As the seas rise, the climate changes, and waters creep ever closer to some of our housing stock, the Government is moving to ensure prospective home buyers do not have their heads in the sand
Councils will be required to disclose a wider range of natural hazard risks to prospective home buyers, under a law change to be introduced to Parliament later this year.
Local authorities will in turn be shielded from legal action taken by home owners angry about their properties being added to hazard zones – provided they have disclosed the information in good faith.
The changes are being made to land information memorandums, better known as LIMs – reports compiled by councils which outline all the relevant information known about a property or section.
Experts have for some time expressed concerns about existing and new property developments in areas at risk of flooding, coastal erosion or other hazards, exacerbated by the effects of climate change.
In a Cabinet paper outlining the proposed reforms – which have now been signed off by ministers – Local Government Minister Nanaia Mahuta said while LIMs were a “key tool” for property buyers to understand the natural hazard risks associated with a purchase, there were significant problems with the current system.
Natural hazard information could be hard to find in LIMs, which sometimes ran to hundreds of pages covering a range of issues and with no consistent layout or navigation tools such as a table of contents.
“The presentation of natural hazard information in LIMs varies across councils, even within a region, and often lacks explanation and interpretation of the information.”
Legal threats over disclosure
The threat of legal action by property owners had also led some councils to take a cautious approach over what natural hazard information was included in a LIM and how it was presented, with the spectre of a lawsuit for both failing to include information and for including information “that may be considered misleading, not accurate or not fairly stated”.
Kāpiti Coast residents spent years trying and failing to throw out the Kāpiti Coast District Council’s decision to add properties to coastal hazard zones without notification, while coastal Christchurch residents have contested similar hazard warnings in the past.
The package of changes will introduce a statutory responsibility for regional councils to provide natural hazard information and support to local authorities, as well as broadening information requirements for LIMs, and creating a power for ministers to set national directions for natural hazard information (including about climate change impacts).
The Government would also introduce a limited legal liability for local authorities when natural hazard information was disclosed in good faith.
Mahuta said the changes would help ensure councils took a consistent approach to the disclosure of natural hazard information, while making LIMs easier for prospective property buyers to understand.
Property owners would still be able to take legal action against councils for failing to include information about natural hazards, but the legal protection would make it easier for them to disclose relevant risks.
“What we know is that for every one house at the coast that is exposed to those sorts of floods, 10 houses inland are exposed to freshwater flooding. There is a significant proportion of our housing stock that is built in floodplains. It’s at least 100,000 and could be several times that.”
– Belinda Storey
Belinda Storey, an economist at Victoria University of Wellington who researches risks associated with climate change, told Newsroom she was encouraged by the Government’s planned law changes given the gravity of the situation.
“It is not a moment too soon – this information is critical for people buying houses, renovating houses and influencing the decisions of developers. Given that there is such a strong push to increase our housing supply, it’s excellent that this is being done now.”
Storey’s previous research on coastal properties had led to a “very conservative” estimate that 10,000 houses were exposed to an annual flood risk of at least 1 percent – what some refer to as a 100-year flood – with insurers stopping cover for houses once risk hit 2 percent a year.
“What we know is that for every one house at the coast that is exposed to those sorts of floods, 10 houses inland are exposed to freshwater flooding. There is a significant proportion of our housing stock that is built in floodplains. It’s at least 100,000 and could be several times that.”
More accurately recording natural hazard risk on LIMs would start to influence how much money people were willing to pay for a property, as well as the lending offered by banks with more objective risk assessments, and could influence the location of future development.
“If developers know that this information is going to be put on LIMs, then the economics for them about pushing for development in hazardous locations will shift. It may be that this translates most directly through banks and developers’ actions, as opposed to individual homeowners.”
The move to protect councils from legal action would also be important, given the “chilling effect” of the Kāpiti case on the willingness of councils to disclose all the potential hazards on a LIM.
Local Government NZ policy manager Grace Hall told Newsroom the Government’s proposed changes “will go some way to improving homeowners’ understanding of their exposure to natural hazards”, but the effect on buyers’ behaviour remained to be seen.
Hall said there was a need to think more broadly about how to grow communities’ understanding of their exposure to and risks from natural hazards, given not all homeowners would necessarily access a LIM and renters, who made up a large proportion of the country, rarely had access to the documents.
Acting Local Government Minister Kiri Allan told Newsroom Cabinet had signed off on the changes to ensure information about natural hazards was better communicated in LIMs, which were currently “difficult to understand, lacking explanation and interpretation of information”.
Allan said the intent was not to signal that the Government would not bail out Kiwis who bought property near a foreseeable natural hazard, but to support buyers’ understanding of risks so they could make better informed decisions.
The necessary legislative amendments were set to be introduced by the end of the year, with work on national directions for LIMs to begin once the changes were passed into law.
