Wellington Scoop

Ignoring the risks of owning an apartment

by Geraldine Murphy
As an essential part of Wellington’s urban fabric, many members of Inner City Wellington (ICW) were some of the first to invest and help create the original ‘Cool Little Capital’. They bought apartments in compliant converted commercial buildings and in purpose-built apartment buildings. Living in vertical streets and neighbourhoods to bring life to the inner city, reduce commuting and use of productive land for housing.

Now medium and high-density housing is one of the essential solutions to address the homes crisis throughout New Zealand. But this type of housing has its challenges as many apartment owners are already experiencing: leaky high-rise buildings, exorbitant insurance premiums, being deemed earthquake-prone. These challenges are in addition to the intricacies and obligations under the Unit Titles Act 2010.

While Wellington apartment owners have been the first to bear the brunt of the earthquake-prone compliance burden, owners in other centres including Christchurch and Auckland are starting to experience it too. It has become a sad fact that apartment ownership comes with significant risks that do not come with houses in the suburbs.

If your apartment building gets assessed as ‘earthquake-prone’, you become liable for a share of the strengthening costs that can easily run into the hundreds of thousands of dollars per owner. This is due to changing building standards and the earthquake-prone buildings legislation, leaving owners of apartments in compliant buildings with heart-breaking and unexpected debt, loss of savings and in some cases, their homes.

Even if your building is not deemed earthquake-prone now, or if you have already strengthened it, you could find it is on the wrong side of the threshold at some future date if the regulations change. Consultation on regulations in 2013 was intended to give owners certainty by linking the definition of moderate earthquake to the building standards in place as at 1 July 2017. But owners in earthquake-prone apartment buildings are told by council officers, engineers and other professionals to strengthen as high as they can ‘in case the regulations change’.

The Minister of Building and Construction accepts that further changes may occur, but will not give any assurance that new compliance burdens will not be imposed on owners who have complied.

Officials say the National Seismic Hazard Model (NSHM) is outdated, the performance settings may not be fit for purpose,and buildings may be being constructed on unsuitable land. There are anecdotal reports from engineers about increases in the NSHM, at least for Wellington. There are ongoing changes to assessment processes used to determine if a building is earthquake-prone and council processes for owners trying to progress strengthening existing buildings. The goal posts keep moving.

Meanwhile, the Insurance Council is calling for a ‘new building standard’ that goes beyond life safety, the focus of the current building standard. A new standard would instead focus on ‘property resilience’ to reduce their pay outs for damage and lessen the economic impacts of buildings that can no longer be used.

Higher building standards to achieve property resilience for new buildings seems a more logical policy response than continuing with the current policy where various ministers believe that continual retrospective strengthening is just part of the cost of owning an apartment. Even a revised building standard focused on life safety will create huge financial burdens for apartment owners who bought or buy into compliant buildings.

The current policy is unsustainable.

The question is what happens to owners who have complied with requirements under the current standard in the event of a new standard? Unless this is addressed, the current policy creates risks for current and future apartment owners throughout New Zealand.

The other question is – do prospective apartment owners looking at medium and high-density buildings understand the risks and complexities of these environments and the risk of retrospective strengthening requirements? In August 2020, Wellington Central MPs Grant Robertson, Nicola Willis and James Shaw all committed to canvassing their colleagues to commission an urgent independent review of the earthquake-prone building legislation as it applies to multi-owner residential buildings.They also pledged to work together to progress issues that are critical to current and future home owners. This is critical to apartment owners throughout New Zealand. That commitment needs to be put into action now.

Geraldine Murphy is Spokesperson on Seismic Matters for Inner City Wellington.


  1. Ray Chung, 14. June 2021, 14:50

    Excellent article Geraldine. Another factor worth considering is that banks will loan a lower percentage of the purchase price or valuation as they consider there is more risk than with standalone housing. The problem with getting a favourable response from government is that they’re encouraging developers to build more apartments and squash people into the smallest possible spaces so they can say they’re doing something about the housing shortage.

  2. Claire, 14. June 2021, 22:14

    Ray: I agree Wellington should concentrate on lower buildings with good seismic design. The problems Geraldine outlines must be fixed. People are going bankrupt trying to strengthen buildings. Where does it end? The code will keep changing.

  3. nemo, 15. June 2021, 11:09

    Geraldine – also worth noting that the ground conditions below the building have a large effect on the seismic rating of the apartment building. Some buildings may be effectively impossible to strengthen, as the ground below is so saturated with water and unstable in a large seismic event. I’ve noted that in a post on the Eye of the Fish blog that you may be interested in.

  4. Ray Chung, 15. June 2021, 13:15

    Hi Claire, yes, but how do we get our existing bunch of woke councillors to understand this? The thing about getting earthquake resilience is like the old adage about “how long is a piece of string?” I’ve contracted three structural engineering companies to assess the same building in the CBD and I received three different solutions with very wide differences between remedial cost.