Anne Gibson

Property editor of the NZ Herald

Building landlords cry poor

Owners proposing own scheme to get tax breaks and other financial help for upgrading old structures.

Damaged Christchurch is a powerful reminder that Aucklanders can't afford to be complacent about the risks of earthquakes, an engineer says. Photo / APN
Damaged Christchurch is a powerful reminder that Aucklanders can't afford to be complacent about the risks of earthquakes, an engineer says. Photo / APN

Landlords are crying poor and seeking financial assistance in the face of proposals to strengthen thousands of old buildings.

The Government is proposing to assess about 193,000 buildings within 5 years to determine whether they are likely to collapse in an earthquake. Estimates suggest 15,000 to 25,000 buildings will need to be strengthened or demolished and the focus is on those built before 1976.

Connal Townsend, Property Council chief executive, said the country's heritage must be protected but threats against buildings from Southland to Northland mean owners are putting forward their own scheme to get tax breaks and other help for their old structures.

Mr Townsend approves of the Government's response to the Christchurch earthquakes but says many landlords will not have the money to bring the buildings up to the proposed new Building Code regulations.

Building owners want financial assistance to keep old structures so his organisation has been investigating schemes which could involve taxpayers or Inland Revenue.

He said that without financial help of some sort the historic fabric of our towns and cities could be lost. Buildings could become empty, boarded-up and derelict because their owners cannot afford to pay for upgrades. That would be the worst possible result, he said, as neighbourhoods with empty structures quickly deteriorate and properties can be vandalised and harbour crime.

"We are investigating the options to find out which would achieve the best outcome. Any changes will most likely need to be fiscally neutral for the Government," he said.

One option is for the Government to reverse axing building depreciation, "or at least some partial restoration including special depreciation deductions for repaired and new buildings".

Tax write-offs on the cost of earthquake strengthening or targeted incentives to encourage business back into central Christchurch are other options, he said.

Maurice Williamson, Building and Construction Minister, acknowledges seismic strengthening costs are high but he emphasises that a balance must be achieved. "We must ensure the earthquake-prone building system strikes an acceptable balance between protecting people from serious harm and managing the huge economic costs of strengthening or removing the most vulnerable buildings," he said.

People also need to have good information about the buildings they work in so they can make informed decisions.

A series of ministry-run public meetings have been held around New Zealand to talk about the new rulebook and about 150 Wellington property owners attended in early February. Wellington investor Ian Cassels has been outspoken, saying landlords need incentives to strengthen their buildings. Wellington mayor Celia Wade-Brown says the proposals are only that and not set in stone.

The consultation period closes on Friday.

Aucklanders 'ignoring risk'

Aucklanders should not be complacent about earthquake risks, one of the country's top engineers says.

John Hare, a director of Holmes Consulting Group, a principal engineering advisor to the Canterbury Earthquake Recovery Authority and Structural Engineering Society president, said he knew that some Aucklanders spurned a national building upgrade.

But the Sumner, Christchurch resident said they should be more realistic about risks and secure easily-fixed building features.

"Aucklanders don't think it will apply to them. It's slightly head-in-the-sand. You've only got to look at Christchurch," he said of how shocked its inhabitants were to find that fault lines ran beneath their city.

"How do Aucklanders think the land got there? We got pushed up out of the sea by two plates colliding. There would have been significant earthquakes in Auckland but we tend to forget. Although the incidence of major earthquakes is few and far between, the reality is that for relatively little effort, you can take out the worst of the building hazards. You want to be looking at the most critical problems," he said.

Many Aucklanders feared volcanoes more than earthquakes but Mr Hare said this was ignoring the real risks.

"How do they think volcanoes got there?" he asked.

Auckland had a relatively low risk of a major earthquake and the land was generally more stable and suffered fewer of the soft soil issues that had beset Canterbury, he said, but that did not mean they should not fix old buildings.

While many Auckland buildings did not need major work, unreinforced brick masonry chimneys and brick parapets on commercial and retail buildings in major pedestrian areas were easily secured.

Auckland Council says the city has about 10 earthquakes annually and the area is rated low-risk.

Easing the pain

Options suggested by the Property Council to help landlords cover the cost of earthquake upgrades:
*Deductibility for losses suffered or reductions in income tax payable.
*Allowing an immediate tax deduction for all or part of the cost of rebuilding.
*Allowing tax losses on buildings on sale or demolition.
*Increasing the deductibility ceiling for donations and special tax credits.
*An allowance for earthquake-related tax losses to be carried back to prior years.
*Special depreciation allowances for replacement assets.

The series

Yesterday: The Government's big plan
Today: Plight of landlords
Tomorrow: The insurance issue
Thursday: What future for our heritage buildings?
Friday: How will tomorrow's buildings look and respond to earthquakes?

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