Candidates for Wellington Central have come out in support of a review into the earthquake-prone building legislation that's left apartment owners facing financial disaster.
The Inner City Wellington (ICW) residents' association has hosted an Election 2020 candidates meeting tonight under Covid-19 alert level 2 restrictions.
An earthquake-prone building is anything rated at less than 34 per cent of the New Building Standard (NBS).
Many deadlines for strengthening are coming up this decade, but apartment owners are finding themselves in what some describe as an impossible situation and want more help from the Government.
ICW has been lobbying for earthquake-prone building legislation to be reviewed to have multi-owned residential buildings removed from it.
Owners say they are over-capitalising their homes, using tax-paid income and savings to comply, and say they're funding public safety outcomes even though their buildings are not used by the public.
Labour candidate and incumbent Wellington Central MP Grant Robertson said he "absolutely" supported a review of the legislation.
But he said that in itself wasn't enough because in the time it would take to do a review, owners would still be facing their looming deadlines.
Robertson said they would need to work out a way to ensure those deadlines could be pushed back in the meantime.
He said the legislation has organically grown over time and various governments, but all the politicians involved have been advised by Government officials who don't agree with the position of ICW.
"That makes it very difficult for politicians when you are dealing with things that are described as life and death style legislation."
National's candidate Nicola Willis acknowledged the original legislation was put in place under a Government led by her political party.
But after digging into the issue she has formed the view that had ministers been aware of the actual costs and the practical implications at the time, their decision making may have been somewhat different.
"I support another look at these requirements and a review of them in the Wellington context to see whether they still make sense."
Green Party candidate James Shaw said he was also happy to support a review.
"It is a situation that's amplified in Wellington but not unique to Wellington, so part of the consideration is how will any changes work over the course of the rest of the country."
Survey reveals plight of owners
Half of earthquake-prone building apartment owners surveyed in Wellington say they would sell up after strengthening work, with many facing no other way to get out from under mounting debt.
A new survey by ICW has canvassed 99 apartment owners from 18 buildings.
ICW estimates the average cost owners are facing for strengthening their share of buildings is about $300,000.
The survey asked owners whether they would sell once their building was strengthened, with 50 per cent responding that they would.
One owner said - "I expect the bank will force the sale via mortgage once we're done. I would like to live in it, but I might have to sell it to get out from under the debt of strengthening, if I can get a loan in the first place."
Of the respondents who have sought loans to do strengthening work, half of them said banks they have approached were unwilling to lend them money.
But selling the apartment without strengthening it is not considered a viable option either.
One owner said they couldn't sell because banks wouldn't lend on earthquake-prone buildings and wouldn't finance strengthening anything under 67 NBS.
"So we are stuck with flats that we can't sell and can't strengthen."
Similarly, a report commissioned by MBIE into potential funding support for earthquake strengthening said discussions with the Insurance Council confirmed in most cases buildings would need to be strengthened to 67 per cent NBS or more to secure insurance.
"The cost of strengthening to 34 per cent is $5.1m across 16 owners. To strengthen to 70-80 per cent will cost $14.5m – not feasible," one respondent reported.
A quarter of owners said they had tried to sell their apartments or unsuccessfully tried to use them to raise finance.
The most common reason for being unable to sell an apartment was not receiving any offers for the property after it was put on the market.
Last year the Government announced a loan scheme to help people find the money to strengthen their buildings, but it's only available to owner-occupiers.
The ICW survey reported 39 per cent of respondents were owner-occupiers.
Building and Construction Minister Jenny Salesa previously told the Herald it was targeted at those in genuine hardship, who couldn't afford to remediate their buildings without assistance.
"The loan is not available to residential property investors because investment in residential property is essentially a commercial undertaking - if the owner is unable to raise the finance to strengthen the building, they have the option to sell their property."
The majority of survey respondents said they would have to vacate their properties for between six and 18 months while strengthening work was undertaken.
Those who live in their apartments will have to foot the bill to rent somewhere else in the meantime. Those with tenants are worried about the loss of income.
"The loss of the rental income to pay the mortgage for the apartment for 12 months as well as paying our own mortgage and the top up required for the strengthening – we wouldn't be able to afford this," one said.
Of those who considered themselves investor owners, 14 per cent, the large majority have just that one apartment in their portfolio.
The survey follows ICW's written submission to the Governance and Administration Parliamentary Select Committee in 2019 and an oral submission to the Committee
in June 2020, on two petitions presented to Parliament.
The Select Committee is yet to report back.