Building owners may get state help
Government ministers are contemplating some form of relief for building owners struggling with the burden of earthquake strengthening their properties.
Throughout New Zealand, public buildings are being closed for repairs and councils are reminding private owners of their obligations after Christchurch's devastating earthquakes.
Those lobbying for aid include the commercial property group, the Property Council of New Zealand.
Immediate past president Chris Gudgeon said without incentives seismic strengthening was "completely uneconomic" for commercial landlords.
"It really needs to be looked at for all property owners and from a 'New Zealand Inc' point of view. It's this whole concept of earthquake strengthening as a public good.
"Many building owners will be facing reasonably significant capital outlays to strengthen buildings for no commercial return . . . That's why the tax system needs to kind of recognise that."
Government ministers will not comment until the Royal Commission of Inquiry into the Christchurch earthquakes has reported back in November. But Deloitte NZ chief executive Thomas Pippos said the nub of the matter was a change in the tax treatment of buildings two years ago.
Minor structural work might still be deductible as a maintenance cost, but the ability to capitalise and depreciate major building work had been wiped. The problem businesses had with earthquake strengthening was that they could not recoup their costs because it did not change the building's functionality, Pippos said.
"The only thing that earthquake strengthening does do is it enables you to maintain a tenant, because in some instances tenants are pretty wary about being in buildings that aren't sufficiently up with the code."
Tax-wise, he felt there were parallels with the leaky building situation. The Government had stepped in even though most leaky homes were not within the tax base, whereas most quake-prone buildings were commercial and within the tax base.
Gudgeon, who is chief executive of Kiwi Income Property Trust, said earthquake strengthening should be treated as a business cost.
"Dealing with structural obsolesence is a cost of doing business just the same as dealing with the obsolesence of your photocopier or your computer."
Revenue Minister Peter Dunne said policy work was being done on earthquake-prone buildings but nothing would be decided until the Royal Commission made its next report.
"It would be pre-emptive to come to any decision about whether the Government would be in a position to provide assistance on this until that has been completed," he said.
- © Fairfax NZ News
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