Apartment owner's decade-long earthquake strengthening battle

Thursday, 29 April 2021

Hutt City Council took action against Alura Ltd for its failure to complete work on the Petone building. (First published in 2018)

Wellington apartment owners understand the risk of earthquakes. But for some, the Government’s efforts to keep them and others safe are an even greater fear. Rob Mitchell reports on one inner-city building and the owners’ painful process of earthquake strengthening.

Gus Charteris owns a “beautiful” 250sqm New York loft-style apartment in the heart of Wellington, a few steps from the action of its inner-city streets.

He hasn’t set foot in it for close to two years. And he’s unlikely to ever set foot in it again.

Instead he finds himself more than 300 kilometres away in a modest Hawke’s Bay house, a self-imposed exile contemplating a very different life to the one he had imagined.

It was a life “in the inner-city”, he says. “I really wanted to be amongst it all. I didn’t want to commute, I wanted to walk to work, wanted to easily get to the gym, be able to come and go.”

Gus Charteris now calls Hawke’s Bay home, despite owning a “dream” apartment in Wellington.

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So the economic development consultant did his due diligence, put down a decent deposit in 2006 and bought his dream $690,000 apartment in a converted inner-city factory, his home one of the biggest in the 17-unit building.

It was “absolutely beautiful…achingly cool, and that’s what got me”.

Stuff agreed not to name the building, a former factory a stone’s throw from Te Aro Park, because some owners are concerned about the impact on their property values. Charteris is selling his apartment. Others are contemplating a similar move.

Charteris was so enamoured with the building and the life it represented that he disregarded early talk of the need for strengthening work.

“There were mutterings that at some point we would need to consider the earthquake strength of the building, and the Wellington City Council had started off its Initial Evaluation Procedure (IEP),” he said.

The Christchurch quake changed everything for Charteris.

The IEP was a desktop review of the city’s pre-1976 building stock, an evaluation tool to help local bodies determine the strength of their properties.

Charteris, then chair of the building’s body corporate committee, was even heartened that the WCC was being so pro-active. And there was little concern when “we all got sent nice letters saying… you are potentially earthquake prone”.

That was 2008. The Christchurch quakes were still three years away, Kaikōura eight, and the body corporate committee was unified behind a solid plan.

An initial engineering assessment determined the building was stronger than first thought but its New Building Standard rating still below 33 per cent and therefore in need of strengthening.

That was about $60,000 but divided among all the owners.

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“That was troubling but we kind of knew that that was going to happen and we were given a nice long timeframe to commit to the work, and then started to save in earnest to do that work,” he said.

The Christchurch quakes changed everything, destroying big chunks of the southern city, and Charteris’ dream life.

Many Wellington property owners have found themselves in the same predicament since the 2016 Kaikōura earthquake and changes to legislation compelled them to strengthen their buildings.

“At the time we were paying $25,000 for the insurance on the building,” he says. Straight after Christchurch, their insurance went to $95,000, then to $330,000 the following year. That worked out an average of $19,400 a year or each unit.

The owners declined to take insurance, putting them in breach of the Unit Titles Act. The initial engineering firm pulled out, citing concerns over dealing with body corporates. There was a second company and then a third as the owners tried to establish a plan.

Charteris estimates they spent $250,000 on engineers.

Initial estimates put the strengthening at $500,000. That quickly grew to $2 million as an increasingly stressed committee of owners tried to tie down engineers, over-stretched contractors and ever-changing regulations.

“We were just volunteers, people with no building experience, with really busy lives and complex jobs.”

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The building wasn’t damaged in the 2016 Kaikōura quake but emergency legislation that followed required owners to secure the parapets and facades on their buildings.

“We asked the WCC if we could do that work as part of the strengthening, which was declined,” Charteris said. “So we ended up having to spend $200,000…and we lost a year to 18 months in planning in order to manage that project.”

Years ticked by, cost estimates increased further and hairs turn grey. Then engineers informed the committee that the future of the project was linked to the building next door, meaning negotiations grew to 35 owners, each one having their own level of risk and tolerance for financial pain.

And when they pulled out “at the last minute”, the project that had begun at $500,000, hit $2m and then $6m was now further delayed and costing almost $8m.

That’s about where it is now.

The body corporate pushed on, and the work will be completed in the next month or two. Engineers expect a New Building Standard rating of 76 per cent.

But Charteris won’t be back.

Like neighbours in his building and so many others, his inner-city dream has been shattered, his love affair with the city broken.

Inner-city apartment owner Paul Flewelling has moved on and may be back, but his wife is over it.

“I have been living with it, going through the earthquake strengthening process for well over a decade now, and it has taken such a toll on my mental health, anxiety, my ability to be able to do other things in life,” he says.

“I suffered depression. At some point you need to draw a line underneath some things in life and I need to draw a line under this and move on… I just needed to remove myself from Wellington, because I was so completely over it.”

Broken too is the community of owners who were so unified and committed at the start.

“We keep it cordial now but we don’t spend any time with each other, because we have seen each other at our absolute worst, raw emotion.”

Which leaves their 44-year-old former body corp chairman sitting in a modest Hawke’s Bay house, contemplating a very different future.

Charteris has spent about $650,000 on the earthquake strengthening alone. There’s been tens of thousands more on engineering assessments, legal bills and so many other costs.

In total, he estimates he’s lost about $1.5 million on the apartment.

“It has completely restricted the choices I thought I would have had at this point of my life.”

Tiny house and a smaller future

Apartment owner Paul Flewelling didn’t think he’d be living in a “tiny” house on the outskirts of the city, still paying a hefty mortgage at the age of 50.

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But that’s what he and his wife have had to do to “stay sane” while their earthquake-prone apartment is repaired. It was meant to take nine months. Almost two years later, they are still waiting.

Like others, the technology coach is unsure if they will return when the contractors hand back the keys in a couple of months.

His wife, Sally, doesn’t want to go back. “It was her first place…it has really impacted her, really dashed her dreams of home ownership.”

Others were forced to rent, pushing themselves to near-bankruptcy.

Flewelling and his wife “part-bought, part-built” a tiny house and rents a small patch of land for it in Island Bay.

Their 45sqm apartment cost $235,000 in 2008 and their share of the repairs is $177,000 and counting. That’s on top of their contribution towards numerous engineers’ reports.

Negotiations with banks became so stressful that Flewelling’s lawyer had to give him a hug.

“In the darkest moments, that [lost future] is a real pressure. You feel like you’ve failed, you’ve been an idiot.”

That future might have included children, but “this has pushed us down a certain path”.

Government role too taxing

It’s the Government’s tax take that really riles Rod Burke.

The builder and roofer went into the earthquake-prone apartment three and half years ago with eyes wide open, paying below market value for his 90sqm property but calculating he’d need another $280,000 for his share of the earthquake strengthening bill.

“Currently it’s $360,000, with no end in sight,” says the 62-year-old.

He can live with that – “I took a punt, and that’s my risk” – but he and his wife now have had to commute daily from a property north of Levin while the earthquake-strengthening work closes on two years.

“That’s between 15 and 20 hours a week commuting,” he says. “I’m tired.”

Despite that, Burke still counts himself luckier than most. Other apartment owners have had to rent in the city and “have been out of pocket for over two years”.

But the Government has got even luckier, says Burke.

He reckons that between $1.8m and $2.2m of the $7.7 million project will end up in the government coffers – a combination of GST, income tax and other levies.

In 2018, apartment owners appealed for some tax relief, but that has been rejected. “Do I want some of that back?” he says. “I’d like to see at least the conversation.”