Wellington Scoop

Unaffordable strengthening – apartment owners find support in Budget

News from ICW
“The inclusion of the Residential Earthquake Prone Building Financial Assistance Scheme in Budget 2019 is a starting point of much needed support for owners of units in residential earthquake prone buildings” says Geraldine Murphy, Inner City Wellington’s (ICW) seismic spokesperson.

$13.3m for operating costs has been allocated over five years and $10m for capital over 10 years. Budget paper information states it will be available to owners in multi-unit, multi-storey residential earthquake-prone buildings, who are in, or facing financial hardship, and where properties were purchased or acquired before 1 July.

ICW and the Body Corporate Chairs’ Group first proposed the concept of a Lender of Last Resort in June 2017 to address the issue of owners being forced to sell their homes because they could not fund their share of the cost, or projects stalling as Body Corporates did not want to force the owners to sell.

Since then a small collaborative lobby group has formed, consisting of ICW’s Seismic Spokesperson, a Body Corporate Chair, and a few owners in residential earthquake prone buildings. The group has been meeting regularly with their Wellington Central MP Grant Robertson, and also with the Mayor Justin Lester and Councillor Iona Pannett to push for more action to support this group of owners.

“We will be interested to see the detail of the Scheme and are happy to work with MBIE to develop that” says Geraldine Murphy.

“It will be critical that there is an effective advisory support service for owners and body corporates to access so they can progress their planning” say Neil Cooper, a Body Corporate Chair and Founder of the Body Corporate Chairs’ Group.

George Kanelos, an owner in a small body corporate and trying to progress investigation work for strengthening, says both the financial assistance scheme and an effective advisory support service are urgently needed to help body corporates like their one.

ICW believes more buildings would have completed strengthening work if there had been financial support and advisory support services available when the policy was first implemented following the Building Act 2004. Most recently, the group under the umbrella of ICW surveyed around 19 body corporates of residential earthquake prone buildings.

“The data collected on 13 buildings clearly shows that the previous Government’s estimate of the costs to strengthen the buildings was seriously flawed” says Hazel Kirkham, one of the owners in the group, who has worked on the data. “It also shows that the costs being used in government do not include the full costs of a complex construction project such as those being demanded of normal private residents.”

As part of doing the analysis, the group has funded an external assessment of the basis for the calculations to validate the results. “We are confident that these provide more realistic figures than the Council or MBIE are able to provide” says Hazel Kirkham, an owner in the group.

“There are other major issues that need to be addressed with the whole earthquake prone building policy”, says Geraldine Murphy. “The fund announced today is unlikely to compensate owners who are faced with selling their entire building due to the cost and the huge financial risk of undertaking such a project. This has to be looked at – people’s property rights are being taken away for a public benefit”.

“There are owners who have already strengthened at considerable expense under what we think is a flawed policy. Inner City Wellington has made several submissions to the Tax Working Group to call for tax relief for strengthening costs. While commercial property owners want depreciation reinstated, this isn’t necessarily going to work for residential owner-occupiers. This has to be addressed as part of the work that has been included in the IRD’s work programme” says Geraldine Murphy.

But fundamentally, the collaborative lobby group question whether the earthquake prone building policy is right.

“The Act needs to be reviewed. The fundamentals of the current legislation have been in place since the Building Act 2004 and Wellington provides real life data to inform that review” says Hazel Kirkham. “We are the canary in the mine”.

The survey results will be released, with an update on other activities, at a public meeting for residential owners in earthquake prone buildings on Thursday 6 June, 6pm – 8pm, at the Victoria University Faculty of Architecture and Design in Vivian Street.

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