Announced back in 2024, the changes to how Fire and Emergency New Zealand (FENZ) levies are funded are now just around the corner, with a new levy system taking effect from 1 July 2026.
Property Council has been advocating hard on this topic for over a decade but unfortunately, it’s a change which, for the commercial property sector, indicates the costs are unlikely to go down.
At the heart of the reform is a shift in how the levy is calculated. Instead of being based on older indemnity-style insurance values that takes depreciation into account, the levy will now be calculated on the sum insured, essentially, the full replacement value of a property.
It sounds like a technical tweak, but it’s where the rubber really hits the road. For many commercial buildings, particularly older assets that have depreciated over time, this means the levy will now apply to a significantly higher value than before. Even though the levy rate for non-residential property is being reduced from 11.95c/$100 to $7.76c/$100, that lower rate is being applied to a much larger base.
The result? For many in the sector, an increase in costs is not just likely, it’s expected.
A broader net, and a bigger pool of funding
The new levy system also expands its reach. More asset classes are being brought into the fold, including aircraft, forests and livestock, while some exemptions have been refined or reinstated. The intention is to better align the funding model with the wide range of services FENZ now provides, well beyond traditional firefighting.
New levy rates and caps (from 1 July 2026)
Insurance Type | Rate/Fee | Cap/Amount |
Motor Vehicles (all policies) | Flat fee of $25 p.a. | – |
Residential property | 10.74 cents per $100 sum insured | Up to $107.40 p.a. |
Contents insurance (personal property) | 10.74 cents per $100 sum insured | Up to $21.48 p.a. |
Non-residential property (including commercial) | 7.76 cents per $100 sum insured | No cap |
Forests & livestock | 1.94 cents per $100 sum insured | No cap, 25% of non-residential rate |
Contract works policies | 3.88 cents per $100 sum insured | No cap, 50% of non-residential rate |
Over the next three years, the levy is expected to generate $2.81 billion in funding. From a payer perspective, particularly for commercial property owners, it raises a familiar question: who is actually carrying the cost?
The commercial reality
Commercial property has long shouldered a significant share of FENZ funding, despite representing a relatively small proportion of callouts. That imbalance has been a consistent concern for the sector, and one that this reform does little to resolve.
Early modelling suggests that most commercial properties will see an increase in levy costs under the new system. The shift to sum insured is the key driver, amplifying the impact across portfolios, especially where properties are older, more complex, or highly insured. From what we understand, this could be softened as property owners are able to insure based on the aggregate value of their property portfolio.
Commercial Insurance Exchange (CIX) which modelled the likely impacts on the insurance premiums on its commercial clients, suggests the levy will jump by an average of 71%.¹ CIX has a national book of 132 clients, an asset base valued at about $1.12 billion and estimated 94% of those would face an increase in levies. Insurance Brokers Association of New Zealand (IBANZ) members have indicated levies are expected to double in some cases.²
Mixed-use: where things get complicated
A 50 percent residential threshold will now play a central role in determining how mixed-use properties are treated. If buildings have a less than 50% floor space that is residential, the building will be charged at the commercial levy rate, unless the policyholder provides the insurer with a valuation of the mixed-use property which apportions the sum insured between the residential and commercial use.³
In practice, this means more reliance on valuations and more uncertainty for owners trying to understand their liability.
Property Council: continuing the push for fairness
Throughout the development of this new regime, Property Council New Zealand has been at the forefront of industry engagement.
Since consultation began in 2022, we have led detailed investigative work to better understand how the levy operates in practice; who pays, who benefits, and where the pressure points sit. That work has highlighted clear issues around cross-subsidisation, transparency, and the growing burden on commercial property owners.
Emergency response today extends well beyond fires, with a significant portion of callouts relating to medical incidents (16.6% in 2024/25) and other non-property events. Yet the funding model continues to lean heavily on commercial properties who contribute around 60% of total levy funding under the current model, despite being responsible for only 5.5% of callouts.⁴
Property Council has consistently advocated for a more balanced, user-pays approach, one that aligns contributions more closely with actual service use and ensures all beneficiaries play a fair role. We’ve taken this advocacy through to Minister Brooke Van Velden who has acknowledged the need for long-term system reform. It is disappointing that many of these core concerns have not been meaningfully addressed at this stage, but the advocacy doesn’t stop here.
What happens next?
With implementation fast approaching on 1 July 2026, attention now turns to how the new system will operate in practice. Further guidance is expected, particularly around mixed-use properties and valuation requirements, as insurers and stakeholders prepare for the transition.
For the property sector, the focus will be on understanding the implications, managing cost impacts, and navigating what is shaping up to be a more complex levy environment.
And for Property Council, the work continues as we continue to advocate for a fair, efficient and user-pays system for everyone involved.
To stay up to date on the latest advocacy work for the FENZ levy, consider joining our taskforce.
³ Fire and Emergency Levy Guide, December 2024 available at the link here.
⁴ To see Property Council’s full investigative conclusions, check out our submission at the link here.
Author | Bella Leddy
As an Advocacy Advisor, Bella supports the development of policy and advocacy initiatives that reflect the real-world experience of our members.
With a Bachelor of Laws and Politics from Otago University and previous experience as a policy intern at the Department of Internal Affairs, Bella brings both a sharp analytical mind and a genuine passion for public policy. She’s particularly energised by engaging with members to ensure our advocacy is grounded in industry insight and practical solutions.
Extroverted, thoughtful and service-focused, Bella thrives in roles that connect people and ideas. Outside the office, she channels her energy into teaching group fitness classes – including yoga, pilates and spin – and is always up for a good political yarn.
