By Kay Keam - 10 Apr 2014
The previously haphazard approach to earthquake-strengthening
requirements in New Zealand has given way to a national policy. The
new requirements will impose significant costs on owners of
earthquake prone buildings.
New Zealand is a seismically volatile country and earthquakes
affecting our buildings are inevitable. The challenge going
forward is balancing the extent of seismic strengthening with the
price that society is willing to pay for mitigating the
risks. For example, recent commentators have estimated that
the earthquake strengthening policy could cost $3 billion in
Auckland alone but take 4000 years to save a single life, based on
current projections on when a major earthquake will next hit
Auckland. These same commentators believe that it is far more
likely that other natural disasters will strike such as tsunamis,
volcanoes, eruptions, tornadoes and landslides and that we should
be preparing for these and other contingencies instead.
So what are the practical implications of these new rules for
building owners, tenants and other affected parties?
The building code requires buildings to be built or brought up
to a certain percentage of the national building
standard. Simply put, the building code defines an earthquake
prone building as having a rating that is 34% or less of the
current national building standard.
The Building Act 2004 does not set out the exact standard to
which territorial authorities may require strengthening of
earthquake prone buildings. While most local councils require
strengthening to 34% of the national building standard, others
require a higher standard. For example, Auckland has more than
an estimated 4000 earthquake prone buildings that will have to be
properly assessed by Auckland Council and strengthened to 34% of
the national building standard in the next 15 to 20
years. There are also special dispensations for heritage
building owners who will have an extended period of time in which
to bring their building up to scratch.
The above will inevitably have an effect on building owners and
their tenants. As a result of the Christchurch earthquakes we
have already seen a change to the commercial leasing
landscape. Most standard commercial leases now contain
provisions that deal with issues such as lack of access during
periods of damage and addressing the tenant's right to cancel the
lease if the lack of access continues for an ongoing
period. Future issues will inevitably arise between landlords
and tenants regarding relocation during earthquake strengthening
works, access during the period of those works and the associated
costs. Many tenants (particularly anchor tenants) are
requesting that landlords commission seismic reports before
committing to a lease (and will often refuse to sign or renew a
lease if the building is less than a certain percentage of the
national building standard). Employers have certain
obligations under the Health and Safety Act to provide a safe
environment for their employees and many employers are conscious of
this when making a decision on which building to lease.
If you are the owner of, or a tenant in, an earthquake prone
building and you have questions about the above process please
contact a member of our property team.
Contact
Elise
Markwick