In last week’s blog we discussed the proposed changes to the earthquake strengthening timeframes, and how landlords in low risk areas would continue to face commercial pressures to strengthen their buildings, despite increased timeframes for doing so. Today we focus on the implications for owners, landlords and tenants in high risk areas such as Wellington, Christchurch, Palmerston North, Napier/Hastings, Gisborne and Blenheim.
Buildings in the high risk zone will need to be assessed within 5 years and upgraded within 15 years. Earthquake strengthening is a costly business, with some owners facing costs in the millions. While this cost has been spread over a longer period for owners in the low or medium risk areas, building owners in high risk areas face paying out huge costs within the next 20 years. Particularly given the decline in property or rental value of buildings with lower earthquake ratings, owners face challenges in raising the funds required for repairs.
In Wellington, owners have access to a rates remission from the Council or a grant from the Built Heritage Fund if they meet the relevant requirements. However these incentives may not meet the full needs of building owners. The rates remission is post-strengthening work, so will not help with raising the necessary funds pre-work. The Built Heritage Fund is only available for heritage buildings, and the granted amount is unlikely to meet the full costs of the earthquake strengthening.
The Wellington Chamber of Commerce has called for government support for businesses to assist with the costs of earthquake strengthening commercial buildings. Their suggestions include tax relief and access to low interest loans (see more information here). These suggestions are aimed at relief for Wellington businesses, but could be similarly applied in other high risk areas.
Click here to read more about the implications for building owners in high risk areas.