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Unaffordable: cost of strengthening Wellington apartment buildings

Report from RNZ
Wellington apartment owners could end up spending more than the value of their homes, to make their buildings earthquake safe. Initial findings from a new survey shows apartment owners in Wellington are facing bills of between $93,000 and $805,000 to bring their home up to code – as required by law.

But the average QV of those units in September 2018 was $430,000.

Apartment owners said local and central government needed to do more to help – and fast.

Wellington architect Roger Walker first fell in love with the brick building he calls home in the late 1990s. The former warehouse was up to standard when he moved in, but now it needs to be strengthened to new standards by 2023.

Mr Walker said that was going to cost about $500,000 per apartment, a cost that was likely to be echoed around the city.

“I’m still working, so I’m probably better off than some people who have completely retired and have no income, [they] will be facing these sort of insurmountable costs.

“So I think where I’m coming from is just help, help, help. We can’t finance these things on our own, it’s just really unaffordable.”

It was unlikely the building could be demolished because of its heritage status, and owners could end up walking away, Mr Walker said.

Human rights lawyer Tony Ellis lives in the same building. He said the situation was “remarkably unfortunate”, and suggested the costs be shared like they were for leaky buildings with the government, local council and homeowners splitting the cost.

“It’s an awful lot of money for people to fork out particularly for those who are on fixed income who put their retirement savings into it. With the amount of money that’s being asked, you lose your apartment.”

The costs faced in that building are echoed across the city – according to a survey done by the Inner City Residents Association.

Spokesperson Geraldine Murphy said initial figures showed the average cost per apartment was about $500,000 – much more than authorities had estimated.

“We had been hearing from council that the average cost of strengthening for residential was between $50 and $90 per owner, and we just didn’t believe that.”

Some owners could not afford the bills they were facing.

“They’re just going to be selling in a market where people you have people trying to get the lowest possible price for their land. The whole policy is clearly flawed.”

Ms Murphy said meetings with local and central government to talk about support had been helpful, but things needed to move faster. She had asked the government to review the Building Act to make sure it was delivering the outcomes expected, but that request had been turned down.

Wellington City Councillor Iona Pannett said for its part the city council was trying to help apartment owners, by offering grants, and an advisory service for owners.

“We have known of course for many decades we are in an earthquake prone city and so there is a responsibility, just as part of owning a building, to strengthen it. In saying that, of course we know there have been significant changes with insurance and the construction market with some of these big earthquakes we’ve had,” said Iona Pannett.

The council’s asked the government for money to help, which would hopefully come through the budget to be announced this month.

The Ministry for Business Innovation and Employment said it acknowledged concerns about the financial burden of earthquake strengthening on building owners. Spokesperson Anna Butler said there was financial assistance available for heritage buildings through the Heritage Earthquake Upgrade Incentive Programme.

The Minister for Building and Construction Jenny Salesa and the Minister of Finance Grant Robertson met last year to discuss financial assistance for owners of earthquake-prone buildings, and had asked officials to do more work in that area.

8 comments:

  1. Leviathan, 14. May 2019, 23:28

    It is a double-whammy, because apartment owners have to pay Body Corp fees as well, and the Body Corp have to pay for the insurance for the entire building. Very hard to save enough to pay for strengthening, when all your money is being eaten up by massive insurance premiums. The ironic thing is, even if you have strengthened your building, the insurance companies don’t take that into account, and just go ahead and screw you anyway. Read about it here in an article on Eye of the Fish: “insurance-means-the-death-of-the-apartment-building”.

     
  2. Iona Pannett, 15. May 2019, 8:49

    Costs are getting out of control; as I say on RNZ, Council and Government need to step in to help. [via twitter]

     
  3. William C O'D, 15. May 2019, 10:11

    The problem as I see it is we fell over ourselves to save these “heritage” buildings, but with little thought to their vulnerability in earthquakes. Either engineers have upped their game substantially in the last 1 or 2 decades, or were reluctant/dis-encouraged to state the obvious about the viability of these buildings – namely the redesigns needed to make them fully compliant. If the costs to secure these buildings are as stated then they become unviable, so could well be abandoned, & ddemolished and rightly so, and should be replaced by newer structures designed to code completely. What cost of lost human life is tenable, before failure creates a disaster. Is this possibly similar to the debacle in ChCh where a developer’s engineer convinced the local body that his design was safe & durable.

     
  4. Kirk B, 15. May 2019, 11:21

    The Government and the council need to get creative here.

    Step 1: interest free/very low interest loans from central government.
    Step 2: allowance for rebuilds of some of these buildings with council waving its normal development fees.
    Step 3: allow rebuilds added flexibility to increase height limits and/or smaller unit sizes so additional apartments could be added with profits of sale offsetting some of the existing owners’ rebuild costs.
    Step 4: for those owners who are in dire situations (eg retired on fixed income with no savings), the council could take ownership of the unit and provide council housing rental rates (eg very cheap) to owner until they no longer require housing (eg they pass away or move to alternative living situation). After that council could sell or keep as part of council housing pool.

    I came up with the above after 5 minutes thought, I’m sure there are many other ideas that might work that don’t require huge (and politically unfeasible) payouts.

     
  5. Chris Horne, 15. May 2019, 14:08

    Let’s have no calamity like the leaky-homes syndrome when more apartment blocks are built. The cost to the nation, and to house and apartment owners, has been enormous.
    The Building Code must be greatly toughened to ensure no repeat of either the leaky-homes syndrome, or the present faulty apartments, office blocks and public library syndrome. Building engineers, contractors, building-materials suppliers and WCC’s building inspectors must be unrelentingly strict in their compliance with an upgraded Building Code fit for the 21st-century.

     
  6. BHS, 15. May 2019, 14:15

    Stop surveying buildings for seismic risk! Live and let live.

     
  7. Mark Spencer, 15. May 2019, 15:33

    It’s unaffordable code. And to think outside the square to solve the problem, the new problematic code needs to be scraped.
    And what difference does it make if it’s by 2023 or by 2032?
    Extensions of the arbitrary date are possible.

     
  8. Local, 15. May 2019, 17:38

    The Wellington Mayor and city councillors need to relook at their policies. They are causing significant economic, social and personal distress in Wellington.
    Why are they insisting and forcing unaffordable super strengthening of buildings that are already robust…and all in a seemingly random shifting fashion, with no clear baseline – just an everchanging attack. After all the Town Hall as one example has since 1904 withstood thousands of earthquakes, some very strong.
    Do the the mayor and Council have “insider knowledge” that the biggest earthquake ever is about to hit us? Council panic and overreaction now will never stop that!

     

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