Quote Originally Posted by trackers View Post
Hi Minimoke,

The guy I share an office with is at the base of Redcliffs and they're looking at a write-off. Have friends in Avonside also that have a writeoff from the first quake. They both think that since EQC covers the land under the house + within 8 sq metres + land under driveway, that EQC will have to pay them for most of their land. If that was the case they'd get 100k for land and insurance would cover house.

A lot of uncertainty out there but its an interesting theory.

Commiserations to everyone affected; we got through both without anything major (except water cylinder damage and a few superficial cracks) which is a massive relief having a young baby etc.
Thats probably right. My understanding is that EQC will pay for the land under your house and around your house to 8 meteres. This means if you have, say an 150sqm house this covers around 800sqm of total land. EQC will pay for either the remediation of the land or the value of the land art the time of the earthquake. And thats where it gets interesting.

If I look at my example above my 800sqm land had a nominal value of $133,000. So that will immediately tap out EQC at $100k leaving my insurer to pay the balance. Thats $100k is settlement for the land. Pegasus Town is selling 500sqm for around $170k. $150k will get me 800sqm at Rolleston or 550 sqm at Delmain for around $165k. No idea what you get for your money but we can see there is a shortfall in both cash and equivalent section size for a start.

$100k isn't going to get you much land. The next problem is to look at your insurance cover. If you have "Landlord Insurance" with State, for example, you are not covered for "
Subsidence: You’re not covered for loss or liability connected in any way with:
1. subsidence or erosion, or
2. settling, warping or cracking caused by earth or other movement
so $100k is about as much as you could expect for the land.

The next problem is, assume you but a wee parcel of land somewhere with your $100k and whatever else you stump up with, you then have to put a house onto that parcel. Your previous 150sqm house may not fit on that land so you may have to build a smaller house. You also have the risk of putting a decent house on poxy land which means you can't gt a true sense of its resale value.

Then theres thinking about the neighborhood. I'm sure people out at pegasus town and rolleston and delmaine have these ideas that their neighborhood will be filled with like minded people. They may find their small sections are built with really cheap housing so the landlords can maximise their return. Which is fine for the landlord but may devalue the overall neighborhood - especially if the Hampshire Street residents move in. (so theres a hint why never to buy in an undeveloped neighborhood - you don't know what your neighbors are like!)

Of course the detail lies in the Insurance Policy and how the Insurance company sees its obligations under that policy. For example you may have had a piece of land slightly recked by the September Earthquake which as at February was worth not very much. How will the insurance company value the land as at February? Will the tax payer stump up the difference?

It will be interesting to see how this pans out over the next few years.