Red Zone Options

Red Zone definition

See Red zone Q&As for more information

The residential red zone (where remediation would be prolonged and may be uneconomic).

• The land has suffered significant and extensive damage
• Most buildings are uneconomic to repair
• There is a high risk of further damage to land and buildings from low-levels of shaking (e.g. aftershocks)
• The infrastructure needs to be completely rebuilt
• Land repair solutions would be difficult to implement, prolonged and disruptive for landowners.

The options being offered by the Government to home owners in the red zone

The Government has announced two options for owners of residential property in the Red Zone for which there is a valid and current private insurance policy for a dwelling on the property.

1. The Government will make an offer of purchase on the entire property (including house and land)

The Government will pay the rateable value of the entire property (land and buildings) as at the 2007 valuation, less any dwelling insurance payments already received by the Property Owner in relation to any earthquake that occurred following 3 September 2010.

Any offer may be adjusted should it be determined that the house is covered for a fixed sum insured and that amount is less than the rateable value, or the house is insured for a lesser square meterage than its actual size.

The government will take over the Property Owner’s rights in respect of:

• The land insurance claim with EQC
• The dwelling insurance claim with both EQC and the Insurer

2. The Government will make an offer of purchase on the land only and the house will be dealt with separately by you insurer

The Government will purchase the land and pay the greater of;

• The rateable value of the land only as at the 2007 valuation, and
• The EQC valuation for the minimum lot size applicable; less any payments already received by the property owner from EQC for damage arising from any earthquake that occurred following the 3 September 2010.

Homeowners continue to deal with their Insurer and EQC for the dwelling insurance.  The government will take over the Property Owner’s rights for EQC recoveries in respect to land. The Property Owner will retain all rights relating to insurance of any dwelling on the property with both EQC and the Insurer.

General information about both options

The Property Owner must have lodged a land insurance claim with EQC and a dwelling insurance claim with both EQC and the Insurer and pursue the claims diligently until the settlement date.

Home owners will have 9 months to consider their options.

You will have nine months from the date of your offer letter to accept the Crown’s offer to purchase your property; the Crown offer expires on 30 April 2013 but this date could be subject to change. As a homeowner, you will need to ensure that you have taken the necessary action to ensure that Government’s offer has been accepted by this time. 

As the Property Owner you will be required to give the government vacant possession on the settlement date however, you may continue to occupy the Property until settlement date provided it is safe to do so. No tenancy agreement will be entered into.

What will happen next?

The Government will continue to work up details around the individual packages being offered to all homeowners. Further information is provided on the Government’s website which will continue to be updated as further information becomes available.

What you need to do next

We recommend that you read the information on the Government’s official website, or you can find further information on the CERA site here. The information provided on our website is just a guide and should not be used as the basis for decision-making.

1. Go to the Government’s website at www.landcheck.org.nz to confirm which land zone you are in and to understand the options more fully. Alternatively, you can call Government’s free-call helpline 0800 779 997.

2. Await your copy of Government’s Information Pack that will be mailed to homeowners in the red zone.

 
3. You will be required to make a decision on whether you would like to proceed with option 1 or option 2 and complete your election with Government before the expiry of the offer.

What we will do next

FMG will be making contact with all our customers identified as within the Governments 'red zone' and providing you with the necessary information you require to make an informed decision on the two options offered by the Government.