Landlord lashes out at quake law

Terry Gould of Phillimore Properties.

MPs hear owners of heritage buildings being forced to sell cheaply because they can’t afford seismic upgrades.

Heritage building owners are struggling financially, unable to upgrade their places, breaching banking covenants and forced to sell properties cheaply, says a landlord.

Terry Gould of Phillimore Properties, which owns the NZ Institute of Architects' top 2013 prize-winning Imperial Buildings on Auckland's Queen St, told MPs how some owners were trying desperately to quit their old buildings because they were unable to fix them and their loan-to-value ratios had been exceeded.

Forced sales were the outcome.

"In some cases, the potential costs of seismic upgrading are so high that loan to value ratios are breached and banks are forcing these owners to sell their assets at hugely discounted values. This is happening right now - it is a fact," Gould said.

Phillimore had been offered many of these blocks from people or trusts who had an initial evaluation showing the building was less than 33 per cent of the new building standard.

"They have neither the wherewithal nor the cold hard cash to seismically upgrade their buildings to 67 per cent of the NBS which is now being demanded by their bankers, their insurers and their corporate tenants whose directors are paranoid about personal responsibility in a seismic event," Gould told the parliamentary select committee hearing the Building (Earthquake-prone Buildings) Amendment Bill.

He wants the law change ditched.

"We believe the proposed legislation is ill conceived, inequitable, illogical and unjustified," he said, decrying a proposal for a central register of earthquake-prone buildings to be established. "The notion of members of the public wanting to discover if the building they are about to enter has a virtually non-existent chance of causing them physical harm in the highly unlikely event of an earthquake is quite frankly laughable."

But he does support amendments to the act to demand work on seismically dangerous elements such as unsupported parapets, chimneys, verandas and inadequately fixed air conditioning units, hidden above suspended ceilings.

The Government proposed the law change after the Canterbury Earthquakes Royal Commission and an extensive consultation period.

The Property Council wants financial help for its members to upgrade old buildings and Building and Construction Minister Nick Smith said this was being considered, but not tax breaks from GST on labour and materials used in the seismic fixup.

Instead, Smith indicated other forms of aid were being discussed.

Property Council chief executive Connal Townsend approves of the Government's response to the quakes but says many landlords will not have the money to bring the buildings up to the proposed new regulations.