A first look at the earthquake-prone building regime reform – no surprises

In September, the New Zealand Government announced significant amendments proposed to the Building Act 2004, signalling a substantial re-write of the country’s earthquake-prone building (EPB) regime. The stated objective is to simplify seismic risk regulation and reduce compliance costs. We previously published our views on the proposed reform.

The Building (Earthquake-prone Buildings) Amendment Bill (Bill) has now been introduced to give effect to the Government’s proposals and has passed its first reading.

There are no surprises.

 

Key changes

The Bill replaces the existing EPB regime with new risk-assessment settings and remediation measures, including the following:

The new regime will apply only to “buildings within scope”, being buildings of certain construction types located within medium or high seismic zones. A map attached to Schedule 2 of the Bill categorises different parts of New Zealand as low, medium or high seismic zones.

As previously indicated, Auckland, Northland and the Chatham Islands will be entirely excluded from the new regime, having been categorised as low seismic zones. This approach was positively received when initially announced and will come as a relief to some landowners in those areas who have not yet commenced required seismic remediation works.

• façade securing;
• targeted retrofit; or
• full retrofit.

• define materials and construction types relevant to determining whether a building is within scope;
• prescribe assessment procedures for determining earthquake-prone status; and
• prescribe which remediation measure applies to different buildings and contexts.

The Bill retains many of the core mechanics of the existing EPB regime introduced in 2016, including provisions relating to:

• the role of territorial authorities in identifying earthquake-prone buildings and priority buildings;
• the issuing of EPB notices;
• owners’ obligations to carry out remediation works within prescribed timeframes;
• the powers of territorial authorities; and
• offences.

 

Transitional arrangements

Most changes will come into force on 1 July 2027. However, the Bill includes interim arrangements to ease the transition from the existing EPB regime to the new regime. These take effect from the day after Royal assent and include the following:

• Earthquake-prone buildings located in low seismic zones will cease to be earthquake-prone, and the relevant territorial authority must remove them from the EPB register.
• Pending applications for exemptions or deadline extensions will be determined under the equivalent provisions of the new EPB regime.
• Deadlines for territorial authorities to identify earthquake-prone buildings, or for owners to complete seismic works in areas previously designated as low seismic risk under the existing regime, will not change where those buildings will be located within a medium seismic zone under the new regime.
• Exemptions or deadline extensions granted under the existing regime before 1 July 2027 will be treated as having been granted under the new EPB regime.
• Where a territorial authority has already begun identifying earthquake-prone buildings under the existing regime before 1 July 2027, it is not required to repeat that work but must complete outstanding obligations under the equivalent provisions of the new regime.
• Where an EPB notice was issued before 1 July 2027 and seismic work has commenced, the owner may choose either to:
  • obtain an assessment under the new EPB regime; or
  • complete the work under the existing notice.

If the latter option is chosen, the building will be treated as no longer earthquake-prone.

The Bill also contains a Henry VIII clause allowing regulations to be made to provide further transitional provisions and any other matters necessary to facilitate an orderly transition to the new EPB regime.

 

Missed opportunity?

Although the EPB regime is being replaced with a simplified framework, several previously identified concerns remain largely unaddressed, including:

• alignment with health and safety obligations;
• cost recovery for owners who have already completed seismic remediation works under the existing EPB regime where no works would be required under the new regime; and
• enforceability of existing contractual arrangements that rely on the NBS metric.

While it was not realistically expected that the Bill would address cost recovery or contractual enforceability, it could have gone further to clarify owners’ obligations under the Health and Safety at Work Act 2015 in relation to seismic risk. These obligations remain unclear.

Historically, a sufficiently high NBS rating above the minimum threshold provided some comfort to owners and occupiers that their health and safety duties in respect of seismic risk were being met. With NBS ratings being removed entirely, owners and occupiers may face renewed uncertainty when determining what works are required to manage seismic risks, particularly where no remediation measures are mandated or where buildings are outside the new EPB regime.

As currently drafted, the Bill represents a missed opportunity to clarify the relationship between obligations to minimise seismic risk under the Health and Safety at Work Act 2015 and EPB obligations under the Building Act 2004.

In relation to contractual enforceability, it is likely that landlords, tenants, lenders and insurers will reassess how seismic risk is addressed in contractual arrangements, procurement policies and property valuations.

It remains to be seen whether future regulations dealing with transitional arrangements will address these uncertainties.

 

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.

 

Short summary

The Building (Earthquake-prone Buildings) Amendment Bill proposes a simplified EPB regime in New Zealand, narrowing scope, replacing NBS ratings and introducing new remediation measures, with transitional arrangements from 2027.