses of equal size in quite frankly better parts of town, but rather giving them a fair (perhaps even greater than fair) amount for what they had? Of course what they receive is not going to buy them the same size house on the same size section - they were living in the less desirable part of town, even before the earthquakes.

You have a very small brain rpcas.

That guy is insured under the law.  He paid premiums and is entitled to receive a full payout at market value.

This package is a cheap option put forward by the Government to save a few bucks, when in fact doing it properly would have cost very little extra.

FACT IS: HE'S WAITED 9 MONTHS TO BE OFFERED LESS THAN HE IS ENTITLED TO UNDER HIS POLICY AND THE LAW.

WHY SHOULD HE OR ANYONE BE HAPPY (unless they are amongst the lucky ones who have relatively high GV's)

Because Chris MOST insurance premiums ONLY covered for the replacement cost of the house and NOT the land it sits on!  

Why do you continue to personally insult anyone who doesn't see your warped point of view?

I think Bernard it might be time for Chris to get a little talking too? 

You have been reported

Justice, how do you not understand that EQC INSURES LAND.  We pay premiums which cover land not just buildings.  If EQC haven't charged enough that's there problem not mine.

I am not personally insulting anyone who hasn't insulted me rpcas has suggested that I am greedy and ungrateful. 

How the hell is it that I am ungrateful when we have $4m in damage and have received less than $300,000 in total payments after 9 months which is only part of the loss of rents and two $100k plus GST EQC payouts out of at least 12 that we are owed.

THIS IS NO HANDOUT,  NO BAILOUT, we just want what we paid for, nothing else.

Mate....no one else walks in your shoes...if it helps I know of worse cases!!! All the best in getting resolution however I'm sure your will end up in court like so many others.

Justice, my comment about rpcas brain size was in response to his above comments and his earlier insults directed at me at 6.26pm and to similar comments made on a previous article.

I believe you would need to be cerebrally challenged to believe that someone who has been through what the residents in Seabreeze Close have - being abandoned by the Government and Insurers for nearly 10 months - is then being ungrateful after being handed a deal less than their legal entitlements.

rpcas has too been reported

Justice has been done ...... this reporting button is a hoot , you bing it , and then  the bumble-bees get released from a small cage within  Alex " Rambo " Tarrant's head ...

... any second now ,.

... " can you hear me Johnny ... breaker ..... phssssk , John Rambo , this is your commanding officer , hand-bag-fight at Bernie's .... phssssk ....... "

While I think it is wrong for people to have had to wait for so long for the govt/insurers to make decisions, what is it that makes you so sure that the 2007 GV is less than full market value (and that these people are getting "less than their legal entitlements")? I assume that among the 5000 properties that the govt will offer to buy, some people will get less than the market value but some will also get more especially considering that property prices have gone down since 2007.

Also, wouldn't the LIM report for a section in Seabreeze Close and similar areas state that the ground was more than suspect? If so, didn't the owners implicitly accept the risk associated with buying a cheap section there regardless (maybe thinking that the odds of something happening were low enough to take the punt)? 

Chris_J : You are wrong to accuse rpcas of having a very small brain .....

..... we need some proof  ... . I suggest that we take it out , and  measure it ......

While you have it out Gummy, you could replace it with a few Gummy Bears to keep him ticking over!

..... seems to be a waste of perfectly good Gummy Bears ..... but I'll do it for you , Chris_J .

Cheers !

..yes Rogie you have some Less now.

I'm with Chris_J  - if you insured for full replacement value then that means full replacement value (you shouldn't be penalised because the EQC component of our homeowners insurance is compulsory - frankly after this experience I think we should get rid of the EQC altogether). 

If one can't buy the same size section in the Chch urban area for the rateable value of the land which the local authority no longer plans to deliver services to, then it seems to me that government should have provided an option of alternate land on which it would do a title swap.

Let's not forget that the people in this worst-case-scenario position are the lower  socioeconomic neighbourhoods - those least able to take on larger mortgages.  Once again those with young families, those on lower incomes and (from what I've seen) a number of retired or near retired persons end up worse off. 

To me, residents in the areas that suffered severe liquefaction and loss of water and sewerage services after the first quake in 2010 should have been assisted immediately with evacuation for health and safety reasons (not the least of which being mental health reasons), perhaps to a number of tent/caravan sites - and within 3-4 months moved into temporary prefab type housing on known stable ground. 

Buses from all over the nation should have been brought into Chch - and the PT routes/services increased 10 fold and made free-of-charge for everyone - to get private vehicles off the roads and so that dislocated people could get to/from work, schools, and their abandoned properties.

The authorities attention/focus after the first event should have been on building the new prefab temporary accommodation - and getting reticulated services in to greenfields/new residential land should have been one of the first planning considerations.

Instead they've spent 10s of 1000s of manhours on "fix it" of the unfixable.  You would think that a country so susceptable to earthquake would have understood the implications of a magnitude 7+ on a little understood faultline in our second largest city built on river flats/estuarine land.  

I'm with Chris_J and will vote strategically to oust the National Government based on their appalling handling of the worst natural disaster this country has ever seen.

They should offer free professional advice if they seriously care about the people in the red zone communities. How many in the East will be able to make an informed decision. Even more difficult when your tired and so emotially involved.

ps The land is at Market Value based on certain size of land parcel constraints per the law.

"...if you insured for full replacement value then that means full replacement value..."

I'm a bit confused about something here. If people are insured for full replacement value, then why is government offering to buy people out? Surely the insurance companies should be paying this out? (After the bit covered by EQC of course.).

The problem is we've always all paid EQC premiums which are supposed to cover the land - but as we're finding out - they only want to cover a notional value - not a replacement value.

Because EQC contributions are compulsory - private insurers have never covered land.

So you can have full replacement on the building, but not apparently on the land (due to EQC being compulsory). 

Thanks for the info. I'm with you now. I had thought that EQC covered the first 100k, then insurance took over after that.

I hadn't spotted that implication. It's a very good point. Property investors should be treated exaxtly the same as commercial property owners.

Just being cynical for a moment, if anyone has access to land title information, can they do a check to see if any pollies names come up? Or companies where the politician is a director or shareholder.

You'll have to do that yourself, I'm afraid.

There are no investigative journalists in NZ.

Kiwi "journalists" would be too afraid of upsetting VIPs and seeing them declining interviews.

Bad for business, and all that.

You know how it is.

 

I am forced to agree. The nearest we seem to get to investigative journalism is when individual posters point something out. And it's a pity because lots of the spruikers arguments have more holes than Swiss cheese.

Pollies have to declare all "interests" I think....but trusts, in wife's name, kids, pet dog....Im sure there are lots of legit ways to obscure it somewhat.

regards

Gerry's place is still orange (Bradnor Road). Some of David Carter's family's properties are orange too.

There's no way the Government will buy properties in Fendalton, the land values at around $1000/m2 meaning that you could drill halfway to China to stabilise the land and it still work out cheaper to fix it than buy it.

Interesting points,  thinking of the eight families I know in the area...all have  two to three houses each in the red zone. Therefore I wonder how many actual households are getting effective relief from this package.

What a wonderful solution I thought, bailing out people instead of finanacial institutions, benevolent to the bone. Then I thought hang on, the people get the money, then what? They pay off their bloody mortgages off course.

So how much of this is driven by the banks I wonder?

Banks seem to have ALL known long enough in advance to come up with sweet deals for house owners in the residential red zone. Part of a deal with government?

The big banks asses got saved by this deal.....again!  Fewer home owners walking away from  negative equity situations. The special interest rates are a bloody cheap trade off.

While we can all hope that those facing a shite life for 9 months or more can now move forward to something more promising; the true winners will be the big banks....

We, the NZ Corp creditors aren't saving Christchurch....nah...just the banks and others in the pig trough. 

 

To all

A gentle note to all to take the emotion down a few notches.

I'm happy to have robust debate and banter, but please don't abuse other commenters personally.

We all know when the line is crossed. Please don't.

cheers

Beranrd

Hugh, on the use of Rateable Values - without even looking I know of properties that have RVs nearly 40% above market value and others where land value is as much as 40% below market value - it hardly seems a fair scheme.

In terms of cost - why is there any cost at all?  The deal is for insured parties only. EQC is liable for the value of (in most cases) 450m2 of land - which in the majority of the value - say in Bexley in 90% of cases it's probably close to full value.

Hence if all buildings are covered by the private insurers and most of the land by EQC then I couldn't see the cost rising above maybe $50k per section ie $250m.  And perhaps some of this could have been recovered by dealing with all the houses written off by insurers (ie relocating them to a new area).  {But also remember that Council has saved the $50,000 or so per site needed to restore roads and services so we should be even anyway].

Are there a lot of undamaged properties insurance companies are not willing to cover?  If we've had 1 big and 2 large close quakes and the properties received no damage why do they need to go?  Sure there was liquifaction, but did you see Edgeware Rd, Hills Rd, Madras St, Peterborough between Manchester and Madras or Charles St - these are all GREEN zones.  No compensation for a 10m wide sink hole on the road (Edgeware Rd) or a foot of water and silt bubbling up.

Now compare this to red Stour Dr (remember they were still building with conventional foundations there AFTER Sept 4), only some houses are out of level, and the liquifaction wasn't anywhere near as bad as some parts of town, yet the Government is buying it all?  Why?

How robust are there decisions?  Where was the discussions?  Surely a better option would have been to have a core "no go" area and have the margins up for discussions with property owners given options to walk away with a buy out if they needed to.

It looks likely with the current plan, no remediation will be done anywhere, except for single siteworks.

This is a lazy and bungled plan disadvantaging some and rewarding others.  If it took 10 months to come up with this ChCh has no hope.

Chris/Hugh - will your 250M figure climb, not a little, when this approach is applied in some of the 'Living Hills'? (+ parts of Fendalton?) Because, a good few of the "blindingly obvious" areas for abandonment will have section values way up there, probably well above the market value of the minimum size district plan section of 650m2, that I think is 240k. (See that article of Janine Starks that I linked to above and the Act. You two probably have.)

Another thought re. insurance claims, don't forget the so called 'out-of-scope' claim. (Driveway covering, paths, fences = hard-lanscaping.) Just an aside, every little helps. 

Anyway, it's bound to change once we've had a few more M5 to M6's, maybe even those "robust boundaries"(?) that will surley flex as assessments progress in the amber and white zones, nevermind once people get to appreaciate some areas of illogical placement in regard to damage distribution, as you are pointing out Chris.

How come we aren't calling this by its proper name the "Bank & ECQ bail out"

The reason those banks are offering the low rates is that after this bail out by the government the bankers have spent the last few hours dancing and celebrating thanks to the enormous generocity of the New Zealand people.

I think we can all also agree that socialism AKA EQC doesn't work and that the 1993 EQC act was utter rubbish. What is worse about the EQC is its reverse socialism since the Rich person gets bailed out by the poor person. 

I mean you people want the EQC to cover your land value yet you refuse to pay any money for it. 

Read this pdf for "insurers" from the EQC where they clearly explain that your lands value is covered (well some of it is covered) and you are required to pay $0 for that coverage, the EQC is worse than AMI no wonder its getting bailed out by the NZ government. 

http://www.eqc.govt.nz/downloads/pdfs/an-insurers-guide-to-eqcover2.pdf

Then read the "publics" version of the pdf where the costs for EQC are never included or explained. Typical modern day socialism were the people demand services and don't care how they are paid for.

http://www.eqc.govt.nz/downloads/pdfs/household-guide-eqc-cover.pdf

This is why you get people like chris_j claiming he has paid for land coverage from the EQC, it should be quite clear to everyone including chris_j that he hasn't paid a single cent for his land coverage and neither has anyone else in NZ. Good luck trying to sue the EQC chris_j you are going to loose, however if you have private insurance that covers your lands value well now your talking as you may be able to Sue the private insurance company instead.

Also note that according to the ACT if your building code was issued under section 74 of the Building Act 2004 or section 32 (b) of the Building Act 1991. Then the EQC can decide to pay you want ever they like including $0.

Don't you just love Socialism. Now could all you people in Auckland living on expensive land please pay a LOT more into the EQC and stop behaving like a bunch of Socialists.

 

 

 

 

 

 

Yeap I suppose they are saying we will give you the equity in your house as at 2007, and then market forces will dictate the rest.

Most people will take option 2 if you got full replacement on your house as building costs have sky rocketed even since September, and buidlers are going  to be very hard to find (I cant see many moving here with families while aftershocks keep hitting out of the blue)

The only way you going to get $50k section's is if the government build's them , and the Government is basically saying we aint got no more money, this is the best we can give you.

Either way there is going to be No quick solution, there are a number of parties involved in each transaction * 10,000 plus properties,  it's going to take time.

Take the money on offer and run...but not before you rip out the roses and daphs,the bulbs and the fence, ....why leave all the goodies for bulldozer!...oh and those ceramic tiles look good...

9  months they say...err that means the socialists could slither back into power before the time is up...better be quick cos Goofy will probably slap a tax on the payouts.