Seismic rules reshape property risk

New Zealand’s seismic landscape is set for a fundamental reset following the passage of the Building (Earthquake-prone Buildings) Amendment Act 2026. The legislation updates the Building Act 2004 and introduces a more proportionate and risk-focused framework that reshapes building prioritisation and vulnerability assessment, with the new system coming into force on 1 July 2027.

Reforms reshape decisions for property owners and investors

It also signals a new set of practical decisions for owners, investors and occupiers as the country transitions to the revised earthquake-prone buildings (EPB) system, with the latest edition of Bayleys' Total Property examining the implications for portfolio strategy and capital planning.

Risk-focused framework replaces uniform seismic rules

Bayleys national director commercial and industrial, Ryan Johnson, says the reforms represent a decisive correction that replaces the old uniform seismic rules with a clearer and more predictable model.

“The outgoing framework created uncertainty and slowed commercial activity, with long-running inconsistencies overstating risk and applying obligations unevenly.

“The industry is relieved to see a framework that feels practical, predictable and aligned with real-world risk.”

New system focuses regulatory effort on life safety

The Government’s position is that the new system is appropriately focused on risk to life and better aligns regulatory effort with the buildings that present the greatest danger in an earthquake.

Quoted in Total Property, Minister for Building and Construction, Simon Watts, says the reforms take a more proportionate approach to managing seismic risk while ensuring high-risk buildings continue to be identified and addressed.

“Under the old framework, expensive and often unrealistic remediation costs that were disproportionate to actual risk threatened to leave buildings derelict,” he explains.

Minister Watts says the new system directs attention to the building types and locations that present the greatest risk to people, acknowledging that while earthquakes can still occur in low seismic hazard zones, the risk in those areas is significantly lower due to their distance from plate boundaries. He says the changes will save communities about $8.2 billion and allow investment to be directed elsewhere.

MBIE methodology will guide the new EPB system

The new regime is focused on identifying and addressing buildings with critical structural vulnerabilities. The Ministry of Business, Innovation and Employment (MBIE) is currently undertaking targeted consultation on the draft updated EPB methodology, which will give effect to the legislation and guide councils and practitioners on how to apply the new system, identify earthquake‑prone buildings, and determine the appropriate mitigation actions. Once the methodology is agreed and approved, MBIE will provide support and guidance to councils, building owners and occupiers on how to implement it.

Seismic vulnerabilities remain beyond the revised framework

Engineering leaders say the reforms mark a meaningful shift in how seismic risk will be assessed and prioritised across the built environment. Craig Stevenson, director of building structures at Aurecon, cautions against assuming seismic concerns have diminished.

“There is a risk that the reforms are interpreted as meaning that concerns around the seismic performance of buildings have largely gone away, whereas the changes are principally about how EPBs are identified and which buildings and deficiencies should be prioritised for remediation.”

Stevenson notes that many buildings outside the new framework may still carry significant vulnerabilities relating to life safety, business continuity and investment risk. He says removing percentage NBS from legislation may not eliminate its commercial influence, as insurers, lenders and purchasers are still likely to scrutinise ratings and identified vulnerabilities.

“It’s important to note that while the risk-based approach directs attention to the highest risk factors, it does not remove all seismic vulnerabilities. A building may fall outside the revised EPB framework while retaining vulnerabilities that affect its seismic performance.”

Contracts, financing and insurance considerations remain

Legal specialists say the legislative reset will not immediately change contracts or market behaviour. Justin March, head of real estate at DLA Piper, says the same fundamental considerations remain even as statutory settings shift.

“The regime shift is positive, but it’s easy to assume leasing, financing and insurance will suddenly become simpler. In reality, the same fundamental considerations remain.”

He says owners and occupiers in medium and high-risk zones will continue to navigate familiar questions of risk, value and regulatory obligation, and those owners who strengthened buildings under the old regime should not expect compensation, as there is no regulatory pathway to recover costs already incurred. March advises owners to use the transition period to assess exposure and plan ahead as the market adjusts to the revised framework.

Clear implementation will be critical to reform success

Industry sentiment is broadly supportive. Property Council New Zealand chief executive Leonie Freeman says members have long believed the old rules lacked certainty and proportionality. She says the new regime is a significant shift that focuses on the buildings posing the greatest risk and removes percentage-based NBS ratings that created uncertainty and unintended impacts.

Freeman says implementation will determine the success of the reforms and stresses the need for clear guidance and consistent application across councils.