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Resource Management Amendment Bill – Don’t Bet Your House On It Yet

Recently, the Government announced it was introducing new legislation intending to increase housing supply in Auckland, greater Hamilton, Tauranga, Wellington, and Christchurch.

The Bill proposes a new streamlined process, Intensification Streamlined Planning Process (ISPP), which will support Tier 1 councils in implementing the intensification policies as set out in the National Policy Statement on Urban Development (NSP-UD). Councils will need to apply ISPP from August 2022.

Also from August 2022, the Government announced that Tier 1 councils will be required to adopt Medium Density Residential Standards (MDRS), which will allow landowners to develop up to three homes of three storeys without the need for resource consent from the council.

Since this announcement, I’ve been getting calls from people in a state of joy, as well from some in a state of panic. I’d like to discuss why this happening, the benefits it will bring to New Zealand’s critical housing supply shortage, and what this means for infrastructure.

Why is this happening?

On the face of it, this is a radical move, partially because it is a bipartisan decision. However, this is a phase of life most major cities, like the in the U.S. and London, experience. At some point, cities simply run out of room and land that’s worthwhile. Moreover, there needs to be space for public transportation development to accommodate the growing population.

With moving out no longer a reasonable option, the only solution is to move up.

New Zealand’s major cities have reached that point and are ready to move onwards (and upwards) into this new phase of life.

While this has been a relatively startling announcement, I haven’t been overly shocked – and neither should the council.

For quite a while now, the Government has expressed its disappointment in the councils’ handling of New Zealand’s housing supply. The crux of this issue is the councils’ amount of power, which ultimately prevented any kind of meaningful change for the housing crisis. This new legislation strips away the majority of that power and gives way for the kind of necessary shift we need in the housing market.

Impacts on properties and neighbourhoods

Now I’ve gotten the key core aspects of this development out of the way, I’ll turn to the question that will be at the forefront of most people’s minds – what will this do to home values?

In short, my prediction is it won’t affect it. This conclusion has been drawn from what we’ve witnessed in other major cities. In fact, in New Zealand’s case, landowners and homeowners are actually getting more development rights to their properties, which normally means an increase in property value.

Of course, this doesn’t mean that this won’t still cause some impacts for homeowners. Even the most beautiful three storey house will still have a material impact on its neighbouring one storeys. And of course – the bad ones will be impactful too.

As more housing development begins in urban areas, there’s the question of parking, which could become an issue in certain areas. Kiwis are already subjected to parking struggles due to the lack of public transportation. While new housing might initially caused more disruption to parking in these areas, it’s a short to medium term problem.

Ultimately, ‘building upwards’ is meant to have a ripple effect across New Zealanders lives. As we start to move up, the more space there will be for public transportation, and the volume of cars packed tightly together on the street will eventually start to fade away.

Infrastructure

There is an aspect of this legislation where there appears to be a major gap.

Who is responsible for infrastructure costs remains unclear. The Government could be planning on providing funding, however, they’ve made no indication that this could be the case.

The worry for some is that the council will be responsible and use this power to prevent progressive intensification. For instance, if a new property couldn’t be connected to the areas existing sewage line, the council (in theory) could reject the building consent. Realistically, if the council is going to be responsible for infrastructure, they should’ve started work yesterday. As they haven’t gone back in time to start those projects, that’s what will be standing in the way of these new builds.

However, I’m not of the opinion that this will actually completely undo the proposed legislation. In reality, the Government won’t accept the council’s refusal of building consents on grounds that the council themselves haven’t appropriately funded the necessary infrastructure.

Moving forward

Like any new piece of legislation, there are always kinks to work out. This information is especially fresh, and we will get a clearer picture of what New Zealand’s housing supply will look like in the future in the coming months.

However, we shouldn’t use this time to be idle. The likely scenario is that is going to play out as the Government has proposed, which means the rest of us, homeowners, landowners, developers, builders, etc., should start gearing up and getting ready to build the future ahead.

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