The Government has this week announced that it intends to implement significant changes to New Zealand’s approach to regulating earthquake-prone buildings.
Existing regime
The Ministry of Business, Innovation and Employment conducted a review of the existing regime, which concluded that while some parts of the current approach to earthquake-prone buildings were working well (for example, parties' obligations to remediate were found to be relatively clear, national consistency had improved, and around 1,500 buildings had been remediated), further progress would become difficult, and many building owners were not on track to meet remediation deadlines.
The review also noted that the current system resulted in some buildings being strengthened (and being vacated while such work was carried out) in disproportion to risk due to a misunderstanding of the current NBS rating system.
Proposed changes
The changes, which will be proposed as part of a Building (Earthquake-prone Building System Reform) Amendment Bill (Amendment Bill), are aimed at moving to a more risk-based, proportionate system, targeting more vulnerable buildings in medium and high seismic risk zones, and lowering costs for building owners.
While no Amendment Bill has yet been introduced to Parliament, the proposed changes include redefining earthquake- prone buildings and introducing zoning for earthquake risk.
A building will only be considered earthquake-prone if it is in a medium or high seismic zone. This appears to exclude any buildings in Auckland. To be considered earthquake-prone, a building must also be either:
- A high-risk building of heavy construction (ie generally includes concrete buildings) of more than three storeys; or
- An unreinforced masonry building.
Other changes include:
- Removal of the existing NBS rating system
- Introduction of a tiered approach to remediation, with different prescribed mitigation works, based on risk
- Owners will be able to apply for extensions to seismic work deadlines (even where those deadlines have already passed).
Impact of changes
The most significant changes will impact buildings currently assessed at having a rating of below 34% NBS – the Government expects that around 55% of earthquake-prone buildings (around 2,900 buildings under the current standards) will no longer be considered earthquake-prone, after these changes are enacted.
We also expect that these changes will impact on how seismic risk is assessed in general.
Moving forward there are a number of matters that are going to need some thought, including:
- Exactly how earthquake prone buildings will be measured from a structural engineering perspective
- The impact on tenant rights and landlord obligations when NBS ratings are used as measures for seismic performance
- The nature of any seismic warranties provided in leases, agreements to lease and agreements for sale and purchase
- Whether tenants will actually accept lesser standards when considering new buildings to lease
- The impact (if any) on insurance and finance
- The future interplay with the Health and Safety at Work Act 2015, noting that there has been considerable confusion in the market as to how the Building Act 2004 / earthquake-prone buildings criteria operate in the context where PCBUs (i.e. building owners, employers) are also required to minimise harm
- The timing of any required upgrades for remaining earthquake prone buildings.
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Co-authored by Larissa Wilkinson (law clerk).
