Auckland Council will buy out about 700 flood-damaged properties but some people are worried that will leave them with mortgage debt on houses they no longer own. Photo / RNZ
Amy Williams of RNZ
Some Auckland residents with flood-damaged homes are worried the proposed buyouts will leave them paying off debt for homes they will no longer own.
West Auckland Is Flooding surveyed its members last week, finding 35 per cent of the 120 respondents would still have a mortgage to pay after any buyout.
Seventy per cent said they would not be able to afford a similar property.
Auckland Council will buy out about 700 flood-damaged properties as part of a $2 billion cost-sharing storm package alongside the Government.
Late this month the council will start advising homeowners if they are eligible for a buyout because their homes are unliveable due to the unacceptable risk of future flooding and loss of life - category three.
For homes in this buyout category, Auckland Council will offer 95 per cent of the pre-storm value of an insured property, less any insurance payout.
Amrita Aujla’s Swanson home was yellow-stickered after the Auckland Anniversary Weekend flooding and she has been renting ever since.
She bought the home, her first, two years ago and spent more than $100,000 on renovations before it flooded.
“The market has already started picking up, from what it was pre-flood value. We will never be able to buy in Auckland, never,” Aujla said.
“After all that we’re left with nothing in our hands, we can’t even buy again. It’s not fair on people like us, we’re full-time workers. It took me 10 years to buy that house.”
Council has not yet determined how a property will be valued for a buyout but Aujla said her property’s rateable value did not reflect the money she had spent on renovations.
Aujla said she just wanted out of the property, which had flooded repeatedly after storms in recent years.
Birkenhead resident Aleysha Knowles’ townhouse flooded extensively in January and is still yellow-stickered and unliveable due to a slip on the neighbour’s property.
She bought her house at a market peak two-and-a-half years ago and said she would be more than $200,000 in the red if offered a buyout based on a market valuation before the flood.
“I would end up having no house, possibly not having enough to pay off the mortgage, losing my entire deposit and everything I’ve put into the house. The thought of being homeless and facing a lifetime of renting is terrifying.”
Knowles also questioned why the council would retain 5 per cent for administering the buyout - that would amount to almost $50,000 if her home was bought out.
“Why are we having to foot the bill of 5 per cent for a home they are effectively going to own?
“It is a kick in the guts. It’s been nine months and we still don’t know where we stand.”
West Auckland Is Flooding and the Auckland Stickered Residents Group confirmed some insurers had contacted residents of flood-damaged homes to advise category three properties would not be reinsured.
“Many people in our group have been getting letters from their insurers saying once their policy is up for renewal they will no longer be up for reinsurance,” said Knowles, who is part of the Stickered Residents group.
She was concerned that would have flow-on effects for people who chose not to accept a buyout.
“If the banks are then to turn around and say they too aren’t going to lend on that property it becomes an unliveable, uninsurable, unborrowable home that you are going to be forced to hand to the Government at a massive loss to yourself.”
Auckland Council said it acknowledged the stress and confusion.
“We are aware that some storm-affected property owners are being contacted by their insurance companies, in the possibility that their property could become a category two or three, and how this may affect their insurance in the future,” it said.
“While we have no legal power over insurance, we have raised our concerns over this communication with the Insurance Council of New Zealand”.
The council’s group recovery manager, Mat Tucker, said it was still doing technical work to confirm categories for storm-affected homes.
He said an estimated 5000 individual assessments and 250 geotechnical inspections were needed across the region.
“When properties are confirmed as category three, we will begin individual conversations with property owners to commence a voluntary buyout process. We expect to begin conversations in late October,” Tucker said.
“Timing will vary from property to property, based on their circumstances and we will communicate progress to individual property owners directly as soon as we can.”
Late this month the council’s governing body will decide if funding will be available for private homeowners requiring flood mitigation work on their category 2P properties.