NBS: No Longer the Legal Test, But Still the Market Benchmark?

Buildings in Auckland, Northland, and the Chatham Islands will be excluded from the earthquake-prone building regime entirely, regardless of their NBS rating. Elsewhere, the regime will apply only to unreinforced masonry buildings, pre-1976 tall and heavy buildings, and selected tall and heavy buildings constructed between 1976 and July 2027.

According to the Government, this means around half of all buildings currently designated as earthquake-prone will fall outside the regime.

For buildings that remain within the regime, the Act also significantly reduces strengthening-related requirements.

For owners concerned about seismic strengthening costs, this will be welcome news.

But that is only one part of the equation. The other part is how the commercial property market responds.

The real question is whether purchasers, insurers, banks, and tenants will embrace the legislative change, or whether 67% NBS will continue to operate as a de facto market benchmark.

Early indications suggest the market is unlikely to move any time soon. But memories fade. In time, the current focus on NBS may go the way of the Covid-19 clauses that once dominated property negotiations.

What should owners do now?

Owners should start by checking whether their buildings remain within the amended regime, and whether any existing earthquake-prone building notices, deadlines, council correspondence, or strengthening schemes need to be revisited.

Owners should also consider whether the changes affect sale strategy, leasing negotiations, funding arrangements and insurance.

In some cases, the reforms may create an opportunity to pause and reassess. In others, it may still be commercially sensible to proceed with strengthening or further investigation, even if the legal obligation has changed.

Key takeaway

The law has changed, but the buildings have not.

Owners should understand both the legal position and wider commercial implications before making seismic strengthening related decisions.

Disclaimer

The above information is of a general nature only.  The information in this article does in no way constitute legal advice and all readers should contact a law firm for advice relating to their specific circumstances.