by Nadia Herlambang

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 safety obligations with commercial practicality.

A More Proportionate System

Under the current % NBS model, buildings are assessed against how they would perform compared to a new building on the same site. Owners of buildings rated below 67% NBS often face significant remediation costs, even when their structures present minimal real-world risk.

The proposed risk-based system takes a more nuanced approach. It introduces four mitigation levels tailored to building type, construction method, and seismic zone:

• Remaining on the public EPB register
• Façade securing
• Targeted retrofit
• Full retrofit

This model focuses on actual life-safety risk, not a one-size-fits-all percentage threshold. It is expected to provide clarity and cost efficiency, particularly for owners of older or mixed-use buildings that have been caught by overbroad rules.

Regional Realignment of Seismic Zones

A key feature of the reform is the regional recalibration of seismic risk:

• Auckland, Northland, and the Chatham Islands would be exempt from earthquake-strengthening obligations due to their low-risk status.
• Coastal Otago (including Dunedin) would shift from high to medium risk, reducing compliance pressure.

Only buildings that pose a genuine risk to human life in medium- and high-risk zones will fall within the new system. This adjustment alone could remove roughly half of the properties currently classified as earthquake-prone.

What the Changes Mean for Property Owners

The new framework offers tangible relief for owners:

• Extended remediation deadlines: Councils may grant up to 15-year extensions, allowing more time to finance and stage strengthening work.
• Removal of concurrent upgrade obligations: Owners will no longer need to complete fire-safety or accessibility upgrades at the same time as seismic work.
• Significant cost savings: The Ministry of Business, Innovation and Employment (MBIE) estimates potential national savings exceeding $8.2 billion in avoided remediation and demolition.

These reforms could reopen the market for buildings previously deemed uneconomic, allowing owners to realise value from assets that had become stranded.

Legal and Commercial Implications

Many sale and purchase agreements and lease assignments include references to NBS ratings or EPB classification. Once the new framework is enacted, those clauses may no longer reflect current legal standards. NZ Legal recommends updating template agreements to align with the revised terminology and risk categories.

Buyers should confirm whether a building remains earthquake-prone under the new scheme. Key steps include:

• Checking for existing or pending Council EPB notices;
• Identifying applications for deadline extensions; and
• Reviewing insurance and valuation implications tied to reclassification.

With a narrower definition of “earthquake-prone,” many properties may regain lending eligibility and market liquidity. Lenders will likely revise their internal thresholds once the new classifications are in force.

Alignment with Health and Safety Law

Under current practice, some landlords have sought to maintain at least 67% NBS to mitigate liability under the Health and Safety at Work Act 2015. The Government intends to align that framework with the Building Act 2004, clarifying that compliance obligations should correspond directly to a building’s assessed seismic risk. This alignment should substantially reduce liability exposure and create consistency between workplace safety and building-compliance requirements.

Impact on Buyers and Sellers

For purchasers, the reforms may unlock value in buildings previously excluded from investment consideration. For vendors, reduced remediation requirements could increase achievable sale prices or shorten marketing periods. Councils and insurers are also expected to recalibrate their policies—now is the time to review your portfolio and identify which assets stand to benefit.

Practical Next Steps

Property owners and investors should:

1. Confirm your building’s seismic zone and classification under the proposed framework.
2. Review any current EPB notices.
3. Assess contractual clauses tied to NBS percentages.
4. Seek legal advice before entering or renewing sale, lease, or financing arrangements.

NZ Legal’s Perspective

“The proposed reforms represent a welcome recalibration of risk and cost. They strike a fairer balance between safety and economic sustainability,” — Adam Siddall, Director, NZ Legal.

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, advise on the removal of unnecessary obligations, and update your contracts to reflect the new legal framework.

Key Takeaway

The refocused EPB system aims to deliver a more balanced, cost-effective, and practical approach to managing seismic risk. However, the reforms also create transitional complexity. Legal review now will ensure you’re positioned to capitalise on opportunities once the new law takes effect.

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