COMMENT

We need higher density living in our cities to accommodate a growing population and the stakes are high in Wellington, with the city smack bang in the middle of a fault line.

Young people are increasingly being told that apartment living is the new way onto the property ladder in a sky-high market.

But I wouldn't touch an apartment in Wellington.

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The insurance premiums are ridiculous, the seismic assessment regime is often confusing and uncertain, and a building that gets deemed earthquake-prone can be a financial death sentence.

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The situation has got so bad developers are resorting to base-isolating new build apartment blocks to provide security for buyers.

Wellington's resilience issues are not new, but the situation has really turned up a notch following the 2016 Kaikōura earthquake.

Everyone talks about how it's not if, but when the big quake happens in Wellington.

Well, the epicentre of the Kaikōura Earthquake was more than 200km from the capital, and it still caused damage bad enough for tens of buildings to be demolished.

New Zealand Herald reporter Georgina Campbell. Photo / Mark Mitchell
New Zealand Herald reporter Georgina Campbell. Photo / Mark Mitchell

The Insurance Council has reported more than $1 billion of insured losses incurred in 2016 following the event.

That has dramatically affected insurers' appetite for risk in Wellington and even Finance Minister and local MP Grant Robertson thinks it's unfair how the city is being treated.

A 1962 converted apartment building strengthened to 45 per cent of the New Building Standard (NBS) in 2015 perfectly exemplifies what's happening.

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The cost to insure the building the year it was strengthened was $23,000, but fast forward to 2018 and the cost had increased to more than $56,000.

What happened in between? The Kaikōura earthquake.

Demolition work on the nine-storey building at 61 Molesworth St after the Kaikoura Earthquake. Photo / Mark Mitchell
Demolition work on the nine-storey building at 61 Molesworth St after the Kaikoura Earthquake. Photo / Mark Mitchell

Only buildings that are less than 34 per cent NBS are considered earthquake-prone, but in most cases buildings would now need to be strengthened to 67 per cent to secure insurance.

Asked whether base-isolating apartment buildings would have any impact on premiums, Insurance Council chief executive Tim Grafton said it was something insurers would welcome.

"But at the end of the day it will be over to each individual insurer to determine how it prices base-isolated buildings."

That sort of ambiguity is quite frankly cold comfort.

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Insurance isn't the only ambiguous thing would be apartment owners have to worry about in this sphere.

Earthquake engineering is not an exact science.

Wellington apartment owner Michael Cummins speaks with New Zealand Herald reporter Georgina Campbell about the escalating costs to strengthen his building. Photo / Mark Mitchell
Wellington apartment owner Michael Cummins speaks with New Zealand Herald reporter Georgina Campbell about the escalating costs to strengthen his building. Photo / Mark Mitchell

For example, Wellington City Council and KiwiRail ended up in a stoush over the status of the central railway station.

The council insisted the building was just 20 per cent NBS but KiwiRail disputed that with independent engineering advice it obtained claiming the building rated as high as 40 per cent.

Furthermore, how buildings are assessed have changed and could continue to do so as engineers learn more about how earthquakes affect buildings.

That's a good thing, but the consequence is a shifting of the goal posts when it becomes legislation.

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This has already financially ruined some apartment owners in Wellington.

Many purchased their buildings after doing due diligence and ensuring it was built "to code".

KiwiRail was accused of
KiwiRail was accused of "flouting the rules" after it removed earthquake-prone building notices from Wellington Railway Station without city council approval. Photo / Mark Mitchell

But then legislation changed and they found their buildings were now earthquake-prone with a looming deadline to remediate them.

Some are facing strengthening bills as high as $400,000 a pop.

The only help from the Government is a loan scheme limited to owner-occupiers who can't get money from the bank.

The city council acts as the regulator for strengthening deadlines and it prefers to work as much as possible with owners to get buildings to the standard they need to be.

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But if push comes to shove, the council can apply for a court order to take possession of the building, get the strengthening done, then charge it back to the owner.

This type of court action is under way over the former Tramway Hotel in Mt Cook.

Wellington apartment dwellers reported experiencing
Wellington apartment dwellers reported experiencing "complete terror" in the Kaikoura Earthquake. Photo / Mark Mitchell

Then there are the buildings which might be structurally sound in an earthquake, but everything still gets shaken up inside.

Willis Bond director Dave McGuinness said he wasn't sure people would want to live in apartments again after the Kaikōura earthquake.

He is the developer behind the Victoria Lane Apartments site, which will be the first ever base-isolated apartment building in Wellington.

A survey of more than 800 apartment dwellers after the Kaikōura earthquake reported many of them experienced "complete terror" that people living in houses didn't understand.

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The nature of the earthquake meant some shaking was more extreme in taller buildings.

Victoria Lane Apartments. Image / Supplied
Victoria Lane Apartments. Image / Supplied

Other respondents said they moved out of their apartments altogether.

"Although structurally okay, the building shook more and made creaky noises in the wind that made me panic because it sounded like the earthquake. There were also a lot of cracks in the plaster that while only superficial, [it] was that constant reminder."

Wellington's population is expected to grow by 80,000 people over the next 30 years and one of the solutions is to build up.

The capital's spatial plan proposes to increase the maximum height of buildings in Te Aro to at least 10 storeys and introduce a minimum building height in the central city of six storeys.

It's also about building smarter, whether that's design or the ground itself.

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The spatial plan presents a brighter future for apartments.

But to borrow a phrase from the Insurance Council, everyone has their own appetite for risk and owning an apartment in Wellington isn't on my menu right now.