The government is tightening the criteria for payments for houses sold after the earthquake

Many houses, such as this one in Cramner Square, were damaged beyond repair in the Christchurch earthquake.
Photo: 123RF

The government is tightening the criteria and timing for the Sales Support Package, a scheme designed to help people return to earthquake-damaged homes.

The scheme was created to help homeowners who bought a house renovated after the Canterbury earthquake, where the repairs were later found to be inadequate.

The payment, administered by the Natural Hazards Commission (NHC, formerly the Earthquake Commission’s EQC), was “ex gratia”, meaning it did not involve an assumption of liability and covered a portion of the repair costs above the statutory limit of $100,000 plus GST.

The aim of the project was to bring the houses up to EQC standards.

Applications closed in October 2020 and more than 800 homeowners had completed their renovations, but hundreds more were still in the process of completing them and another 250 homeowners had yet to sign an agreement.

Deputy Treasury Secretary David Seymour announced the changes to ensure the program “comes to a complete stop in a manner that ensures claimants receive a fair settlement.”

“The program was never intended to continue indefinitely,” he said in a statement. “The government is making changes to make it easier, encourage timely settlements for remaining homeowners and avoid delays that increase the cost of the program.”

Government costs for the scheme have risen from an initial 2019 estimate of $250 million to $717.9 million as of June this year.

Changes include:

• The limit calculation is 1.5 times the current taxable capital value of the property.
• New deadlines: Settlement deeds must be signed within 30 business days of proposal submission and construction must begin within six months of agreement.
• Pre-construction project management costs are limited to 4 percent of the total payment amount.
• From December 23, an additional limit will apply if the homeowner has purchased another new home.

“The amount of the renovation grant that can be repurposed will be limited to the market value of the buildings on the property being sold—assuming no damage to be restored under this program existed—plus the cost of demolition of the damaged properties.” sold property.

“Other existing parameters and restrictions for these alternative settlement payments will continue to apply and NHC will continue to review the appropriateness of the proposed costs on behalf of the Crown.

“I am pleased that we have achieved an outcome that benefits everyone: the remaining applications are completed at no additional cost to taxpayers,” Seymour said.