Unreasonable, unfair, harmful flaws in legislation for strengthening apartment buildings

Inner City Wellington has today released its latest report on the impact of earthquake-prone building legislation on apartment owners in Wellington. The report draws on ICW's recent survey of Wellington apartment owners whose buildings have been assessed as 'earthquake prone' and so are legally obliged to strengthen or demolish their buildings. Responses from over a hundred owners paint a grim picture of their situation.

The report clearly shows how apartment owners have tried in good faith to progress strengthening projects, at huge financial and personal cost. Whilst some have started or are about to start the strengthening work, many find themselves unable to advance and are now stuck facing non-compliance penalties.

The report concludes that it is impossible for apartment owners to comply with the legislation without incurring financial losses averaging $400,000, and without exposing themselves to financial, legal, housing, wellbeing and health risks so enormous that they will suffer short term and lifetime consequences out of all proportion to any benefits their sacrifice might achieve.

ICW's spokesperson on seismic matters, Geraldine Murphy, says: "There are around 40 multi-owner residential buildings in Wellington that have been assessed as 'earthquake prone', and based on our analysis they contain around 668 apartments, with over one thousand owners, and over 40% of those are owner occupiers.

If all these owners strengthened their buildings within a maximum of 15 years, as the legislation obliges them to do, they would have spent on average $400,000 per apartment, plus price increases of around 5% per year. That's a total of at least $267.2 million, but the public safety benefit of that, based on the Ministry of Business, Innovation and Employment's (MBIE) own estimates, is a possible life safety benefit of just 0.4 lives over 75 years."

Compliance cost/net losses
40 multi-owner residential buildings in Wellington
$267,200,000
to the building industry and GST
Public safety benefit
Possible saving of 0.4 lives over 75 years

The report shows that benefit would be reduced if
a) MBIE's estimate of 17,424 'earthquake prone' buildings across New Zealand turns out to be overstated, which we believe it will be;
b) at least 17,424 buildings are strengthened to 34%, which we believe will not happen; and
c) buildings identified as being 'earthquake prone' are in fact at risk of collapsing in a moderate earthquake in the next 75 years, which we believe they are not.

ICW has already provided the Government, MBIE and WCC with information about how the EPB regime is impacting these apartment owners, and about the difference between what is really happening and what is in the policy documents on which they rely. But so far they have not been prepared to accept there is a very big problem here.

This latest report provides even more compelling support for ICW's contention that the effects of the EPB legislation on apartment owners are unreasonable, unfair, harmful and morally indefensible, because the whole EPB regime is deeply flawed.

"Neither the Government or WCC have got data on the home owners affected and the impacts. The Government and WCC must take notice now with more data in front of them. Why would anyone think it is acceptable in New Zealand, for hundreds of home owners to be forced to part with $400,000, and have their lives torn apart, when strengthening 40 of their buildings would not even save one life?

"Forcing home owners to comply with the legislation by exaggerating the risks posed by their buildings, and threatening them with non-compliance penalties of $200,000 and compulsory demolition of their homes, is outrageous and cannot be allowed to go on."

ICW has made written and oral submissions to the Governance and Administration Select Committee, on ICW's two petitions that Grant Robertson presented to Parliament in early September 2019. The submissions call for an independent review of the legislation as it affects multi-owner residential buildings, compensation for owners who have completed or are progressing strengthening, and provision of practical owner-centric transition measures. The Committee did not report back to Parliament on the petitions and they will be carried over to the next Parliament.

ICW will be calling on whoever is in Government after the election to commission such a review and progress these actions, as a matter of urgency.

At the Wellington Central candidates meeting on Tuesday 18 August at St Peter's Church in Willis St at 6pm, the impacts of mandatory seismic strengthening will be one of the topics being discussed by Grant Robertson, Nicola Willis and James Shaw. The other two topics are the affordability and availability of insurance for apartment buildings, and the changes required to the Unit Titles Act.

Note: We are planning for the candidates meeting to proceed under Level 2 restrictions and are confirming arrangements with candidates who are attending.

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