NZ Government to buy 5,000 quake homes from Christchurch property owners...
Around 5,000 homeowners in Christchurch's worst affected suburbs, known as the suburban Red Zone, will be able to sell their properties to the Government.
Prime Minister John Key has just made the announcement in Christchurch alongside Earthquake Recovery Minister Gerry Brownlee.
Mr Key says Christchurch has been divided up into four residential zones – red, orange, green and white.
Homeowners with insurance on September 3 in the red zone, which is where the land is unlikely to be able to be rebuilt on for a considerable period of time, have two options.
They can sell their entire property at current rating value to the State less any built property insurance payments already made.
The State would assume all the insurance claims other than contents.
The other option is that the Crown makes an offer of purchase for the land only, and homeowners can continue to deal with their own insurer about their homes.
Treasury has estimated the net costs to the Government to purchase all of the around 5,000 properties currently in the residential red zone to be between $485 million and $635 million.
The costs are expected to be met from the Government's $5.5 billion Canterbury Earthquake Recovery Fund.
Residents will have nine months to consider the offer of purchase.
"The varying degrees of damage to the houses and land in the residential red zone mean it will take more time to develop these offers," Mr Key says.
Current rating valuations on properties, which are what the Council's rates are based on, date from 2007.
Mr Key says it has taken some time to get information to residents because of the size, scale and complexity of the issues the Government has been dealing with following the earthquakes.
He says the Canterbury earthquakes have been major events and the Government is committed to getting things right.
"Each subsequent earthquake since 4 September has made an already large and complex challenge more difficult," Mr Key says
Treasury has estimated the combined cost of the first two Canterbury earthquakes to be equivalent to about 8% of New Zealand's GDP.
"Damage from the 1995 Kobe earthquake in Japan was just over 2 percent of Japan's GDP, Hurricane Katrina in 2005 cost about 1 percent of US GDP, and March's Japanese earthquake and tsunami disaster was an estimated 3 to 5 percent of Japan's GDP."
Mr Key says the Canterbury earthquakes have been major events and the Government is committed to getting things right.
"Since September last year, the government has been working to provide certainty for residents, while recognising many people have their life savings tied up in their homes," Mr Key said.
Kiwipete says: I don't think it will prove to be as straight forward as the government claims. Will the payout be sufficient to buy a similar property in Christchurch? The Government said sections could be made available to influence the reaction of the market to its decision. Those people affeced have up to nine months to make a decision. There is a general election at the end of the year and a lot of people will have made their minds up by then. The government's intentions may well be genuine at this time, but faced by the need to make political decisions later in the year, considering that a majority of people in the eastern suburbs are more inclined to vote Labour, the climate could change. The future may be less than rosy for some in coming months.
Acknowledgements: Newstalk ZB Staff/Peter Petterson