Around 700 households across the country have been told their properties cannot be rebuilt in the wake of this year's cyclones.
A further 10,000 will need additional flood protection before they can be rebuilt.
The Government will join forces with councils to offer voluntary buyouts in the worst-hit areas at a cost of around $1 billion.
One of those areas is Esk Valley in Hawke's Bay. Residents there didn't take the news well and are feeling shocked by the lack of communication from officials. They learnt their fate via an email at 10am, and some are refusing to leave, including Ted Roberts, who has lived in Esk Valley for 49 years.
"[I'm] not going anywhere," he told Newshub.
"[The Government] would have to drag me out by my ear. I'm not going anywhere."
The 81-year-old has no insurance, so he's rebuilding his flood-damaged home himself.
"I've re-jibbed, re-plastered and painted the complete thing. I've put new carpet down."
His property is home to five families. Now it's a silt-covered wasteland on the banks of the Esk River.
That river turned into a raging torrent in February. People were rescued from roofs, hundreds of homes were destroyed, and a two-year-old girl drowned.
Nearly four months later and the entire stretch of the valley has just been classified as Category 3. The risk of flooding is too high for people to live there.
About 236 properties in Hawke's Bay are in the same situation, including parts of Tangoio, Pakowhai, Twyford, Brookfields, and Rissington.
"It's also very hard, almost impossible, for engineering solutions to protect residents and properties where people are living," said Hinewai Ormsby, Hawke's Bay Regional Council chair.
The valley has been effectively red-zoned.
Locals are also upset about the lack of communication from the Government and council.
"They just should have come and talked to people here who know what's going on and tell them why and how they're making decisions," said Linda Paterson from the Esk Valley Community Group.
"This is our beautiful valley."
It's something the Hawke's Bay Regional Council is defending.
"We wanted that information to them before the Government announcement," Ormsby said.
The Government announced that it would join up with councils to offer buyouts for owners of Category 3 homes.
"Obviously, there are a number of issues to work through when it comes to how those costs will be split," said Cyclone Recovery Minister Grant Robertson.
Although not everyone wants to be bought.
"I am going to stay put," Roberts said.
Minister Robertson said it's "definitely an issue" when people want to stay put.
"There are still people who live in the Christchurch red zone because some people simply decided that they didn't want to go," Robertson said.
As for whether Esk Valley vineyards and orchards can get back to business, that's still up in the air.
"That's a mixed land use conversation that the task force is yet to determine," Ormsby said.