Simpson Grierson - The seismic reset - A shake-up for the system and a lifeline for building owners

The seismic reset - A shake-up for the system and a lifeline for building owners

This week the Government announced some long awaited changes to the earthquake-prone building management system.

The legislation still needs to be drafted but the proposed changes include:

Removing the existing New Building Standard measurement system (frequently referred to as “NBS”).
Removing low seismic zones from the future earthquake-prone building system. Areas of New Zealand that are classified as low seismic zones are Auckland, Northland and the Chatham Islands.
Reclassifying Coastal Otago, including Dunedin, and Stewart Island into the medium seismic zone (from the current low seismic zone).
Changing the risk mitigation requirements for those earthquake-prone buildings that remain on the Earthquake-Prone Building Register.

Under the future earthquake-prone building system, an earthquake-prone building will be a building that is in a medium or a high seismic zone and is either:

of unreinforced masonry; or
a high risk building of three or more storeys, of heavy construction (such as of concrete).

Buildings which are currently designated earthquake-prone but do not fall into the above criteria will be removed from the Earthquake-Prone Building Register.

What do these changes mean?

The proposed new earthquake-prone risk mitigation requirements will apply to unreinforced masonry buildings and to high risk buildings of three or more storeys of heavy construction (such as of concrete) which are not located in Auckland, Northland or the Chatham Islands.

Unreinforced masonry buildings in a medium or a high seismic zone

For unreinforced masonry buildings that are of one to two storeys and are located in rural areas or small towns, no work will be required although those buildings will still be recorded in the Earthquake-Prone Building Register.

For unreinforced masonry building in urban centres, no matter what the height, façades and walls facing onto public spaces or above adjacent properties will need to be secured.

Unreinforced masonry buildings of three or more storeys which are located in urban centres will, in addition to securing the façade, require a full retrofit that addresses significant building vulnerabilities to a level comparable to the current mandatory minimum standard.

High risk buildings of three or more storeys of heavy construction in a medium or a high seismic zone

For high risk buildings of three or more storeys of heavy construction (such as concrete) and regardless of whether they are located in rural areas, small towns or in an urban centre, targeted retrofitting that addresses the worst vulnerabilities of the particular building will be required.

We will need to await further details when the Government introduces the legislation.

Building code requirements

Currently, when a building consent application is made for earthquake strengthening works, compliance is also needed with the Building Code’s requirements for fire escape and disability facilities. The legislation is likely to remove triggering these requirements where building consents are sought but are limited to earthquake strengthening works.

However, these Building Code fire escape and disability facilities requirements will still be triggered for buildings that are either not earthquake-prone or are earthquake prone buildings and which are undergoing a change of use. It makes sense that the public safety requirements under the Building Code continue to be met.

Apartment buildings

The proposed changes will mean that apartment buildings in low-risk seismic zones (Auckland, Northland and the Chatham Islands) will be removed from the Earthquake-Prone Building Register and no earthquake-strengthening work will be required.

For owners of apartments which are located in either unreinforced masonry buildings or in high risk heavy construction or concrete buildings which are of three or more storeys and in other parts of the country, the applicable retrofitting earthquake-strengthening work will still be required.

Again, the legislation will contain details of the extent and nature of the required seismic works.

Landlords and tenants

Under the current NBS measurement system, many tenants require their landlords to seismically strengthen buildings so that they are at least to 67% NBS, even if a building is not earthquake-prone. This is due to concerns regarding the possibility of liability being imposed under the Health and Safety at Work Act 2015 in relation to managing seismic risk, rather than to the risk of occupying an earthquake-prone building.

The Government will also progress a bill to amend the Health and Safety at Work Act 2015, so that the Act does not require a higher standard of compliance than under the Building Act 2004, in terms of managing seismic risk. These measures will reduce compliance costs for building owners, and provide certainty to tenants in relation to their health and safety obligations, in terms of managing seismic risk.

Insurance

It remains to be seen what these proposed changes will mean in terms of building owners being able to obtain adequate insurance cover for their buildings and the implications for building owners being able to meet the premiums costs of arranging insurance cover. Early commentary from insurance companies is that these changes will have no impact.

Conclusion

While the detail of the changes is still to be worked through via the legislative process, the Government’s proposed reforms to the earthquake-prone building regime represent a significant shift in how seismic risk is managed across New Zealand. We consider that these changes are pragmatic and will remove a substantial amount of the burden on building owners. We expect this will mean less vacant buildings and shift the focus onto the high-risk buildings. The alignment of health and safety obligations under the Health and Safety at Work Act 2015 with the Building Act 2004 should provide greater clarity and certainty for both landlords and tenants, ensuring that seismic risk is managed proportionately and sensibly. While the impact on insurance availability and costs remains to be seen, overall, the reforms should trigger a more sustainable path forward for earthquake resilience.