Changes to the earthquake-prone building system have been called “pragmatic” and “commonsense” as Prime Minister Christopher Luxon says having targeted risk and risk management is what's needed.
Building and Construction Minister Chris Penk announced the changes at a joint press conference on Monday involving Prime Minister Christopher Luxon and Finance Minister Nicola Willis, who is also a Wellington-based list MP.
Luxon told the conference: “Targeted risk and risk management is actually what’s needed because the danger is, if it’s a one-size-fits-all, you end up boiling the ocean and actually not doing and managing those risks actively.”
Penk said while the current system for assessing and managing seismic risk in buildings was well-intentioned, it placed an overwhelming financial burden on building owners to find a better way forward.
The new system
Penk said the Government would remove the New Building Standard (NBS) ratings currently used by engineers to determine whether a property is earthquake-prone.
“The new earthquake-prone building (EPB) system will capture only buildings that pose a genuine risk to human life in medium and high seismic zones," he said.
“This category includes concrete buildings three storeys or higher, and those constructed with unreinforced masonry.”
Auckland, Northland and the Chatham Islands would be removed from the system entirely, reflecting their low seismic risk, Penk said.
Coastal Otago - which includes Dunedin - will move from a low to medium seismic zone.
“Unreinforced masonry buildings under three storeys in small and rural towns will no longer require remediation or warning notices, but owners must secure the façade before the building can be removed from the earthquake-prone register.”
For buildings that still require some remediation, Penk said the Government is removing the rule that owners must upgrade fire safety and disability access at the same time as earthquake strengthening.
Local councils would also be given the authority to grant extensions to remediation deadlines of up to 15 years.
Ministers would also be looking at making changes to resource management and heritage rules.
The numbers
According to Penk, there are about 5800 earthquake-prone buildings on the register.
The changes would remove around 55% of current earthquake-prone buildings (that's around 2900 buildings) and a further 1440 buildings will face "more cost effective remediation requirements", Penk said.
He said 840 would require no work at all and about 80 would still need a full retrofit.
‘More proportionate risk-based approach’
Luxon said the Government was not absolving every building owner of every responsibility because that would be "going too far the other way”.
“Instead, we are creating a more proportionate risk-based approach and mitigation will be required only in buildings with the highest risk.”
When asked about homeowners who have struggled to get loans or insurance, and if he expected that to change, Penk said: “We think it will be helpful for people whose lenders and insurers point to the existing earthquake-prone building regime and the stigma attached with a building considered to be earthquake-prone will be removed where that is the case."
“That said, lenders and insurers and would-be tenants can make their own assessments," Penk said.
"And in terms of survivability of a building as opposed to the life safety risk to the human life within that building, that'll be a different calculation that businesses but also public sector organisations, trusts and so on, will make on their own."
When asked if he expected insurance premiums to come down, Penk said he could not give assurances directly.
“But I know that a more proportionate system will put downward pressure on those premiums and it might go to the excess levels as well, and also the willingness of insurers to provide coverage.”
Wellington
When asked how the changes would make things better for Wellington apartment owners in concrete buildings taller than three storeys that are still caught up in the system, Penk said there will be wins.
“To the extent that we can have targeted retrofit as opposed to full retrofit. And then down a level again, facade securing as opposed to full strengthening works. And then you’ve got in the category of others, those which merely need to be recorded on a risk register by way of disclosure.
“And then for the other category, those that simply remain in the system, we are working on different measures to make it more easy, practical and affordable for those to undertake the work that they would still need to do,” Penk said, bringing up heritage rules and other areas of law.
Finance Minister Nicola Willis said the changes would bring down the number of Wellington buildings classified as earthquake-prone to 269 from 540.
Inner City Wellington’s earthquake-prone buildings spokesperson Geraldine Murphy said she was pleased with the direction of the review.
Murphy, an apartment owner in central Wellington, and others from the residents’ association have long been campaigning for changes to the earthquake-prone building system.
“I think it seems to be a targeted, pragmatic, proportionate and I think what really pleased me was that they recognised the impact that had been borne by apartment owners and small business owners of the previous system.”
“It’s going to be interesting to see where the banks are going to sit on this but I think with insurance, the cost of insurance was impacting on buildings that were 100% NBS - they were getting huge increases,” Murphy said.
Murphy said the people at her apartment building voluntarily strengthened their building from about 45% to 70% NBS and their insurance went up.
“I can’t imagine this will change insurance premiums on their own.”
Murphy said there would still be apartment buildings that have to be strengthened and homeowners who had limited funds and limited abilities to access a loan.
When asked if the Government was open to creating another fund to help existing homeowners in earthquake-prone buildings, Penk said it was not something they were committed to as the review lands in a good place.
But he said it would continue to think about ways it could make sure remediation works are more affordable.
While she wanted to see it all play out, Murphy said she was optimistic.
“I think we’ve got a good platform to build a robust, targeted, proportionate system and have gone away from what had been such a broad-brush approach that’s gotten totally out of control.”
‘It was a maelstrom’
Property Developer Ian Cassels said the changes were a relief.
“It was getting more and more restrictive and prescriptive. There were huge consenting issues and it was time consuming. It wasn’t sensible," Cassels, who is based in Wellington, said.
“It was a maelstrom."
The changes means "we won't have screaming insistence upon standards which are improbable in terms of buildings we have", Cassels said.
“They are a very good example of practical common sense."
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