Proposed changes to the earthquake-prone building (EPB) system in New Zealand
On 29 September 2025, the New Zealand Government proposed legislative changes aimed at making the EPB system more proportionate and cost-effective by focusing on higher seismic risk areas and high-risk building types (MBIE, 2025a), as foreshadowed by our briefing in September (Risk Frontiers, 2025). The changes are based on a technical review described in MBIE (2025b) by a Seismic Review Steering Group (MBIE, 2025c). A bill containing the proposed changes, which are described in MBIE (2025d, is expected to be introduced in the coming months.
The changes are designed to target buildings that pose the greatest risk to life safety, while reducing unnecessary costs and disruption, particularly in regional communities. By enabling more cost-effective approaches to seismic strengthening, remediation will be more accessible for building owners than was previously the case. The EPB system changes will be enacted through the Building (Earthquake-prone Building System Reform) Amendment Bill.
What's on the horizon for change
The proposed changes include:
- Removing low-risk buildings and buildings in low seismic zones (Auckland, Northland and the Chatham Islands) from the EPB system.
- Classifying Coastal Otago, including Dunedin, as a medium seismic hazard area remaining within the earthquake-prone building system (Figure 1).
- Introducing tiered risk mitigation requirements, making use of new engineering methodologies, based on location and building type.
- Allowing building owners to apply for deadline extensions to encourage incremental progress
- Reducing barriers to seismic strengthening by removing the requirement for concurrent fire and accessibility upgrades.
The anticipated results of these changes are that:
- About 55% of EPBs (about 2,900 buildings) will be removed from the EPB system,
- About 1,440 EPB’s will have more affordable remediation requirements,
- 840 EPBs will have no mandatory requirement for remedial work, and
- Only about 80 EPBs will require a full retrofit due to the risk they pose.
According to Ashe et al. (2012) and Keeney (1990), the costs of regulatory measures to reduce mortality should align closely with their intended benefits. These costs can be assessed by valuing society’s willingness-to-pay to save a statistical life. Such analyses underscore the need to carefully evaluate unforeseen costs of new safety regulations, ensuring they generally match the claimed benefits.
Figure 1. New Zealand’s Seismic Zones as defined in the Building Act 2004.
Commentary by Building and Construction Minister, Chris Penk
Quoted from MBIE (2025e) under the heading Earthquake-prone building system refocused.
“The earthquake-prone building system will be refocused to reduce repair costs and reinvigorate communities
While well-intentioned, the current system for assessing and managing seismic risk in buildings places an overwhelming financial burden on building owners.
For many buildings, the price of strengthening runs from hundreds of thousands to several million dollars. As a result, these buildings are often left empty and become derelict, making them even more dangerous to bystanders in an earthquake.
Cities and regions are losing the businesses, churches, town halls and classrooms that are central to their local economies and community spirit.
On top of this, apartment and small business owners who cannot afford the fixes demanded by the current laws have faced years of stress and sleepless nights, as their most valuable asset has become unsaleable through no fault of their own.
Today, I am announcing a change to a fairer, risk-based system that will bring enormous relief by lowering costs for building owners, while keeping Kiwis safe.
The Government is removing the New Building Standard (NBS) ratings currently used by engineers to determine whether a property is earthquake-prone.
The NBS rates how an existing building is expected to perform in an earthquake compared to a new building and has proven too broad and inconsistent.
A building’s overall risk status is determined by its weakest part, meaning even a small defect can result in an entire building being classified as earthquake-prone.
The new earthquake-prone building (EPB) system will capture only buildings that pose a genuine risk to human life in medium and high seismic zones.
This category includes concrete buildings three storeys or higher, and those constructed with unreinforced masonry.
Auckland, Northland and the Chatham Islands will be removed from the regime entirely to reflect the low seismic risk in those areas.
Unreinforced masonry buildings under three storeys in small and rural towns will no longer require remediation or warning notices, but owners must secure the façade before the building can be removed from the earthquake-prone register.
This change recognises that the risk of a façade falling on a pedestrian is simply lower in communities with fewer than 10,000 residents than it is in larger urban centres, because there are fewer people on the streets.
For buildings that still require some remediation, the Government is removing the rule that owners must upgrade fire safety and disability access at the same time as earthquake strengthening.
This requirement can add significantly to building costs and has discouraged owners from carrying out essential seismic safety work.
Ministers will also consider further regulatory relief, including changes to resource management and heritage rules.
Finally, local councils will have the authority to grant extensions to remediation deadlines of up to 15 years, giving building owners time to secure funding, plan and carry out any major work still required.
This refocused earthquake-prone building system is expected to save New Zealanders more than $8.2 billion in remediation and demolition costs.
The changes give effect to recommendations from an independent review led by the Ministry of Business, Innovation and Employment (MBIE, 2025b).
The review confirmed what has always been clear: protecting human life must remain our top priority.
It also recognised the need for a fairer balance between costs and the real risks buildings pose, so that strengthening work is achievable.
The Government is ensuring New Zealanders can get on with the work that matters, so that our businesses, regional communities and cities can thrive.”
A minute of the EPB review outcome is described by MBIE (2025f), and a regulatory impact statement is provided by MBIE (2025g). A technical overview of the proposed changes is provided by NZSEE (2025) and a media factsheet is provided in MBIE (2025h).
Legal and contractual implications
The legal and contractual implications of these changes have been reviewed by March et al. (2025) and are summarised below.
Existing contracts referencing %NBS
Many commercial property contracts in New Zealand – including leases, development agreements, and financing arrangements – contain provisions tied to specific %NBS thresholds (for example, 67% NBS as a trigger for tenant termination rights or landlord obligations to upgrade the building’s seismic performance). Some of these arrangements will run for a long period. With the removal of %NBS as a statutory reference point, these clauses may become ambiguous or unenforceable. Legislative clarity will be required to determine how such legacy provisions will be treated – we anticipate that this will be a focus during the legislative drafting process.
Corporate and Government occupiers and internal policy updates
Corporate tenants, including multinational businesses, Government agencies and local government authorities, often have internal policies that require buildings to meet minimum seismic performance ratings. These policies will need to be reviewed and updated to ensure that the underlying aims of the policies such as safety and risk management are calibrated to the new system.
Owners with committed seismic works
Owners who have already commenced, or agreed to commence, seismic strengthening works under the existing regime may face commercial uncertainty. Key questions include:
- Will cost recovery be available where works would not have been required under the new system? Our expectation is that it will not, which will potentially disadvantage buildings owners who have pro-actively complied with the existing legislation.
- Can contractual obligations referencing %NBS still be enforced?
- Does the removal of %NBS constitute a frustration of contract or require renegotiation?
Health and safety responsibilities remain unchanged
Despite changes to the EPB framework, obligations under New Zealand’s Health and Safety at Work Act 2015 remain in force. Building owners, tenants and other duty holders must continue to manage risks to health and safety, so far as is reasonably practicable, including those arising from seismic vulnerability. Removal from the EPB register does not negate these duties, and WorkSafe – New Zealand’s national health and safety regulator – may still investigate concerns regarding structural integrity and occupier safety.
A market recalibration on the horizon
Should these proposals become law, the market will likely enter a period of recalibration. Landlords, tenants, lenders and insurers will reassess the way seismic risk is addressed in contractual arrangements, procurement policies, and property valuations. We expect the Government to continue playing a leading role in resetting market expectations as public sector procurement and leasing standards often serve as a benchmark for private sector practices.
Under the existing regime, many large corporate occupiers, taking the lead from Government agencies and local government authorities, require seismic resilience standards that exceed minimum legal thresholds. In aligning the seismic performance requirements of its own property portfolio to the new regime, the Government will have an opportunity to steer market behaviour closer to minimum legislative requirements.
The detail of the proposed legislation – including transitional provisions and treatment of existing arrangements – will be critical in shaping legal certainty and commercial decision-making. A Bill is expected to be introduced to Parliament in the coming months, with full legislative and regulatory implementation to follow.
Implications for insurance
In its review of the EPB system, MBIE concluded that buyers and renters, including companies, had been using percentage EPB-related assessment scores as a proxy for how safe a building was when deciding whether to buy, or rent it, making some buildings hard to impossible to rent or sell. In focus group testing which included insurers and banks, the Government found support for a more risk-based approach to managing earthquake-prone buildings, rather than a uniform approach for all areas of the country. However, they also found a widespread belief that regulatory changes may not resolve issues with insurance and finance for EPB owners.
The shift toward a more targeted, risk-based approach may affect how insurers evaluate and price earthquake cover for commercial properties, especially in regions newly excluded from the EPB system. Building and Construction Minister Penk appeared to suggest that insurers relied on the current EPB scheme assessments when deciding whether to insure buildings, and how much for, and suggested scheme changes could ease pressure on premiums. However, some insurers said that they were the ones who made the decision as to whether to insure a building, and what premiums to charge, based on the building itself, and that changing the EPB scheme would not change that. Some insurers called on the Government to do more to ensure that new buildings were developed to standards that minimised damage in natural disasters like earthquakes, which would make them more attractive to insure.
Overall, the proposed changes to New Zealand’s earthquake-prone building (EPB) system are unlikely to lower insurance premiums, despite expectations of significant savings for building owners. The reforms are expected to save building owners billions of dollars in compliance costs, but the new EPB system will probably not make insurance cheaper, because its reforms do not directly address the underlying risks that determine insurance premiums.
The presence of countervailing conditions due to building code changes also makes it unlikely that insurance costs will decrease, although these changes are directed at new buildings, not building retrofit. In most of New Zealand, the 2022 revision of the National Seismic Hazard Model (GNS, 2022) caused probabilistic seismic hazard estimates to increase in almost all parts of New Zealand, with ground motion levels doubling in the main urban areas, as described in Risk Frontiers (2022). These increases in ground motions were adopted by Standards New Zealand (2024a, b), leading to large changes in code ground motions for new buildings in NZS1170.5.
REFERENCES
- Ashe, Brian, Felipe Dimer de Oliveira, and John McAneney (2012). Investments in Fire Management: Does Saving Lives Cost Lives? Agenda, Volume 19, Number 2, 2012
- GNS (2022). New Zealand National Seismic Hazard Model 2022 Revision. https://nshm.gns.cri.nz/
- Keeney, R. L. (1990). Mortality risks induced by economic expenditures. Risk Analysis 10: 147–59.
- March, Justin, Nick Byrnes and Sundaresh Thangavelu (2025). Seismic shifts ahead: Government proposes major reform to New Zealand’s earthquake-prone building regime. https://www.dlapiper.com/en/insights/publications/2025/10/seismic-shifts-ahead—government-proposes-major-reform
- MBIE (2025a). Earthquake-prone building system changes announced. https://www.mbie.govt.nz/about/news/earthquake-prone-building-system-changes-announced
- MBIE (2025b). Earthquake-prone building system and seismic risk management review, June 2025. https://www.mbie.govt.nz/dmsdocument/31204-earthquake-prone-building-system-and-seismic-risk-management-review-proactiverelease-pdf
- MBIE (2025c). Seismic Review Steering Group. https://www.mbie.govt.nz/building-and-energy/building/earthquake-prone-building-and-seismic-risk-management-review/seismic-review-steering-group
- MBIE (2025d). Proposed changes to the earthquake-prone building (EPB) system. https://www.mbie.govt.nz/building-and-energy/building/earthquake-prone-building-and-seismic-risk-management-review/proposed-changes-to-the-earthquake-prone-building-epb-system
- MBIE (2025e). Earthquake-prone building system refocused. https://www.beehive.govt.nz/release/earthquake-prone-building-system-refocused%C2%A0
- MBIE (2025f). EPB review outcome minute of decision proactive release. https://www.mbie.govt.nz/dmsdocument/31200-epb-review-outcome-minute-of-decision-proactiverelease-pdf
- MBIE (2025g). Regulatory Impact Statement: Effectively managing seismic risk in existing buildings. https://www.mbie.govt.nz/dmsdocument/31202-regulatory-impact-statement-effectively-managing-seismic-risk-in-existing-buildings-proactiverelease-pdf
- MBIE (2025h). Refocused Earthquake-Prone Building System Media Factsheet. mg.scoop.co.nz/media/pdfs/2509/Refocused_EPB_system_media_factsheet.pdf
- New Zealand Society for Earthquake Engineering (2025). Overview of Government EPB Policy Announcement. https://www.nzsee.org.nz/wp-content/uploads/2025/09/NZSEE-Overview-of-Government-EPB-Policy-Announcement_v1.pdf
- Standards New Zealand (2024a). Draft number: DZ TS 1170.5:2024, Public consultation draft.
- Standards New Zealand (2024b). Draft number: DZ TS 1170.5 Supp.1:2024. Public consultation draft Commentary.
- Risk Frontiers (2025). Are NZ building code requirements for seismic resilience of existing buildings fit for purpose? Briefing Note 523.
- Risk Frontiers (2022). New Zealand National Seismic Hazard Model 2022 Revision and NZSEE Advisory on Buildings. Briefing Note 471.
