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Ngā pārongo e pā ana ki te hoko me te utu inihua mō ngā whenua i pā kinotia e te āwhā

Information for buy-outs and insurance payouts for storm-affected properties

You should know

We are aware that some storm-affected property owners are being contacted by their insurance companies, in the possibility that their property could become a category 2 or 3, and how this may affect their insurance in the future.

Auckland Council was not aware of this communication and we acknowledge the stress and confusion that this may have caused residents.

While we have no legal power over insurance, we have raised our concerns over this communication with the Insurance Council of New Zealand.

Category 3 buy-outs

The New Zealand Government confirmed on 1 June 2023 that it will support a buy-out programme for Risk Category 3 properties.  

To read more on the government announcement, see Government to support councils with buy-out and better protection of cyclone and flood affected properties.

Why we need to buy Category 3 properties

As a result of two extreme weather events in January and February 2023, an intolerable level of risk now exists for some residential households.

Even if a Category 3 property is insured, insurance doesn't account for the land and future risk.

So, while insurance helps people put their homes back the way it was before the storm, it does not prevent the risk to life from storms in the future.

If we do not step in, these households are highly likely to become stuck in a disaster-rebuild-disaster cycle, where loss of life is possible.

As part of the proposed cost-share arrangement with the government, local councils in storm-affected areas will buy the properties from the owners so people do not continue to live in high-risk homes.

This is a voluntary process for property owners to take part in.

See Property risk categories for more information on risk classification.

How buy-out valuations will be calculated

The Governing Body considered policy options for buying Category 3 homes in early October 2023.

We looked for a fair and reasonable approach that:

  • recognised the significant financial hardship faced by homeowners
  • balanced the high cost of a buy-out programme to Auckland ratepayers.

We will use a pre-weather event market valuation as at 26 January to determine the starting point for the voluntary buy-out offer. We will offer 95 per cent of the value of an insured property, less any insurance payout (including EQC). This means that the property owner is making a 5 per cent contribution towards the cost of the buy-out.

For properties that are not insured, we will offer at least 80 per cent of the value of the property (up to 95 per cent - the same basis as an insured property). This means that the property owner is making up to a 20 per cent contribution towards the cost of the payout.

You can make an application for council to consider your individual circumstances related to your insurance status.

In some situations, we may offer you up to 95 per cent (the same amount as for an insured property) if we consider that it is fair to do so based on individual circumstances relating to your insurance status.

This could be where:

  • there was little or no insurance loss
  • you couldn’t get insurance at the time of the events due to previous weather events
  • you can show a history of paying insurance for the property previously.

Your property advisor or navigator will explain the application process to you. This is done using an online form (or paper form). It will take up to 25 working days for you to receive a decision about your application.

To summarise, the buy-out offer will be the market valuation at 26 January 2023, less the insurance (including any EQC settlement), less the homeowner contribution.

How to prepare for a property buy-out

This homeowner handbook will guide you through the Category 3 Voluntary Buy-Out Support Scheme to help you complete the steps of a buy-out.

Valuation information about the Category 3 buy-out process​

You can read about how your property is valued in the Valuation Brief for Auckland Council Category 3 Buy-Out Process (Residential Home Property Type).

​Timeframe for Category 3 buy-outs

We recognise that property owners want certainty as quickly as possible. While we have started individual conversations with confirmed Category 3 property owners, there are still details to work through before we can confirm how long it will take for us to purchase a property.

The timeline will be different for everyone as it depends on your situation. For most homeowners it is likely to take between three and six months from the initial homeowner meeting to receiving a Sale and Purchase Agreement. This timeline might be longer if there is a valuation dispute or it takes longer than expected to supply all the required information.

You will have a month to accept or decline the offer.

Insurance payouts

This risk categorisation process will have no impact on your insurance claim - which will continue to progress as normal.  

Your insurance contractual rights under your claim are between you and your insurer and we recommend you contact them with any concerns or questions. 

If you have questions about how your insurance claim relates to a possible property risk categorisation, contact your insurance company.

See the Insurance Council of New Zealand website for more information. 

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