Buyer beware: Wellington city apartment owners say rules need to change

Sunday, 6 September 2020

For Wellington’s inner city, the draft plan means a six-storey minimum building height will be introduced with developments up to 10 storeys in Te Aro and on some central city boundaries (File photo).

More Wellingtonians are expected to live in inner city high rises in the coming years, but those living there now are facing expensive problems.

These residents are trailblazers of sorts – living the lifestyle that Wellington City Council and the Government are pushing for.

The council has estimated that over the next 30 years, the capital will need to make room for 50,000 to 80,000 more people.

For Wellington’s inner city, a six-storey minimum building height will likely be introduced with developments up to 10 storeys in Te Aro and on some central city boundaries. In the inner-city suburbs, up to 5400 extra homes will be created.

But inner-city apartment owner Carol Brown says people should think very carefully before buying an apartment in Wellington.

Wellington City Council has estimated that over the next 30 years, the capital will need to make room for 50,000 to 80,000 more people.

Carol Brown says people should be very careful and think very carefully before buying an apartment in Wellington (File photo).

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In the inner-city suburbs, up to 5400 extra homes will be created (File photo).

While the new high-rise buildings people would be living in over the next 30 years would likely be built to code, she said she had been the victim of changing rules.

Earthquake-prone building legislation which meant Brown, alongside her neighbours, would have to fork out the money to strengthen her apartment.

Brown is part of Inner-City Wellington, a residents’ group which has been asking for change to the legislation especially for people living in multi-owner residential buildings.

Inner-City Wellington said it was “almost impossible for apartment owners to comply with the legislation without incurring financial losses averaging $400,000, and without exposing themselves to financial, legal, housing, wellbeing and health risks so enormous that they will suffer short term and lifetime consequences out of all proportion to any benefits their sacrifice might achieve”.

Brown had entered retirement with no debts and “modest” savings, and had plans to spend the rest of her retirement living with her son overseas.

Premium rates in Wellington are similar to those in Japan and California, according to the Insurance Council of New Zealand (File photo).

But those plans had been put on hold as she tried to meet legislation requirements – and said the experience had been a “nightmare”.

“If politicians, local or central, want people going upwards, they're going to have to re-examine the rules.”

Inner-city apartment owner Chrissy Hill agreed. While she was all for developing the city, there needed to be a stronger plan and more support from council and the Government, she said.

The Unit Titles Act 2020 would need to be hugely amended and rejuvenated to reflect inner-city living.

Hill also raised concerns about insurance premiums, as her natural disaster cover had jumped by 57 per cent last year.

“It is becoming unsustainable to live here … any income or savings that we have go towards the outgoings and it flows on.”

PREMIUM RATES SIMILAR TO JAPAN AND CALIFORNIA

Premium rates for commercial property buildings including apartment dwellings in Wellington, were similar to those in Japan and California – places with similar levels of earthquake risk, according to the Insurance Council of New Zealand.

Chief executive Tim Grafton said that showed how historic premiums were not fully covering risk, and adjustments from the past two to three years had brought about a correction.

“If denser housing by way of high-rise apartment living in the central city is the plan for the future, then neither future Governments nor future councils should turn a blind eye to the risks the city faces.”

Wellington City Council estimates that over the next 30 years, Wellington will need to make room for 50,000 to 80,000 more people.

Just looking at insurance pricing and avoiding 'the inconvenient truths about the risks and the fact that the New Building Standard (NBS) for commercial property is not up to the task totally does Wellingtonians a huge disservice”, Grafton said.

“The NBS is a life-safety measure and is not designed to reflect whether a building will still be functional after an earthquake. This needs to change.

“Sadly, some apartment owners invested in upgrading their buildings thinking that a higher NBS would make the building earthquake proof and lower their premiums. No-one asked insurers if that was the case before they invested.”

Grafton called for a review of the Earthquake Commission Act to treat apartment dwellers in a similar way to house owners.

Talk Wellington editor Isabella Cawthorn feels the country was in a “transitionary” phase when it came to buildings, building quality and insurance.

“Insurance should be allowed to signal risk and if affordability issues arise these should be addressed through social policy mechanisms available to the Government as occurs in so many other areas like housing or power supply affordability,” he said.

“There are no quick-fire, sustainable solutions.”

Infometrics economists talk about the housing market and building sector.

‘WE SHOULDN’T LET THAT STOP US’

Wellington City Council place planning manager John McSweeney said along places like Taranaki St, buildings may be strengthened or replaced as part of a market response.

Some proposals in the draft plan would likely lead to regeneration of an area and the city, he said.

“In any space where we're expecting lots of people, there will be community space and infrastructure in place. The Spatial Plan does give this opportunity.”

In an email, Wellington City Council’s chief resilience officer Mike Mendonça said the Spatial Plan could not fix insurance premiums and the costs of strengthening.

“Although in the long term our land use planning decisions will improve our resilience and maybe insurability,” Mendonça said.

He said it was not uncommon for insurance to be unavailable or unaffordable in seismic areas.

Wellington City had 1000 earthquake-prone buildings – 450 of them had completed their seismic work. The remaining buildings needed to be done by 2032, but this would unlikely to be a major constraint on Wellington's future, Mendonça said.

“Most of these buildings are not apartment buildings. While this is not a long term challenge, of course it is an issue right now and will be for the next five to 10 years.”

Talk Wellington editor Isabella Cawthorn said the country did not have a strong history of good density design.

“So we see [high density homes] in many respects as the poor cousin to a beautiful quarter-acre bespoke house,' Cawthorn said.

She felt the country was in a 'transitionary' phase when it came to buildings, building quality and insurance.

“We shouldn't let that stop us … we should focus on having a good quality urban environment – it will help us break the deadlock around character and if we do intensification, people already living there could see it improve overall.”