New Zealand’s commercial property sector is set for a significant reset. The Government has proposed a major reform of the Earthquake-Prone Building (EPB) system through the Building (Earthquake-Prone Building System Reform) Amendment Bill.
This legislative shift would replace the long-criticised “New Building Standard” (% NBS) model with a risk-based classification framework — a move intended to balance genuine safety obligations with the commercial practicality of managing older building stock across a geographically diverse country.
If you own, occupy, buy, or sell commercial property in New Zealand, these changes will affect your legal obligations, your contractual documentation, and potentially the value of your assets.
The Problem with the Current % NBS Model
Under the current system, buildings are assessed against how they would perform compared to a hypothetical new building on the same site. A building rated below 34% NBS is classified as “earthquake-prone” and triggers remediation obligations. Buildings rated below 67% NBS are often flagged by lenders, insurers, and tenants as problematic — even when they present minimal real-world risk.
The consequences of the current system have been significant:
- Owners of older buildings face substantial remediation costs even when structural risk to life is genuinely low,
- Some buildings have been demolished that might otherwise have been economically strengthened or retained,
- Properties in areas of low seismic hazard are caught by the same rules as those in high-risk zones, and
- Smaller and heritage buildings have faced disproportionate compliance pressure.
The reform responds directly to these criticisms.
A More Proportionate System: Four Mitigation Levels
Under the proposed risk-based framework, buildings would be assigned to one of four mitigation levels based on actual life-safety risk, construction type, and seismic zone:
| Mitigation Level | What It Means | |
|---|---|---|
| Register only | Building remains on the public EPB register — no immediate strengthening required but status is disclosed | Lowest intervention, typically for lower-risk buildings |
| Façade securing | Targeted work to secure at-risk cladding, parapets, or ornamental features that could fall and injure people | Common for older masonry or character buildings |
| Targeted retrofit | Structural strengthening of specific, identified vulnerable elements rather than a whole-building upgrade | More cost-effective than full retrofit |
| Full retrofit | Comprehensive structural strengthening to meet revised performance standards | Required for highest-risk buildings in high-seismic zones |
This model focuses on actual life-safety risk rather than a single percentage threshold. It is expected to provide clarity and cost efficiency, particularly for owners of older or mixed-use buildings that have been disproportionately affected by the current rules.
Regional Realignment: Who Gets Relief?
One of the most significant practical changes in the reform is the recalibration of seismic zones to better reflect actual ground-shaking hazard.
Under the proposal:
- Auckland, Northland, and the Chatham Islands would be exempt from earthquake-strengthening obligations entirely, reflecting their genuinely low seismic risk. This would remove a substantial number of older Auckland commercial buildings from the EPB register.
- Coastal Otago (including Dunedin) would shift from high-risk to medium-risk, significantly reducing compliance pressure on one of New Zealand’s most historically significant building stocks.
Only buildings that pose a genuine risk to human life in medium- and high-risk zones will fall within the new system. MBIE estimates this adjustment alone could remove roughly half of the properties currently classified as earthquake-prone from the register.
The proposed reforms could remove roughly half of all currently classified earthquake-prone buildings from the register — unlocking significant value in assets that had become commercially stranded.
Extended Deadlines and Removal of Concurrent Obligations
For building owners who remain within the system, the reform offers meaningful relief in the form of:
- Extended remediation deadlines — councils may grant up to 15-year extensions, allowing more time to finance and stage strengthening work. This is a substantial improvement on the current system, where deadlines are often commercially unworkable.
- Removal of concurrent upgrade obligations — owners will no longer be required to complete fire-safety upgrades or accessibility upgrades at the same time as seismic work. These concurrent requirements have significantly increased the cost and complexity of strengthening projects, often rendering them uneconomic.
Together, these changes could reopen the market for buildings previously considered too expensive to hold, allowing owners to realise value from assets that had effectively become stranded.
Legal and Commercial Implications for Property Owners
Sale and Purchase Agreements
Many sale and purchase agreements and lease assignments currently include references to NBS ratings or EPB classification. Once the new framework is enacted, those clauses may no longer accurately reflect current legal standards.
NZ Legal recommends reviewing any template agreements that reference % NBS classifications and updating them to align with the revised terminology and risk categories. Using outdated references in a contractual document creates ambiguity and potential for dispute.
Due Diligence for Buyers
Buyers of commercial property should confirm whether a building remains earthquake-prone under the new scheme — and, if so, under which mitigation level. Key due diligence steps include:
Earthquake-prone building due diligence checklist
0/0 completeLending Implications
With a narrower definition of “earthquake-prone” under the new framework, many properties may regain lending eligibility and market liquidity. Lenders will likely revise their internal thresholds once the new classifications are in force.
For buyers of properties currently affected by EPB classifications, it may be worth waiting until the new framework is in place before committing — or, alternatively, negotiating a price that reflects the current constraint.
Lease Arrangements
Commercial leases often include obligations relating to the building’s structural compliance. Landlords and tenants should review:
- Whether existing lease provisions reference % NBS thresholds,
- Whether the tenant has any right to terminate or seek rent reduction if an EPB notice is issued,
- How the new framework affects maintenance and upgrade obligations under the lease.
Alignment with Health and Safety Law
Under current practice, some landlords have sought to maintain a building at 67% NBS or above to reduce liability exposure under the Health and Safety at Work Act 2015. This is because the HSWA imposes general duties of care on building owners and occupiers to manage workplace risks — which can include structural seismic risk.
The Government intends to align HSWA obligations with the Building Act 2004 under the new framework, so that compliance obligations correspond directly to a building’s assessed seismic risk under the revised classification system. This alignment should substantially reduce liability exposure and create consistency between workplace safety law and building-compliance requirements.
Impact on Buyers and Sellers
For purchasers, the reforms may unlock value in buildings previously excluded from investment consideration due to EPB classification. A building that currently carries a significant remediation liability may, under the new system, face only a façade-securing obligation — a far less costly and disruptive intervention.
For vendors, reduced remediation requirements could increase achievable sale prices or shorten marketing periods. A property that was difficult to sell because of an EPB notice may regain marketability once its classification changes.
Councils and insurers are also expected to recalibrate their policies once the new framework is enacted. Now is the time to review your portfolio and identify which assets stand to benefit.
What the Transition Period Means
The transition from the current % NBS model to the new risk-based framework will create a period of transitional complexity. Key questions arise:
- When does the new framework take legal effect, and what happens to existing EPB notices in the interim?
- How quickly will councils update their registers?
- How will lenders, insurers, and valuers respond during the changeover period?
NZ Legal is monitoring the legislative progress of the Amendment Bill and advising clients on how to position their agreements and compliance strategies ahead of the transition.
Practical Next Steps for Property Owners
-
Step 1
Confirm your seismic zone
Identify whether your property falls within the proposed high, medium, or low (exempt) seismic zone under the new framework. If you are in Auckland, Northland, or the Chatham Islands, you may no longer face any EPB obligations.
-
Step 2
Review current EPB notices
Check whether your building is currently classified as earthquake-prone and whether any EPB notices have been issued by your council. Confirm the current remediation deadline.
-
Step 3
Assess contractual references to NBS
Review any sale, purchase, lease, or finance documents that reference % NBS ratings. Consider whether those clauses need updating to reflect the new framework once enacted.
-
Step 4
Engage an engineer for a current assessment
For properties likely to remain in the system, commission an updated seismic assessment to understand the likely mitigation level under the new risk-based approach.
-
Step 5
Seek legal advice before transacting
Before entering or renewing any sale, lease, or financing arrangement involving a commercial property with EPB implications, obtain legal advice on how the current and proposed frameworks affect your position.
NZ Legal’s Perspective
As Adam Siddall, Director of NZ Legal, notes: “The proposed reforms represent a welcome recalibration of risk and cost. They strike a fairer balance between safety and economic sustainability — and for many property owners, they will unlock value from assets that had become commercially stranded under the current system.”
NZ Legal’s property specialists are advising clients nationwide on how to future-proof agreements and compliance documentation ahead of the reforms. We can help determine whether your building still qualifies as earthquake-prone under the new framework, advise on the removal of unnecessary obligations, and update your contracts to reflect the revised legal standards.
Key Takeaway
The refocused EPB system aims to deliver a more balanced, cost-effective, and practical approach to managing seismic risk in New Zealand. For property owners, the reforms create both opportunity and transitional complexity. Legal review now will ensure you are positioned to capitalise on the opportunities and avoid being caught out by documentation that no longer reflects the applicable rules.
Get in touch with NZ Legal to discuss how the EPB reform affects your specific property interests.
This article provides general information about New Zealand’s earthquake-prone building system and the proposed reform as at November 2025. It is not legal advice. Speak to a lawyer about your specific situation.
Sources
- Building Act 2004Primary legislation governing building consent, earthquake-prone building classification, and remediation obligations in New Zealand.
- Building (Earthquake-Prone Building System Reform) Amendment BillProposed legislative reform replacing the %NBS model with a risk-based classification framework.
- Health and Safety at Work Act 2015Governs duty-of-care obligations for building owners and occupiers, including seismic risk management.
- MBIE Earthquake-Prone BuildingsMinistry guidance on the current EPB system and the proposed reforms.
Was this article useful?
Thanks for the feedback. It helps us improve.
