The Red Zone - Government Land Grab John Coburn

What is Red Zoning and what does it do?

The ‘Red Zoning’ of properties was intended to provide some certainty to homeowners increasingly frustrated by delays from EQC and insurance companies.

The Red Zoning did provide some certainty, but at what cost?

Red Zoning essentially involves the compulsory sale of property and removal of land (EQC) insurance eligibility, in exchange for the rateable value of the land.

Red Zoners are given the option to retain their insurance claim on buildings, but in many cases damage to buildings is less than rateable valuation .

Red Zoning takes more than it gives in most cases.

Ownership of the land is lost and the redevelopment rights over the land are taken by the government.

Normally full insurance payments AND ownership of the land would remain with the landowners.

For example, in the case of a property with minor building damage, the owner would normally receive insurance to pay for repairs and chose how to do those repairs. Given that all Red Zone land has been deemed uninsurable by global re insurers, they would also probably receive full compensation for the value of their land (up to the equivalent land type of 500m2) from EQC, while they would ALSO retain ownership of the land and decide its future use. Buildings could be repaired, relocated or demolished or in some cases lived in as is, depending on the preference of owners.

The Red Zoning removes all these ownership rights from land owners.

Insurance companies and government (owner of EQC) are the biggest winners from Red Zoning, being let off the hook regarding full replacement entitlements of those insured.

The amount being paid by the government will in most cases be less than insurance would have entitled homeowners, while the Government effectively gets the land for nothing.

The Government gets ‘two for one’ out of the compulsory Red Zoning, it removes its obligations under EQC for land damage while also getting the land and its future development rights.

If Red Zoning is pushed through in those areas already designated, it is likely to be the template for many more Christchurch properties now in white, orange and even green zones. There are several areas in so called green zones where serious land subsidence and movement will make repairs and rebuilding difficult, expensive and perhaps uneconomic.

Red Zoning removes property rights and insurance entitlements in a compulsory scheme aimed to appease insurers and minimise costs to Treasury.

Decisions over the future use of what was once ‘home’ to thousands of citizens has been taken away.

Red Zoning only provides certainty, certainty that your property rights and insurance rights are being removed.

How could things be done differently?

Information is power, and land information is being deliberately withheld.

Release land information allowing informed decisions by land owners.

The compulsory nature of the Red Zone offer is fundamentally wrong.

Earthquakes have undermined peoples security and peace of mind.

Red Zoning has only compounded the disempowerment of residents.

Make the Red zone offer optional, not compulsory.

Taking peoples property rights and options is not a helpful approach.

Offering alternatives would be.

The government is currently refusing to consider offering insurance to Christchurch property owners keen to begin the rebuild.

Instead they are going to global reinsurers in London and Zurich trying to tell them all is well and its OK to reinsure us, even while they say to their own citizens they won’t do it themselves...its too risky.

The role and motives of global reinsurers are quite clear, and different to that of government, the issue is what do/can we expect of our government at this time?

Do we want them to plead to foreign commercial interests, or do we expect them to back us in the task of rebuilding our homes, businesses and lives?

If government had the will to, they could offer insurance and thereby put real pressure on other insurers to re enter the market.

Insurance costs will rise for all New Zealanders, but without a government insurance option costs are likely to be even greater and slower in becoming available.

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