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Apartment owners face massive losses and debts to strengthen their buildings

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A survey carried out by Inner City Wellington has estimated that owners are facing an average total cost of $437,000 to strengthen their apartments in order to meet new legislation affecting “earthquake-prone” buildings. The survey shows that Wellington apartment owners are facing untenable, escalating costs to carry out the required strengthening, which could leave owners with massive losses and debts. Some would lose everything and be forced to seek social housing.

The results of the survey were presented to a meeting of residents on Thursday, called by Inner City Wellington.

News from ICW
Over eighty people attended a meeting called by Inner City Wellington (ICW) to update owners of homes in Wellington apartment buildings that have been officially designated ‘earthquake-prone’.

Speakers at the meeting were Geraldine Murphy, Seismic Issues Spokesperson for ICW, and Hazel Kirkham, an affected owner who is working closely with ICW, lobbying Government and the Wellington City Council for action to provide support and compensation mechanisms for home owners who are facing untenable and escalating costs to comply with legislation.

Owners heard that Wellington Central MP Grant Robertson had taken the time to meet with the group on a several occasions and he recognised that owners deserved assistance. A $10m capital fund for a loan scheme for owners had been announced in the recent budget, a move that Grant Robertson had described as a first step, and he had expressed his commitment to continuing to look as other assistance including tax relief.

Other politicians and officials the group had approached had expressed sympathy about the often devastating impact the legislation is having on home owners’ lives, but most had shown no interest in addressing the problem.

Owners at the meeting welcomed ICW’s work to establish and publicise the facts, which contrasted sharply with the assumptions of most politicians and officials in Government and the Wellington City Council, usually based on a 2012 Government estimate of less than $30,000 to strengthen an 86m2 unit.

Out of around 600 buildings on the MBIE EPB register in February 2019, around 300 were partly or wholly residential. Of those, we believe around 40 were multi-unit, multi-ownership buildings (body corporate or company share), containing around 300 individual homes.

The meeting was told that MBIE and WCC had not produced reliable data about the number of residential buildings caught up in the legislation, real costs, or other issues affecting residential owners. So ICW had undertaken its own survey. The survey showed that to comply with the legislation by strengthening their buildings, home owners were facing total costs of between $55,000 and $2m each.

The average total cost per owner has been estimated at $437,000. The average RV was around $484,000. So in many cases, the costs would be more than a unit would be worth after the work was completed, leaving owners with massive losses and debts, or forced to sell at discounted prices in the current market. Some, including those with mortgages, would lose everything and be seeking social housing. But owners who did nothing could be fined $200,000 and have their buildings compulsorily demolished by the council, so owners were trapped.

ICW declared its intentions to use its data to continue lobbying for Government and WCC to introduce measures to offer financial and technical support to owners at different stages of the process, and compensation for capital losses.

A moratorium on new assessments should be initiated pending a full review of the earthquake-prone buildings policy and legislation which was now just one of several urban living and development issues, including insurance, building sector capacity, competence and business failures, contributing to an urban development environment that one professional at the meeting described as “a complete mess”.

Comments from owners told of the serious problems home owners are coping with including high levels of personal stress.

The speakers cautioned owners to be aware of the real costs when they were assessing their options, because building work represented only part of the costs. They encouraged everyone to tell their MPs, councillors and ICW what difficulties they were facing and say honestly “we can’t comply”, if that was the case. And they announced that ICW will soon be launching a Petition to Parliament.

RNZ: Owners fear losing homes because of unaffordable strengthening costs

1 comment:

  1. Robin Hagen, 10. June 2019, 9:43

    All based on an engineer’s opinion driven by risk-averse legislation. I have seen an instance where an Earthquake rating was challenged on a 1960s apartment block and the finding was altered. The owners think this is only a temporary respite as the incentive for engineers to produce more work for themselves is large and the standards are a moving target. I live in a building that is currently 100% of standard. Another round of standards revision and it may no longer be so. We may have lost sight of the reason for the standards. They were developed to protect human life in the event of a quake. Ironically, they are being destroyed without a quake.