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Apartment Specialists Podcast No: 155

Summary:

What is the reason why some buildings in Auckland don’t have earthquake ratings? How can you be sure if an apartment building is not earthquake-prone? Find out the answers from this podcast, as Andrew Murray shares his insights and expertise regarding earthquake ratings.

TRANSCRIPTION:

Good day, Andrew Murray here from the Apartment Specialists, talking about earthquake ratings and why all apartment buildings don’t have earthquake ratings. I often get asked the question when I’m showing a person through an apartment.

It may be built in the 80s and what’s the IEP rating or earthquake rating? I said, “It doesn’t have one and the people are going, “Well why not? The one that I saw down the road’s got one, and an older one has one. I want to make sure this is not earthquake-prone.” So, I thought I’d do a podcast on it.

The reason is the council is only identifying or doing assessments on buildings that are built before 1976. The reason for this is because in 1976, the code changed. What changed was a loading element, which meant it had to pass certain regulations, which means everything built after 1976 is a lot stronger. Often times, it’s so it can handle earthquakes. Logically, they’re only assessing buildings from 1976 or before, or earlier than 1976.

I’ve also come across some heritage buildings or buildings that are older than 1976 that don’t have an earthquake rating. It has always baffled me and the reason for that is because they only started doing these IEP ratings, earthquake ratings in 2010 have until 2015 to have them all done. They just haven’t had them all done yet, and there’s no reason other than that. You’ve got to think of how many buildings are in Auckland, and how many they’ve got to go and do these assessments for.

Another thing I get asked is, “Okay, is the earthquake rating going to change?” I addressed that in another podcast. In my opinion, it’s a NO! But it doesn’t mean the IEP rating that the building has is set in stone, because that can be changed. If you do a more detailed report, and that often leads to a building being stronger. Anyway, if you search in my podcasts you’ll find more about that particular one on how to change your IEP rating.

Andrew Murray, Apartment Specialists. Hope that this has been helpful.

Cheers, bye.


Apartment Specialists Podcast No: 154

Summary:

Will the earthquake rating for Auckland apartments change in the near future? How important is an earthquake rating when buying an apartment in Auckland? These questions will be answered in this podcast along with some exclusive insights about this topic. Learn more about it by watching the video.

TRANSCRIPTION:

Good day, Andrew Murray from the Apartment Specialists. I will be talking about earthquake ratings. Are they going to change?

The benchmark is 34%. Is it going to go up or is it going to go down? And the short answer is, no. You’re probably thinking, “Well how do you know? You just sell apartments.” Well, yes I live and breathe selling apartments, but you’re right, I can’t say this is from myself.

This is from me speaking to structural engineers and to people in this industry – in the building industry and asking their opinions. So, this is the opinions they’ve given me. I’m obviously passing that on to you. I do a lot of research to help me understand the market as well as, obviously, give the right advice to owners.

Basically what they sort of made me aware of is, that every 1% that earthquake rating changes, it costs the country about $700 million. That’s a lot. It’s being at 33% now means that 34% or higher is a pass. To raise that, every percent is going to cost a huge amount of money.

Now, another question I get asked is the earthquake rating going to go down? For example, 33% mark which could fail.  You think that could go down 20%? Now, from the research, I’ve done is that is extremely unlikely because this earthquake rating – to help you understand , it says 33% and that means it’s 33%.

The strength is in regard to a new building, so it means it’s one-third as strong as a new building and that’s built today in an earthquake zone. That also means is that because earthquakes work definitely—a building in an earthquake prone area.  It’s like if we’re saying an average earthquake, and that is at 33% compared to a brand new building, it will have ten times the damage. So for the council or the governing body to lower that, is to put people at risk, especially with apartments when they live in them.

So, for them to take that mark and bring it down, I highly doubt it because that would go against why they’ve actually put in these limitations in the first place. A bad earthquake rating or a failed earthquake rating, it’s bad news and it’s not good for many reasons. A lot of banks won’t even finance an apartment in a building with a low rating. It’s in a nutshell and I can’t see it changing, it’s a 33% mark, 34’s a pass, and obviously, the higher the better.

Thank you. Andrew Murray, Apartment Specialists.

Apartment Specialists Podcast No: 107

Summary:

What is an IEP Report and how important is it?  If you’re an apartment owner or buyer then you should know the earthquake rating of a building before you make any decision. Get the facts about the IEP Report from this podcast.

TRANSCRIPTION:

What is an IEP report, and what is an earthquake rating?

Basically, they are the same thing. Good day, it is Andrew Murray here from Apartment Specialists, talking about earthquake ratings. Something that’s very prominent at the moment regarding character buildings, and because of what happened down in Christchurch. An IEP rating, which is called as you can see here, I’ve got one in front of us, which is an Initial Evaluation Procedure. Hence IEP, which is what comes out as a figure, gives you a percentage of what iscalled a New Building Standard.

An IEP rating comes out with a percentage, which is compared against what the standard of a new building that is built today, in regards to earthquakes. For example, if it comes out at 75%, let us say in a building that was built 50 years ago, there is 75%, but it’s 75% as strong as a new building that was built today.

I said I would show you one. This one was done by Fraser Thomas Engineers. It was done for a heritage building built in 1917 – The Regency. Obviously done here, which is the Initial Evaluation Procedure, IEP, and they go through and they actually come in and look at how the building was built.

The first IEPs  or earthquake ratings are just done off the plans, which are done by the council, which is my brush stroke approach. If you feel that your building has got a higher structural rating than what a council thinks, you can get an external IEP rating by an engineer. That is when they look in more closely, and then often what happens is, that’ll often increase – it could decrease, depending what has been done to the building. In this case increase, so they look at the buildings and they give you a history of the building. What it was built out of, when it was done, for what.

In this case, because it was built in 1917, it had various things done to it. It went from a warehouse office space, then an extension on the top, then it was turned into apartments in 1994. When it comes to an IEP rating, Initial Evaluation Procedure that comes out with an earthquake rating, it is really talking about two things: What they call longitude, which is what happens with the movement up and down, and what they call traverse, which is the movement side to side.

What is the rating? What will happen in an earthquake, if the earthquake movement was up and down, what is that rating? Against if the building was built today. What is the rating if the earthquake’s moving from side to side? Then each one will have a percentage, and then what happens is, they’ll take the lower of the two. And that will be the IEP rating, which is Initial Evaluation Procedure, or what we call the earthquake rating.

If you look down here, so it goes through a lot of stuff, that really you have got to be an engineer to really get into. I can explain some of it, but a lot of it is sort of probably beyond my expertise. Then it comes down to, we have actually come down to the IEP rating. What they have done here, is I think it might be a bit of a typo, but you can see here, you have got the longitude. Which is the up and down, coming at 54, and then the traverse, which is the side to side strength, is 72%. Now take the lower of the two, and it is 55 – I think it is supposed to be 54 there, because generally that’s what they take there. But anyway, you get my drift. That is what they come and look at. They look at the IEP, and they got the lower of the two of movements – this way and that way, and that gives you your IEP rating or earthquake procedure rating.

At the moment, the law is at 33% is the cut off. If you come in at 33 or lower, you are going to have to strengthen your apartment within 15 years. If it is a character apartment, you can have 25. That means you have to be 34% or higher to pass. In different parts of the country, that is higher – Wellington and Christchurch, etc. I have got, from very good sources within the council, that it is not going to be changing in Auckland.

I cannot promise that 100%, but to give you an idea, every single percent that goes up – that’s 33%. If it goes to 34%, on average, they estimate it to be about $700 million dollars that it’s going to cost the country. I’ve spoken to structural engineers, and they are basically telling me they are 100% sure it is not going to change. Obviously, I cannot say that, because I’m not a structural engineer. But that’s what I’ve heard from the industry, which is great news because I actually own character apartments myself.

Anyway, I hope this helps you understand a little bit more about IEP and earthquake ratings. Obviously flick me an email, andrew@apartmentspecialists.co.nz, or off the website, and I’ll talk to you soon.

Cheers, bye.

Apartment Specialists Podcast No: 94

Summary:

Why do you need to raise your apartment’s earthquake rating? How can you raise your earthquake rating? How can it affect the value of an apartment? This podcast will answer these questions. Find out more from this video.

TRANSCRIPTION:

Good day!  Andrew Murray from the Apartment Specialists, on raising your earthquake rating. Now you’ve probably seen in the papers, quite a bit of publicity around character apartments and how the earthquake ratings are affecting their values, and a lot of owners are scared around this.

There’s a number of buildings around the CBD – I don’t really want to mention them – that are going below that 33 per cent threshold, where they have to be restrengthened. That’s a very expensive exercise. One example is obviously St James. It is at 28 percent. It is a stunning building, and to get those earthquake ratings up means a knock to the values. Currently, they’re being sold below their value because of this. So I wanted to talk to you today about what I did in my own building, and how I raised the earthquake rating in my own building.

Now I’m a chairman of the Regency Apartments. Obviously, I work with the owners’ committee here, and I meet with the Body Corporate secretary here, so that’s Paula Beaton from BCA, so I can’t take the credit myself.

But basically what we did is, earthquake ratings are based around what’s called an IEP, which is a Initial Evaluation Procedure, and that’s a brushstroke approach done by the council, where they don’t actually inspect the buildings individually. They look at the original plans. And these are often incorrect.

So what they do is they look at these plans and give a bit of an idea. And they put a rating on it. These ratings are done in a longitude and latitude way. So they’ll have a rating, let’s say we got the Regency for example. It was around about 66 percent longitude. So if there’s an earthquake, going up and down, it had a 66 per cent strength, which is great.

But then the latitude, because it’s old, and it’s where these character apartments often fall – so as in not fall, but fall down. So the earthquake rating was only 35 per cent. Now so that means the IEP rating, or earthquake rating, falls on the lower of two. So it came out as 35.

Now yes, that just scraped through past that 34 per cent mark, which is, you know, the pass mark. But that’s still quite close so it does affect a purchaser’s opinions on what they’ll pay for the apartment .So what we did, is we looked at getting another IEP rating. That’s when you get an engineer in. It will costs you a couple of thousand dollars. They’ll come in and actually assess your building, and actually find out what the IEP rating really is.

So what we did is, we got another engineer in, an independent engineer, to do an inspection of the building. An inspection of  how it was constructed, and actually really really look into closely the strength of that building. And we had a very positive report that came out, showing that the plans that were in the council did not actually reflect how strong the building was. And that came out at 55 per cent, which is fantastic, because that lifts the ratings. And it lifts the value of the building. Being an owner, it was fantastic.

So when you’re dealing with a building, and if you are looking at purchasing a building or you own in a building which has an IEP rating or earthquake rating which is low, talk to your body corporate. Talk to your owner’s committee. Talk to your body corporate secretary and have a chat about getting another IEP opinion.

So get another engineer, to do an independent report, and yes it could come back at the same amount, but it also could come back a lot higher. So before you start thinking, Oh I’m stuck with an apartment with a bad earthquake rating, make sure you go down that avenue.

Now, if that fails, then you can go into– and you still believe that it could be stronger, you then go into a DEE, which’s is a detailed evaluation. That is done by an engineer and that’s very expensive. So that’s when they actually go into, they actually drill holes and look at what kind of steel was involved and all that kind of thing.

A recent one was done in the Wiltshire, which it came in where the earthquake rating was very very low, so, I think by memory, don’t quote me on this, about 23 per cent, and then they got a DEE, so a detailed evaluation, and that came in, by memory, at around 83 per cent. So it shows you that these earthquake ratings aren’t set in stone, and the initial ones that are given by the council are just a brushstroke approach. There are options here to see if you can lift that, and just lift the values of your apartments, with the apartment you own, and the value of the whole building, basically.

So feel free to give me a ring on 021 424892. 021 424892, or andrew@apartmentspecialists.co.nz, if this concerns you and you’d like to have a conversation about it, because yeah, it’s all not lost and there’s some hope out there.

So anyway, hope that helps.

Cheers, thank you.

steps undertake raising apartment complex earthquake rating


Apartment Specialists Podcast No: 40

SUMMARY:

Effects of apartment complex earthquake rating and steps that owners and body corporates should take to raise it up.

TRANSCRIPTION:

Andrew Murray from Apartment Specialists. Good day. How do you find out your earthquake rating for your apartment complex?

You have three avenues you can go through. You can go to your real estate agent. You can go to the council or your body corporate should have it on file. This is known as your IEP (Initial Evaluation Procedure). They will have documentation showing when the council evaluated your building or your apartment complex.

When you find out what your rating is, that really determines what you do. If you are above 50%, your IEP is above 50%, your earthquake rating, then you are fine. The actual pass rate is above 33%. If you are below – if you are 33% or less – you fail. That means you have to do something about it. Otherwise, if you cannot get it above that, you are going to have to, by law, within the next 15 years, strengthen your building. Unless if it is a character one building, which means you are given an extra ten years on top of that.

The second thing is, what if it comes close? Now, technically you pass. You don’t have to strengthen your complex. But it is not that simple because what happens if it comes close to that 33% mark – say it’s 35, 36, 37, 40, 45, etc – you are going to get hit with the building insurance. Building insurance is the biggest cost for body corporate. What that will mean is your building insurance can go up by 20, 30%.  Just purely because your IEP or earthquake rating is very close.

There are different things that you can do. You can either strengthen your building and do some minor things just to lift that up. Or you can get what is called a DEE (Detailed Engineering Evaluation). That takes about 200 man-hours. It is a detailed report. It starts with the plans, it starts with the materials. It is structurally looking at the building. I have seen ratings go from 22 to 60 because of that and then there’s no problem. Some have not moved and in that case, they have to do something about it.

That gives you an idea of what you are dealing with. If you actually want to go through the specific situations, I can go over those with you. I’m the chairman of my own building I live in, in the CBD. That has had a rating that has been very close and has passed. But we had to go through certain procedures to keep our insurance down, lift that rating up and make sure it’s still a great building and a great proposition for buyers.

I hope that helps and talk to you next week.

Cheers. Bye.

 

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Apartment Specialists Podcast No: 39

SUMMARY:

Brief explanation about Initial Evaluation Procedure (IEP), Detailed Engineering Evaluation (DEE), New Building Standard (NBS), and  who does the building earthquake ratings, and how it affects selling and purchasing apartments.

TRANSCRIPTION:

Andrew Murray, Apartment Specialists. Earthquakes. What does it all mean? What is this earthquake rating and how does it affect you when selling your apartment, or when you are purchasing an apartment. Now I’m going to do this in two podcasts because it’s actually quite a big topic. First of all, I’m just going to cover these IEP’s, DEE’s, and NBS’s. All these abbreviations that we seem to hear.

Now, an IEP is Initial Evaluation Procedure. It is done by the council. It is done across the board on all buildings. This gives you your earthquake rating. Now IEP or Initial Evaluation Procedure is a rating that is compared to what is called NBS or New Building Standard. What that means is, all the new requirements of a brand new building – see that as 100%. And an old building, let’s say it’s from 1940s, is compared in regards to structural strength or earthquake strength to that new building standard. So if it comes up as a 50% IEP rating, or earthquake rating – as it is more commonly said – that means it is half as strong. So in an earthquake, it is half as strong as a brand new building.

What the council has done or the government has done (because of Christchurch and because of the recent earthquake in Wellington), is it has really gone to town on this earthquake stuff. All the buildings have been checked. And they have all been given a range of ratings. The first is your IEP. They then have a cut-off point. So what is actually okay? That has been made as 33%. And it’s just been recently opened up in the Herald, saying that they have actually made a decision that they are not changing that. And it’s staying at 33% threshold. So anything that is 33% or less needs to be re-strengthened. Anything that is over 33% (i.e. pass rate is 34%) is okay and doesn’t need to be touched. But it still has implications depending on how close it is and I’ll go over that on the next podcast.

Then what happens is you have what is called a DEE or Detailed Engineering Evaluation. That’s what happens when, for example, you are in a building that has been built in the 1930’s, 40’s, 50’s, and that comes underneath that threshold of 33% or equal to. And that is done so. Basically it is probably about a 500 an hour job, where they go into the initial PET plans, look at the actual materials, and look how it is constructed. And I’ve seen buildings that have gone from 23% up to 60% purely because the IEP procedure, the Initial Evaluation – a procedure by the council – is actually just a bit of a brushstroke. So they look at it and think okay, which are prone and which actually look like there could be issues here. So if they are under that, that means it appears so and it is not definite, a DEE or Detailed Engineering Evaluation is needed.

I hope that’s not complicating you. But the important thing is that it is very important – this earthquake rating. It is not just because you could be in for a cost of having the building to be re-strengthened which means each owner, when dealing with apartments, has to pay, but also because of insurance. So the closer you are to that 33% mark, so if you’re 37% or 35%, your insurance premium is going to go up. You are not going to have to re-strengthen it but your insurance costs will go up because the insurance companies see it as an excuse to clip the ticket. That is not how they say it. They say if there is a problem like an earthquake, it is more likely to be completely ruined, I suppose.

In the next podcast, I am going to look at and go over what is acceptable. How is that affecting values in the CBD? And as a purchaser, when you are looking especially at character apartments, what is okay and what is not? How can you get more visibility on these earthquake ratings? How can you find out?

Cheers. Bye.

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