Lending and the %NBS

[cb14]

Does anyone have experience using a commercial property for a bank loan that is less than 67% of the NBS? Are there banks that will take security over commercial property if the rating is say 50%?

[Nick G]

I thought banks were happy if insurer was. What happens when councils force everyone to upgrade to 66% tho?

Is this those units in Wellington?

[John the builder]

This is a load of crock

chch and wellington events showed that even 100% buildings needed demolition after moderate/severe EQ event as the damage is uneconomic to repair.

What is driving this issue for banks?? surely as long as there is adequate insurance then the asset is protected? whether 0 to 100%NBS????

[Nick G]

I think it might be coming from insurers and council policy.

[John the builder]

The insurers are looking to get greater premiums for the same risk which is demolition

the council are enforcing EQ regs and these are defective and designed to save life not buildings.

If this is Auckland/northland then even more rediculous. The insurers are rorting the system when the risk is non existent in this regaion.

[cb14]

Yes, Wellington. I think the banks issue is when it's sold, without any damage, it might not get 'market value' if the rating is low. Therefore the loan security is at risk, if there is a loan default.

[Nick G]

It is happening in Wellington, not sure Auckland. Council is looking at the safety aspect. In Welly they're extending to bigger standalone wooden houses that have been converted to flats. I think it's 3 dwellings or 3 stories or something. So those 120 year old beauties need to be brought riiiiiight up to scratch.

[Davo36]

I have a mixed commercial/residential building in Auckland, no problems with insurance. Didn't even really go up after the earthquakes.

As others have said depends on where you are in the country.

JTB, yes it doesn't make any sense really. The 2 buildings in Chch where nearly everyone got killed were newer ones. The older ones stood up better but still they base all the requirements on age. And the only reason we have all this is after the quakes, the government felt they had to be seen to do something about it. So they brought in these new rules, which are as effective as micro chipping dogs i.e. not at all.

[John the builder]

So those 120 year old beauties need to be brought riiiiiight up to scratch.

only ifBuilding act s122 (2) applies and this means; 2 or more storeys AND 3 or more household units. Be careful with the "storeys" as the basement may not be a story?

[Nick G]

Exactly. Once they're all done there'll be these bored assessors who need to go and produce some revenue to justify their seats right? So what comes next?

[Scouser]

Not sure where you get the 67% NBS from - thought the current minimum was 34% - on that I've done reasonably recent loans under the 67% but >= 34% with no issue.

[Beano]

It is happening in Wellington, not sure Auckland. Council is looking at the safety aspect. In Welly they're extending to bigger standalone wooden houses that have been converted to flats. I think it's 3 dwellings or 3 stories or something. So those 120 year old beauties need to be brought riiiiiight up to scratch.

Nick do you know where they are drawing the line?
Is it the stories?
The height?
The m2?
The number of units?
Etc etc etc

[Beano]

only ifBuilding act s122 (2) applies and this means; 2 or more storeys AND 3 or more household units. Be careful with the "storeys" as the basement may not be a story?

Does this apply to commercial too?

[Rosco]

Also watch what tenants will accept. Most lawyers are now advising their tenants, that they need to lease a building over 67% to avoid any possible Health and Safety issues. It will take along time for this to filter through, as a lot of properties will be already tenanted and it is only when they are re-tenanted that lawyers are likely to have input.

Ross

[John the builder]

all buildings are considered......silly MBIE were even considering retaining walls at one stage as if they could cause injury or death to persons ......(under s122 (1)
the residential category above is the exception.
the assessment is then supposed to be that ultimate capacity exceeded in a moderate EQ AND "likely to collapse and causing injury or death..." This is the bit that most overlook. NBS is only part of the equation and NBS is not collapse state but based on Ultimate limit state (ULS) This is design parameters not collapse.

n
regards tenants;
isnt this the tail wagging the dog and lawyers being dicks?