Building (Earthquake-prone Buildings) Amendment Act 2016
/Building (Earthquake-prone Buildings) Amendment Act 2016
About the Act
The Building (Earthquake-prone Buildings) Amendment Act 2016 which came into force on July 1, 2017 brings radical changes to the methodologies by which local councils, engineers and building owners will carry out assessments and deal with earthquake-prone buildings. These changes are limited to commercial buildings and any residential buildings that comprise two or more storeys and are either a hostel, boarding house or other specialised accommodation or contain more than three household units.
The Canterbury Earthquake Royal Commission identified problems with the way councils previously dealt with earthquake-prone buildings. Issues such as the variability of local practice, poor information about the number and location of earthquake-prone buildings and a general lack of central government guidance contributed to the need for updated legislation. The driving force behind this legislation is a desire to ultimately prevent death and minimise risk. The Act aims to strike a balance between three major considerations: protecting people from harm in an earthquake, the costs of strengthening or removing buildings and the impact on heritage.
Identifying earthquake-prone buildings
The 2016 Act departs from a “one size fits all” approach and instead targets earthquake-prone buildings by dividing New Zealand into three seismic risk categories, depending on the vulnerability of the location. These risk categories have been identified using the Z factor – the seismic hazard factor that would be used to design a new building on the site in accordance with other factors including the building code. Councils have the option to specify certain parts of buildings as higher risk than others, instead of being restricted to one assessment of earthquake vulnerability for an entire building.[1] This ensures that the public, owners and councils have the most accurate data about the safety and security of their buildings in the case of an earthquake and can undertake remedial work on just the vulnerable part of the building.
The implementation of this Act will be driven primarily by local councils who have the responsibility to ensure that earthquake-prone buildings are identified quickly and will need to work with owners to ensure they undertake appropriate strengthening works.
The Act does not change the legal requirement that buildings are to be considered earthquake-prone if they fall below 34% of the New Building Standard.
Time frames for completing work
The Act sets out specific time frames within which territorial authorities must identify earthquake-prone buildings:
· High risk e.g. Christchurch, Wellington – 5 years
· Medium risk e.g. New Plymouth, Tauranga – 10 years
· Low risk e.g. Auckland – 15 years
Time frames for final dates of completion of seismic work on earthquake-prone buildings following investigation and issuing of notice:
· High risk – 15 years
· Medium risk – 25 years
· Low risk – 35 years
These time frames are halved for ‘priority buildings’ such as education facilities, hospitals and unreinforced parapets and facades on public thoroughfares with greater potential to endanger the public. Fast tracking these buildings will mean that in some high-risk areas, works will have to be completed by June 2027.
Implications for building owners
The requirement to meet the 34% threshold will put financial pressure on owners of earthquake-prone buildings. The remediation costs are borne entirely by the owners, however for historic buildings, owners may be able to apply for grants to help offset costs. It may be difficult for owners to sell before they have undertaken the remediation works. Further, earthquake-prone building owners may even find that the only available cover is indemnity insurance.
The Act introduces new rules[2] for building owners who are undertaking substantial alterations (25% of the value of the building, including earthquake damage repairs).[3] Where previously the repairs were required to bring the building back to where it was before the earthquake took place, the legislation now requires that if substantial alterations are undertaken, then the building must be brought up to the 34% threshold during those repairs. An alteration (including a repair) is usually considered substantial if the estimated value of the work and other consents granted in the past two years is greater than 25% of the total building value. Failure to comply with the requirement for the owner to ‘reduce or remove’ the danger can result in a criminal offence with a fine up to $200,000.
Comment
Cecily Brick, partner at Fee Langstone, notes that the new Act has implications for building insurance. There may be changes to the cover that is available for insureds if a building that was previously thought to be safe is deemed earthquake-prone. Owners of buildings that are deemed earthquake-prone will need to advise their insurance company as this is a material fact for the insurance company to consider. Insurance companies may also find themselves making more indemnity settlements for building damage, given that cover under a policy is unlikely to extend to the cost of a seismic upgrade which might need to be done together with damage repairs. It will be important as the new Act takes effect that insurance companies familiarise themselves with the changes and particularly the time frames to ensure that they are aware of when the new Act will affect claims.
[1] S 123A Building (Earthquake-prone Buildings) Amendment Act 2016.
[2] S 133AT Building (Earthquake-prone Buildings) Amendment Act 2016.
[3] The ‘substantial alteration’ definition can be found in the Building (Specified Systems, Change the Use and Earthquake-prone Buildings) Amendment Regulations 2017.
