Seismic shifts ahead: Government proposes major reform to New Zealand's earthquake-prone building regime

The New Zealand Government has proposed significant amendments to the Building Act 2004, outlining a re-write of the country’s earthquake-prone building (EPB) regime. These reforms aim to simplify seismic risk regulation and reduce compliance costs - particularly for buildings in low-risk areas such as Auckland and Northland.

 

Key changes at a glance

• NBS metric removed - The legal definition of an earthquake-prone building will no longer be based on a fixed percentage of the New Building Standard (%NBS), New Zealand’s current statutory benchmark for seismic performance.
• Risk-based tiering introduced - Buildings will be assessed using updated engineering methodologies that account for location, building type and critical vulnerabilities.
• Reduced scope of coverage - More than 2,900 buildings currently listed on the EPB register are expected to be removed under the revised framework. Buildings in Auckland, Northland and the Chatham Islands will be entirely excluded from the new regime.
• Streamlined upgrade obligations - Fire safety and accessibility upgrades will no longer be automatically triggered when seismic strengthening works are undertaken.

 

Why these changes

The proposed reforms to the Earthquake-Prone Building (EPB) system reflect a strategic shift toward a more proportionate, risk-based, and cost-effective regulatory framework. By focusing on buildings that pose the greatest risk to life safety, the Government aims to reduce unnecessary compliance burdens on low-risk properties and regions. This approach is expected to deliver significant economic benefits, including an estimated NZD8.2 billion in savings for building owners and public agencies.

Initial stakeholder response to the announcement has been generally positive, with emphasis on the increased flexibility, clarity and cost-efficiency embedded in the new regime.

 

Legal and contractual implications

Existing contracts referencing %NBS

Many commercial property contracts in New Zealand - including leases, development agreements, and financing arrangements - contain provisions tied to specific %NBS thresholds (for example, 67% NBS as a trigger for tenant termination rights or landlord obligations to upgrade the building's seismic performance). Some of these arrangements will run for a long period. With the removal of %NBS as a statutory reference point, these clauses may become ambiguous or unenforceable. Legislative clarity will be required to determine how such legacy provisions will be treated - we anticipate that this will be a focus during the legislative drafting process.

Corporate and Government occupiers and internal policy updates

Corporate tenants, including multinational businesses, Government agencies and local government authorities, often have internal policies that require buildings to meet minimum seismic performance ratings. These policies will need to be reviewed and updated to ensure that the underlying aims of the policies such as safety and risk management are calibrated to the new system.

Owners with committed seismic works

Owners who have already commenced, or agreed to commence, seismic strengthening works under the existing regime may face commercial uncertainty. Key questions include:

• Will cost recovery be available where works would not have been required under the new system? Our expectation is that it will not, which will potentially disadvantage buildings owners who have pro-actively complied with the existing legislation.
• Can contractual obligations referencing %NBS still be enforced?
• Does the removal of %NBS constitute a frustration of contract or require renegotiation?

 

Health and safety responsibilities remain unchanged

Despite changes to the EPB framework, obligations under New Zealand’s Health and Safety at Work Act 2015 remain in force. Building owners, tenants and other duty holders must continue to manage risks to health and safety, so far as is reasonably practicable, including those arising from seismic vulnerability. Removal from the EPB register does not negate these duties, and WorkSafe - New Zealand’s national health and safety regulator - may still investigate concerns regarding structural integrity and occupier safety.

 

A market recalibration on the horizon

Should these proposals become law, the market will likely enter a period of recalibration. Landlords, tenants, lenders and insurers will reassess the way seismic risk is addressed in contractual arrangements, procurement policies, and property valuations. We expect the Government to continue playing a leading role in resetting market expectations as public sector procurement and leasing standards often serve as a benchmark for private sector practices.

Under the existing regime, many large corporate occupiers, taking the lead from Government agencies and local government authorities, require seismic resilience standards that exceed minimum legal thresholds. In aligning the seismic performance requirements of its own property portfolio to the new regime, the Government will have an opportunity to steer market behaviour closer to minimum legislative requirements.

The detail of the proposed legislation - including transitional provisions and treatment of existing arrangements - will be critical in shaping legal certainty and commercial decision-making. A Bill is expected to be introduced to Parliament in the coming months, with full legislative and regulatory implementation to follow.

 

How we can help

Our team advises owners, developers, tenants, funders and investors on legal issues relating to seismic compliance, leasing, construction risk, and building regulation across New Zealand.

If you are interested in learning more about how these changes may impact your property interests or risk position, please contact a member of our team.