Consultation has recently closed on a document by Ministry of Business, Employment and Innovation (MBIE) on building seismic performance in New Zealand. The feedback is timed to assist the government's response to the Canterbury Earthquakes Royal Commission report.

The proposals set out a consistent national approach for dealing with the assessment and identification of earthquake-prone buildings.

The proposals

  • A legal obligation would replace the current discretion on local authorities to carry out a "seismic capacity assessment" of all non-residential and multi-unit/storey residential buildings.  Assessments are to be completed within five years and in accordance with standard methodology
  • Results of the assessments would be held by MBIE on a publicly accessible register
  • Following assessment, building owners have 12 months to submit a plan for either strengthening or demolition, and a further 10 years to implement the work
  • Maintain the current national earthquake-prone building threshold (33% NBS), but introduce a mandatory national requirement for all buildings to be strengthened above such threshold within the above defined period (15 years)
  • Certain buildings are to have priority for assessment and upgrade works; those critical in an emergency or those on important transport routes
  • Other buildings, such as low use rural churches or farm buildings if declared earthquake-prone, would be exempted from the requirement to strengthen or demolish.

The economic impact of the proposals

The proposals obviously have an economic impact.  For local authorities, there will be an immediate cost in setting up the processes and allocating the resources needed for assessments.  For owners of buildings that are found to fall short of the standard, there will be costs in challenging the local authority's assessment and commissioning their own, and in providing their plan for strengthening or demolition within a year of assessment.  It seems likely that there will also be a direct effect on the market price of buildings.  Buyers are more than likely to offer lower prices for buildings that require capital investment in earthquake strengthening works.  The market also currently indicates that buildings with a higher seismic capacity rating are earning higher rentals.  Whilst MBIE's view is that maintaining a register will create the right incentives for building owners to maintain buildings well above the 33% NBS threshold, some owners will inevitably face difficulties in securing tenants, lower rent prices and costs in strengthening work.

Summary

MBIE have attempted to come up with timeframes that address the risk quickly, but at a pace that building owners can reasonably manage.  It recognises there is no such thing as an "earthquake-proof" building, and instead aims to strike a balance between an acceptable level of risk and the economic costs of strengthening or demolishing.

If adopted, the proposals in the MBIE consultation document will require legislative change, which invites further opportunity for public input through the select committee process.