Govt will consider improvements to red zone houses

The government will consider post-valuation sale prices and improvements on red zone houses but is not making any promises that will result in higher payouts.

"They are going to have to have a very good case to shake from that valuation we struck," Earthquake Minister Gerry Brownlee told NZPA.

The Government yesterday announced Christchurch had been divided into colour-coded zones, including a residential red zone covering 5100 houses that can't be rebuilt.

Red zone homeowners can either sell their entire property to the Government at current rating value or just sell the land and continue to deal with their own insurer for the value of their homes.

Some families were relieved to be able to move on but others felt the rating value -- set at 2007 levels -- was not enough because they had paid more than that to buy the property or had made improvements.

"Naturally you'd expect that out of 5000 houses they won't have been static," Mr Brownlee said.

"They will be able to, once they get their package, indicate that actually 'I've got a sale and purchase agreement that says this and I've got receipts for my new kitchen or bathroom or other such'.

"They can be considered. I am not saying that will change the valuation."

The Government would want to see substantive documentation but factors such as values would also be taken into account.

The cost to the Government has been estimated at between $485 million and $635 million, once it has received payments from the Earthquake Commission (EQC) and private insurers.

All homeowners in the zone would have to move.

"They won't have infrastructure to support that house, and secondly it's our assessment that the land is not supporting that house," Mr Brownlee said.

"They might think it's perfectly fine but we know that over a period of time that if the land isn't remediated it won't hold that house up -- it doesn't matter how high up they are on their piles."

The Government expected all the homeowners to get the offer within eight weeks and then had nine months to make a decision. Then there would be settlement periods.

"We would hope that everyone has moved in 18 months or so and that in about two years time that they would be completely cleared."

Houses would be removed as they were vacated.

If individuals refused to leave "we would deal with that as the time arrives. They can't stay. It's not safe to stay there, it's not really an option that they've got".

He did not think the Government would have to change land designation or take other measures.

"I don't think it's going to come to that. People in those areas know how bad things are, they know that the seismic event we are in is not yet over... I just don't see it coming to that sort of thing."

In 2007 interest rates were higher and banks were offering lower rates for red zone residents, he said.