New Zealand will commence work soon on a “voluntary buyout” scheme for properties in cyclone and flood-prone areas. 

The program, announced last week by the Government, will apply to properties that are designated Category 3, meaning they are located in areas where future severe weather event risk cannot be sufficiently mitigated. 

The Government will split the cost with councils and initial assessments indicate about 700 Category 3 properties will qualify for the program. 

Finance and Cyclone Recovery Minister Grant Robertson says the process to understand how that split will work is underway and will be completed by the end of this month. 

“Obviously there are a number of issues to work through… and we are working with councils on issues such as valuation criteria, how we deal with insured and uninsured, who ends up with the final ownership of land,” he said at a press conference. 

The Government also announced it will co-fund work needed to protect Category 2-designated properties. Category 2 refers to homes in locations where community and/or property level interventions are feasible to manage future severe weather event risk. 

The initial support for Category 2-designated homes is already in place with the $NZ100 million ($92 million) funding that was announced in the recent Budget. 

Local councils in Hawke’s Bay, North Island – which was affected by the record floods this recent summer – have already released maps around Category 1, 2 and 3 areas.  For Category 1 properties, repair to previous state is all that is required to manage future severe weather event risk. 

The Insurance Council of New Zealand (ICNZ) has welcomed the announcement from the Government. 

“We know from previous disasters that for those worst affected this is often a very stressful and uncertain time,” CEO Tim Grafton said. 

“For many, today’s announcements are just the start and we are all waiting for more detail, both on specific measures required by councils as well as any additional council help that may become available to either make repairs or to move on.” 

ICNZ says cyclone Gabrielle and the North Island floods this recent summer have already resulted in more than 100,000 claims with an estimated value to date of more than $NZ2.8 billion ($2.6 billion).