Limbo Land - what a world without flood buyouts looks like

Sunday, 1 February 2026

While no decision has yet been made on property buyouts for the latest weather washouts, the government last year signalled it could not endlessly bail flood victims out. Nikki Macdonald investigates what a world without buyouts looks like. And what happened to the law to clear a path for managed retreat.

When a rain warning lands, Kimberlee and Gary Whitehead kick into action. Again.

They shift the cars off the lower property, which is submerged 3-4 times a year. They pile belongings on benches and beds. They corral the animals - the two dogs, cats, ducks and chooks. There are fewer than there used to be, Gary says sadly.

And then they wait, and wonder, will this be the 1-in-100 year deluge that will burst Pupuke River 120m away, sending floodwater 3m deep raging across their exit route, and surging 1.89m inside their raised-pile house. Even a 1-in-10 year flood has a high danger rating. The risk to life, modelling says, is “intolerable”.

“We feel that one day a big flood is going to come through and we’re going to die,” Gary says. “Once the bottom of the valley floods, there’s no exit out.

“So it’s pretty stressful.”

But the Whiteheads are stuck in this soggy corner of Northland, near Kaeo. For now, they still have insurance, but the premiums have doubled to about $400 a fortnight. And after the 2018 flood breached their 1m raised floor, their insurers warned they’d scarper if they make another major claim.

Lifting the house out of danger would cost about $520,000 - more than the property is worth, and way out of reach of the couple in their late 50s, who rely on supported living benefits.

They haven’t a prayer of selling. And they were refused a buyout under the Cyclone Gabrielle and Auckland anniversary floods programme.

So they stay, and accept a life where vege gardens are swamped in sewage-contaminated silt. Where animals and cars drown. Where no rain feels safe.

Or they walk away with nothing.

“There’s not a lot of quality of life,” Kimberlee says, choking up. “There’s no point in doing landscaping. There’s no point doing any work to the house. We’re in limbo.

“We’ve both worked all our lives to get to this stage. Our house is not super flash. It’s just a comfortable little house which is ours. Walking away - it just seems unfair.”

The Whiteheads are unfortunate emissaries from a no-more-buyouts future. A glimpse of what’s to come, if local and central governments decide to no longer bail out flood- or slip-trashed homes, as Prime Minister Christopher Luxon signalled after last year’s Tasman floods.

A spokesperson for associate emergency minister Chris Penk says it’s too early to say if buyouts will be offered for the dozens of homes likely made unliveable by the latest downpours.

But the Far North District Council’s justification for rejecting the Whiteheads’ plea, shows the difficult balancing act as climate change inevitably brings more storms and more damage, more often.

“The recommended approach is to prioritise broader community resilience efforts while refraining from property-level interventions…Avoiding intervention in this case prevents setting a precedent that could lead to an unsustainable influx of similar ad hoc requests,” the council wrote.

The case against buyouts: trust the market

After 100 trucks’ worth of silt and logs stormed through Rita Paczian’s Riwaka house and property last July, she asked Tasman’s council for a buyout.

“It was absolutely not a thought,” she says. “There’s only so much rate money, and we can’t possibly buy out, they said.”

The home’s structure remained sound, so insurance only paid for a renovation. But Paczian and her husband are too scared to return.

“There’s no way we want to go back there - it’s going to happen again.”

So Paczian has been shovelling silt, cleaning and painting, and commissioning tradespeople to fix the place up. By the end of February, it will be ready to sell.

The couple’s property valuation and insurance policy are both up for review.

“I presume premiums go up, while the value goes down,” Paczian says.

She reckons the property needs a $100,000 concrete retaining wall to make it safe. And while the couple could have sold for almost a million before the rain, they’re now looking at $800,000, maybe. She hopes a builder will see the potential, or a climate-denier.

And hopefully they will clear enough cash to buy somewhere else in the Tasman region. Just not at the bottom of a hill, or next to a river.

That’s arguably the market doing its thing - the hazard is flagged to any new buyer, and the risk is factored in to both the price of the house and insurance.

As the independent reference group on climate adaptation put it, in their July 2025 report, “people and markets should adjust to a changing climate over time”.

And if they choose to stay in risky areas, they shouldn’t expect government buy-outs. Ad-hoc bail-outs such as the Cyclone Gabrielle and Nelson flood buyout programmes reduce incentives for people to understand and manage their own risks, the group said.

And with $4.1 billion worth of household assets facing serious harm over the next 30 years, the expectation of a buyout creates an “uncapped and growing” demand, the report said.

Tasman mayor Tim King says government-subsidised buyouts probably wouldn’t have helped much following last year’s double-whammy floods, as many affected properties were rural, and most flooded houses were fixable.

He also worries about the message buyouts send to prospective owners.

“If you say, look, if you live in a high risk situation, and something terrible happens, the government will buy you out - that’s an almost perverse incentive. So someone who lives in a very low risk place, effectively ends up paying - through their rates or taxes - for people who live in higher risk areas.”

If buyouts to get people out of harm’s way are off the table - either before or after a disaster - that makes property insurance all the more important, as it becomes the only exit route, says Insurance Council CEO Kris Faafoi.

But if there’s no investment to make disaster-prone areas safer, insurers will stop insuring high-risk properties, known as insurance retreat.

That’s already happening. Home insurance premiums have increased nine-fold since 2000. And King has heard of insurers refusing to cover new owners, where properties have been sold after the floods.

Insurers also declined to cover homes red-zoned as part of the Cyclone Gabrielle and Auckland anniversary floods. But it’s wider than that.

AA Insurance head of underwriting, Dee Naidu, says the company has a “temporary restriction” on issuing new home and landlord policies “in a small number of locations where natural hazard risk is elevated and where our risk exposure in those areas has reached the limit we can responsibly take on”.

That includes flood-prone Westport. But homes already insured by AA in affected areas can still be covered when sold, Naidu says.

Tower Insurance now factors flood, slip, sea surge and earthquake risk in to its policies. While the company says it still insures properties in high-risk areas, whole streets come up as uninsurable, based on its online quote tool. (Customers can call to query that)

Vero says it has “decline rules” for high hazard sites, but that’s assessed at each individual property.

Most insurers say post-flood cover decisions are case-by-case, and depend on repairs, protection works, and claim history.

Faafoi says more money needs to be spent on disaster prevention, so insurance retreat doesn’t become more widespread.

“There’s pockets. Our concern is keeping it to pockets.”

The case for buyouts: What if you can’t afford to leave?

There’s dispute about how much the Whiteheads should have known about the flood risk to their property when they bought it, in 2013.

The council says the risk was mapped in 2012, but the couple say that didn’t show a threat to the house. They figured the home had a building consent, so must be safe. (An MBIE determination found the council should have been aware of the flood risk when consent was issued in 1994, and the property title should have included a hazard note).

Gary argues past council failures shouldn’t be on them.

“You buy a house with a building consent, thinking that it complies with the law and that everything is done above board, and when it's not, it's just like ‘Tough luck for you - it's not our problem’.”

That legacy of bad building decisions is a key argument in favour of buyouts, because it can’t be fixed by simply hiking insurance premiums, says Victoria University emeritus professor of public policy, Jonathan Boston.

“If property owners respond by ceasing to insure their properties, that isn’t going to stop the damage occurring to them in the end. And it’s not going to move them out of harm’s way.”

There should absolutely be limits to buyouts, says Boston, who was on a working group investigating climate adaptation. They suggested payment caps, and discretionary payouts for owners who don’t live there.

The other risk of abandoning buyouts is a political one, Boston says.

“I just can’t see a prime minister turning up in a helicopter and saying to people who have been washed out of their homes and have nowhere to live, ‘Nice to see you, sorry about that, bad luck, you’re on your own’.”

Slip sliding away

As owners of slip-smashed houses return home, the state of their property might not be the only nasty shock awaiting them.

“So many people who've had damage to their properties, they're all about to find out just how little is covered,” says Gill Parnham. “That's going to be be hideous.”

Two and a half years after the bank behind her Wellington home collapsed in the winter 2022 storms, Parnham was finally paid out her full entitlement last February.

But she’s still 170k in debt, having had to take a second mortgage and withdraw $48,000 from her Kiwisaver to pay her $274,000 portion of the vast hunk-of-concrete engineered replacement retaining wall she now shares with her neighbour.

That’s because, for land damage claims, the Natural Hazards Commission can only pay the lesser of either the land’s value, or its repair cost.

Parnham says that’s unreasonable, because it favours people in expensive places. A home owner in dress circle Oriental Bay told her his payout more than covered his repairs.

“That’s a horrible way to calculate it. It’s not fair.”

An NHC review found Kiwis don’t understand how limited land cover is, and it was also an issue flagged in the Insurance Council’s Cyclone Gabrielle debrief.

“We might need to take the opportunity to cast forward and see what land cover should look like in the future,” Faafoi says. ”Because some people go into a land claim, thinking that they’re going to get everything looked after. And that’s not always necessarily the reality.“

What happened to the Climate Adaptation Act, and managed retreat?

Designing a legal framework for managed retreat (moving people from dangerous areas before disaster hits) was one of the 2022-2024 “critical action” points under New Zealand’s first National Adaptation Plan.

It was supposed to be part of the planned Climate Adaptation Act, but that never happened.

In October 2025, the government finally released a 2-page National Adaptation Framework, with four pillars - risk and response information sharing, roles and responsibilities, investment in risk reduction and cost-sharing pre- and post-event.

But there’s no detail about how costs will be shared, and no mention of managed retreat.

Victoria University law professor Catherine Iorns, who studied the legal barriers to managed retreat, says the fact there’s still no Climate Adaptation Act highlights the fraught decisions that have to be made. Do you bail out people building new mansions on eroding sea cliffs, or do you abandon low income renters who can’t afford to move?

“We’re avoiding the choices, because then you’d have to be explicit about which choice you made.

“Sometimes government can get ahead of where people are at, and bring them along. Other times, government will only act when they know they’ve got a majority behind them. The bigger question is - when will it get so important for voters that they make government do it?”

Councils are also reluctant to introduce climate adaptation measures, because of the risk of litigation, Iorns says. Kāpiti Coast District Council was taken to court by home owners, after attempting to flag coastal erosion risks on properties.

“They're waiting for a climate adaptation act, or someone to pass something that says who is responsible, and says they're allowed to do this without being sued.”

Boston says the adaptation framework is a “very small step forward”, with the critical hole being how it will be funded. If the responsibility lies with “stretched to the limit” local government, they need better tools and resources, he says.

“This is a multi-generational, unprecedented problem that will require an unprecedented set of policy instruments to address. And my sense is, that a lot of people simply do not grasp what’s coming at us.”

The mayor of Westport’s Buller district, Chris Russell, says councils in repeat-flooding areas need long-term funding certainty from government, and clearer national direction.

“Climate adaptation is a national issue and requires a coordinated national framework rather than piecemeal local responses.”

Westport has a master plan which includes opening a safer land area for growth, and as an alternative site for post-disaster rebuilds. But Russell is adamant it’s not managed retreat.

“Its purpose is to avoid increasing future exposure to risk, not to relocate existing communities or mandate retreat.”

One of the most flood-vulnerable communities in the country - South Dunedin - is also going though a climate adaptation planning process, called South Dunedin Future.

Managed retreat, or letting the water in, was option 7 of 7, but did not make the shortlist. They’re instead considering raising the land and pumping out water; creating wetlands; or a combination of the two.

Dunedin mayor Sophie Barker says the region also needs government support, both in terms of money and clear legislation around responsibilities.

“We really need central government to invest in South Dunedin, and we have asked for that, and we'll keep asking, because infrastructure is really expensive.”

Climate Change Minister, Simon Watts, says a Climate Change Response Act amendment bill, due to be passed before the election, will require councils to create adaptation plans for vulnerable areas.

That will give communities a clearer picture of their risks, how they will be managed, and what investment is planned.

Managed retreat is one adaptation option, alongside opening new land for development, infrastructure investment and building design requirements, Watts says.

Faafoi says the adaptation framework is “a good start”, but more urgency is needed on risk reduction, funding mechanisms and - where needed - hard conversations about the future of communities.

The council’s latest survey found 87% of Kiwis wanted early action on protection from natural disasters, and 61% thought the government should lead a response, Faafoi says.

“If we mull on this too long, we’ll keep having these events, and I think New Zealanders will become very uncomfortable that nothing is being done.”

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