One building, two verdicts
An apartment complex in Epsom, Auckland is physically a single structure. Auckland Council’s post-2023 flood recovery process decided otherwise. Six ground-floor units were assigned Category 3, meaning intolerable risk with no feasible intervention, while five upstairs units received Category 1, where the risk threshold was not even met. One upstairs unit was not categorised at all because it had never been registered for assessment.
The problem is that the building does not recognise the boundary the council drew through it. As Michelle Nathan, whose mother owns a ground-floor Category 3 unit, put it, “the whole unit is totally interconnected”, sharing a downstairs laundry and electrical components that feed the upstairs units from below. Her family declined the voluntary buyout because, in her words, “this is a joint complex that should be treated as one property, even though it’s 12 different units.”
The legal trap that follows
Here is where a human-interest story becomes a balance-sheet one. Under the Unit Titles Act 2010, all units in one structure must be insured under a single body corporate policy. The council, having bought four of the six Category 3 units, even confirmed in writing that its properties needed to be included for the policy to be compliant.
Then the market spoke. Three insurance companies declined to quote once the split-category situation surfaced, and the broker’s renewal terms simply excluded the council-owned Category 3 units, pricing cover on the remaining eight privately-owned units. The result is a legal impossibility. The complex must be insured as one building and cannot be. “The fact that we can now not get insurance as a whole building, that is enough to alarm anyone,” Nathan said.
The vacant council-owned units compound the damage. Empty apartments invite vandalism and drag down the wider area, Nathan noted, so the building becomes both uninsurable and more in need of insurance at once.
Built on data from 2016
None of this rests on evidence that water will actually arrive. Auckland Council’s flood mapping, the layer feeding both LIM reports and the categorisation process, is based on LiDAR aerial survey data collected in 2016. Fresh data gathered in 2024 had still not been incorporated into the council’s tools as of July 2026. Nick Vigar, Auckland Council head of planning networks, defends the technology, saying “modern LiDAR is getting within centimetres on your property”, while conceding decade-old data was not necessarily fair. Crucially, the assessment looks only at the land and generally does not acknowledge flood mitigation work.
The market reads the label, not the nuance. Glendowie homeowner and real estate worker Stephanie Burgess says “some people would not even enter the open home if there was flood notation on the LIM”. In March 2026, Bayview owners on the North Shore fought new “very high hazard” LIM tags, and Andrew Chin, Auckland Council head of strategic initiatives at Healthy Waters, admitted the maps “are not created at a site-specific level” and are indicative only. Indicative maps producing definitive financial consequences is the whole problem.
The scale, and the money
This is not a fringe case. Treasury documents from August 2024 show the post-2023 categorisation framework touched over 20,000 properties across Auckland, Gisborne and Hawke’s Bay, including 1,085 in Category 3, with the estimated Category 3 buyout bill running to $1.1 billion to $2.0 billion. The framework has no statutory basis, leaving councils to determine their own powers.
The insurance tail is moving fast. The November 2025 Finity and Treasury data collection recorded a maximum estimated flood premium of $9,250, more than double the $4,250 ceiling of the prior collection, and 43 percent of profiles received no online quote at all. Adding to the fog, IBANZ chief executive Katherine Wilson warned in June 2026 that “the implications of Section 72 hazard notices are not widely understood”, noting many private policies pay out only once the NHC accepts its portion, “potentially leaving homeowners uninsured for the specified natural hazard risk.”
What it means for property investors
The Epsom block is a proof-of-concept failure. The categorisation framework was built for standalone houses and breaks the moment it meets a multi-unit body corporate. The council now wears three hats at once: the regulator that assigned the categories, the owner of four units it cannot insure, and the neighbour leaving them empty. Private owners are trapped between a legal insurance requirement they cannot satisfy and a market that will not lend or buy.
For anyone holding Auckland apartment or multi-unit stock, the lesson is blunt. A map layer built on 2016 survey data can strip the insurable and financeable status of an asset before a single drop of water crosses the threshold. That is a live balance-sheet risk, and almost no portfolio has it priced in. Watch whether the council reassesses Epsom as one entity, whether the 2024 LiDAR finally lands in the tools, and whether the Unit Titles Act gets amended before the next building falls into the same gap.
Sources
- One apartment block, two flood risk ratings and owners left in ‘limbo’ (2026-07-11)
- Auckland resident contests council’s ‘broad brush model’ for flooding designations (2026-07-10)
- Auckland owners fight very high hazard tags on LIMs (2026-03-17)
- Insurance brokers call for centralised register of properties with Section 72 hazard notice (2026-06-30)
- Insurance Data Collection – Finity Consulting – November 2025 (2025-11)
- Official Information Act Response 20240415 – National Risk Category Framework (2024-08-22)