To repair or not to repair

Abode’s architectural expert Greg Young discusses the pros and cons of Christchurch’s newest housing phenomenon, the ‘as is where is’ home.

Following the earthquakes, an entirely new housing market emerged in Christchurch for houses without insurance cover. These homes are labelled ‘as is where is’ but what does this mean?

The reason the owners of these damaged homes are unable to obtain insurance cover is, as part of the owner’s insurance settlement, the insurance has been cancelled. Until the house is repaired, insurance companies won’t even look at them.

The first point to understand is that anything can be repaired, even if that means dismantling the house then re-assembling it (which, rumour has it, was actually done by an insurer as a repair).

This is where the insurance policies kick in. These policies are contracts, with terms that the insurance company has to adhere to – just like if you don’t adhere to their terms, they don’t cover you (as we often see on Fair Go).

If the cost of the repair is greater than the cost of the rebuild, then the house is classed as an economic loss. Some insurance companies will then settle with the owners and cancel their insurance, leaving a house that is repairable but is classed ‘as is where is’, without insurance cover.

Another reason the house may be settled and insurance cancelled is that it may not be repairable in terms of the insurance policy conditions. A couple of relevant examples are; the house may not be able to be repaired to an ‘as when new’ condition or, may not be able to be repaired with commonly used construction methods.

This doesn’t mean that the houses can’t be repaired in accordance with the requirements of the New Zealand Building Act, just in the terms of the insurance policy – this is an important difference.

The vast majority of the housing stock in Christchurch was damaged in the 2010 and 2011 earthquakes. The ‘as is where is’ houses are just the most obvious.

So, what should you look out for?

It would be sensible for the Earthquake Commission report for each property to be attached to the property LIM (Land Information Memorandum) report – that way any future purchasers know what the damage was as well as the first purchasers.

For any house that was built before the earthquakes, it’s important to make sure it has been repaired properly – this goes without saying - but how do you know if the work has been sufficient?

The most critical area of the house from a New Zealand Building Act point of view is safety. This means the structure of the house needs to have been repaired properly, which means it should have been signed off by a structural engineer.

The professionals involved carry liability for their work. If the companies involved have been around for a while before the earthquakes struck, then it is more likely they will be around afterwards – this will carry some reassurance that the repairs have not been carried out by a ‘fly-by-nighter’.

Not everyone can afford to build a new home, which means that Christchurch’s existing housing stock is critical. Know what you’re buying and understand what to look for. Personally, I’d prefer to buy a properly repaired house that was sold ‘as is where is’ than a house that has had its insurer or EQC stick a Band-Aid over the damage.

03 384 7879 | young.co.nz