The New Zealand Government will pay homeowners in Christchurch and surrounding areas who bought properties they later found contained botched repairs from the earthquakes and who are unable to claim on private insurance.

The Government estimates there could be 1000 homes that will qualify for the payments. Repair costs could total about $NZ300 million ($285 million), to be paid through the Earthquake Commission (EQC).

“The new policy allows EQC to make an ex gratia payment so people can repair their homes, providing an option for people who had run out of options,” EQC Minister Grant Robertson said.

The EQC has in the past paid for earthquake repairs up to $NZ100,000 ($95,045), with costs above that level covered by homeowners’ private insurance.

But disputes have arisen where a property had repairs completed below the cap, but later problems pushed the costs above the threshold, while insurance arrangements had changed because of a sale.

“This new policy will hopefully create certainty for homeowners and avoid the delays, stress and significant cost associated with court proceedings,” EQC CEO Sid Miller said.

Homeowners have 12 months to register their interest for the payment and anyone buying a house after yesterday’s announcement is not eligible.

The Insurance Council of New Zealand says home-buyers in Canterbury need to do thorough checks before purchasing a property.

“Insurers will always expect properties to be properly repaired before taking on the risks of insuring them,” CEO Tim Grafton said.

“We would also expect that all funds transferred to homeowners are applied to fixing up the property, so they can be fully insured.”