The Natural Hazards Commission (NHC) says a “significant number” of remaining applicants in the Government’s on-sold programme for Canterbury homeowners with earthquake-affected properties will receive settlement offers over the coming months.
The news comes three months after incoming Deputy Prime Minister David Seymour announced a rollback to the costs of the on-sold programme in order to prevent a “cost blowout”.
Seymour, who is the Minister in charge of the NHC (previously known as EQC), announced changes to the Government’s on-sold support package in November 2024.
The on-sold programme was set up by the Labour-led Government in 2019. It was meant to be a time-limited offer of support for owners of eligible on-sold over-cap properties in Canterbury.
Applications for the scheme closed back in October 2020, with people having had 12 months to apply for an ex-gratia payment towards the cost of having their homes repaired for remaining earthquake damage.
The ex-gratia payments from the on-sold programme cover both failed repairs and missed damage, and the repair process is managed by homeowners.
In November last year, Seymour said the initial cost estimates for the programme in 2019 had been $250 million, but by June 2024 the estimated cost of the completed programme had risen to $717.9 million.
According to Seymour, the on-sold programme had supported over 800 Canterbury homeowners in completing repairs and moving back into their homes.
But as of November 2024, there were still 250 applicants in the programme who had not yet signed a settlement deed.
“The programme was never intended to continue indefinitely though, so the Government is making changes to simplify it, encourage timely settlement for these remaining homeowners, and avoid delays that add to programme costs,” Seymour said at the time.
Seymour asked the NHC to make the following changes to the on-sold programme immediately at the time of his November announcement:
- No application can be settled in excess of 1.5 times the current rateable capital value (CV) of the property.
- Applicants need to meet new deadlines to remain in the programme. For example, they have 30 business days to sign their Settlement Deed (from the date of offer) and six months to begin construction from the date of agreement. Applicants will also need to supply the information needed to progress applications within strict timeframes.
- Pre-construction project-management costs under the programme are limited to 4% of the ex-gratia payment.
From the 23rd December, a further limit was also applied to settlements where the homeowner had chosen to purchase a new home.
'Significant number'
NHC Chief Executive Tina Mitchell told interest.co.nz the on-sold programme’s 250 applicant figure had been reduced to 127 applicants as of the 24th February.
“We have seen good progress with information flows. We expect a significant number of these remaining applicants to receive a settlement offer over the next few months,” she said.
Mitchell said the NHC had experienced “strong engagement” from applicants since Seymour announced the changes to the programme.
“There have been a very small number of on-sold applicants removed from the programme. Some of these had to make a choice on whether to progress with their on-sold programme application or pursue an alternative legal process instead. We are unable to provide any further information for privacy reasons,” she said.
Asked how the cost-control measures – like the 1.5 times rateable CV cap – had impacted settlement amounts for applicants, Mitchell said previously when repair costs reached the CV cap, the NHC was required to formulate an alternative proposal, consult with the Treasury and obtain Crown approval.
The NHC also had to seek Crown agreement when it came to progressing a number of applications with repair costs above that CV cap.
“By formalising the settlement cap and removing the step to liaise with Treasury on this matter, the changes have provided clarity for homeowners and allowed us to progress settlements,” Mitchell said.
“Around 1,400 homeowners met the Government’s criteria for the programme. Nearly 940 of all eligible applicants have completed their repairs and are back in their home. Another 300 applicants are in the construction phase, completing the repairs or works on their homes.”
Mitchell said the on-sold programme had paid “about $428 million” to homeowners in the programme so far.
Asked if there had been any disputes or appeals from homeowners regarding the new changes, Mitchell said a “small” number of homeowners have raised concerns about the changes with the NHC.
“We have been working with them on a case-by-case basis to address those concerns and support them through the process,” she said.
14 Comments
I wonder how many of these outstanding claims are trying to milk the system for every last cent they can get. Would likely require a whole lot of engineers in both time and expense to ascertain what is genuine and what is dubious. It appears these changes will focus peoples minds in getting some compensation instead of dragging it out. Probably aided by the legal fraternity.
The whole episode has been a jungle of injustices, double dealing and malpractice. Both sides of the argument have been blatantly at fault. Most of what eventuated could have been avoided if EQC had simply been allowed to meet its obligations, pay out the cap where relative and let the insurer and insured take it from there. Instead Treasury intervened and the resultant EQC/Fletchers repair program set the base for the distortions and ructions that flared up. Worst of all the dud repairs by Fletchers that were exposed removed the liability from the insurer(s) and placed it financially instead on the taxpayer. Key, English and Brownlie executed here, a massive own goal. Have very little time for the sixth Labour government but here they were certainly delivered a foul set of circumstances by the previous government.
FG. Agree with most of your observations. Not sure however that blaming Treasury is fair. Even under your establish cap and pay that out scenario EQC would still need to have employed someone like Fletchers to establish extent of damage and cost to fix so you'd have had the same result of many claims remaining ostensibly under cap. The problem was in the damage assessment process which suffered from wide spread incompetence of EQC assessors, accentuated by bureaucratic, often authoritarian, damage minimising mindsets. Insurers were aware EQC undercooking of damage was widespread, with some running programs comparing over cap claims with supposed under cap on nearby properties with similar characteristics. They knew from this that there would likely be an extensive tail of 'new' claims as owners discovered the awful truth.
Aye and it all started fifteen years ago but remains something of a stark memory. During that time I found on line a thesis on the NDF/EQC which unfortunately I didn’t save well enough. The basic thinking of purpose post WW2 that both Labour and National were party to was well expressed. It was to be funded by levy on insurance premiums. Thereby a direct and specifically intended collation of public money for their future protection. It also included a list of “withdrawals” from the fund by subsequent governments culminating in the Lange/Douglas government under treasury’s urging, incorporating the fund in the government’s general ledger, or whatever. Said all that to say if that previous pilfering of those private funds hadn’t occurred, then EQC likely would have been under quite some less pressure in 2010.
ps : trust you are remaining here from 1 March. Balance will always be valued.
Hamish. While Cam Preston believed there was a causal link between EQCs uncovered financial exposures and their under scoping of damage, I consider it unlikely there was such a conspiracy. Discussions with very senior EQC staff at the time about the standard of repair it was required to achieve as mandated under the act, gave no hint of such direction from on high. All of my multiple lengthy interactions revealed a team struggling to define how EQCs liability translated into repair standards. Of the many senior staffers who would need to have been in on such a conspiracy I'm not aware of any who have blown the whistle. My feeling is that like most conspiracies the explanation lies in incompetence.
For sure, that would be quite something.
I find it a lot more interesting when reviewing the history of EQC and how subsequent governments couldn't keep their mitts off of it.
Imagine if on your home policy, the line wasn't for an EQC levy, but a levy to help the government of the day balance it's budget?
It's also why although I think kiwisaver has merit as an idea, I then get nervous when big interests start sniffing around and trying to direct where this should be invested.
Relying on memory here but in the aftermath of the Abbotsford landslide in Dunedin late 1970s, PM Muldoon’s refused to allow EQC to pay out compensation. I recall that either in the house or in a TV interview he repeatedly blamed the 2nd & 3rd Labour governments for stripping out EQC funds. There was likely more to it than that in so much that it was more than arguable that the risk had been well known and the land should never have been built up. I’m not sure how any compensation was funded in the end.
Hamish. Yes, absolutely. Hands off kiwi saver funds Willis. But suggest KS is not really equivalent to the NH fund where running what is effectively a large deductible to meet the gap between event cost and reinsurance proceeds plus NHF accumulated funds, is not unreasonable. The only issue is what size should that deductible be?
FG. Well, I'm flattered with your suggestion I provide balance. I'm still in childish sulking mode for having been carved up by Int.co moderators aeons ago but I enjoy the quality articles and much of the commentary so yes, I intend to become a card carrying party member. Appreciate your interest. Re raids on EQC funds by thieving pollies, yes that's true but on the other hand their premise that the govt would fund any future shortfall was realised in ChCh. Tougher times ahead for the Natural Hazards Commission though as their policy of cross subsidising high risk sites by those with lower risk becomes increasingly expensive. Reinsurers must be developing reservations.
nigelh. Yes, there's a whole industry in ChCh making money out of actively seeking out people whose houses might fit the 'hidden over cap' criteria. No doubt some have spotted an opportunity and bought a dump they suspect to have been poorly assessed and repaired, in the hope of a windfall but there are also plenty of innocent long term owners who have been desperately let down by EQC. I have much less sympathy for those who buy a pre EQ house and fail to do their homework on the possibility of a botched EQC repair. A properly instructed and executed house inspection report that thoroughly considers the easily available EQC scope should identify the likelihood of unidentified damage and/or inadequate repairs. The government is correct to call time on the onsold racket.
Sadly the companies who survey and prepare these prepurchase inspection reports are not regulated or required to comply with any industry standard. No matter how careful the purchaser may be you are at the mercy of these companies and rely on their ability and skills, it is a minefield. Yes certain building companies/professionals have made a packet out of the programme model, my observation is that the argument is invariably between the building company engaged to complete the repairs by the homeowner and EQC&Treasury, the home owner is just tossed around in the middle. No-one who purchased a home after the programme was announced in 2019 qualified so I am not sure there are many with the ability to know it was coming along as you suggest. I agree with your comment though that there are a vast number of homeowners left with no recourse on the properties they owned at the time of the quake. This should never, ever have happened and we can all thank Gerry Brownlie for what occurred and how he chose to handle the situation in general, especially in regards to the liability of private insurers.
ChCh Lass. Thanks for your comments, good to hear from someone knowledgeable on the topic. Fair point about the 2019 date. On reflection I was thinking more about what happened between the EQ sequence and the introduction of the on sold facility. If you were in ChCh at that time you'd have heard the hustlers talking about the gains to be made by buying under scoped houses and having the claims assigned to them. Curious about your last comment re Brownlie's involvement 'in regards to the liability of private insurers'?.
No own-two-feeters when the hard times hit. It's always the taxpayer ultimately being hit up by hands held out for welfare.
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