Anger some condemned homes can now be repaired

10:11 pm on 12 April 2012

A Christchurch resident says the Government has given in to pressure from the insurance industry by changing building regulations and reducing the size of payouts on earthquake-damaged houses.

Some property owners in the residential red zone stand to be paid up to $180,000 less after a rule change which allows for their houses to be deemed repairable.

In 2011, the Department of Building and Housing loosened guidelines around acceptable levels of quake damage so that big cracks and tilts in foundations previously deemed irreparable could be fixed.

Using the more liberal guidelines, insurance companies have been reassessing houses and declaring some now capable of being fixed.

Richmond homeowner Michael Mallia says following the rule change, his insurer reassessed his quake-damaged home and said it could be repaired.

Mr Mallia says he is mystified over why the department would relax the rules and believes it gave in to pressure from the insurance industry.

He believes his insurance company has reassessed his home as a repair job in order to delay a payout.

Len Griffiths, who lives the red-zoned settlement of Brooklands, has also been reassessed and says the difference between being paid out for a rebuild compared with a repair job is $180,000.

Mr Griffiths says he has been betrayed by the rule change and most of about 400 Brooklands residents whose homes are zoned red are in the same situation.

Canterbury Earthquake Recovery Network spokesperson Lianne Curtis told Radio New Zealand's Nine to Noon programme on Thursday the upshot for people in the red zone is a dramatically reduced payment compared with the money they would have received for a complete rebuild of their homes.

Insurance company IAG covers the majority of Christchurch homes after it bought AMI.

A company spokesperson, Renee Walker, says reassessments using the new guidelines will not be carried out on properties where settlements have already been reached.

However, Ms Walker says anyone still sitting on an initial assessment could be reassessed as a repair job. However, she maintains the reassessments are not about saving money.

Neither Building and Construction Minister Maurice Williamson nor Earthquake Recovery Minister Gerry Brownlee were available for comment.