1. In some of New Zealand’s major population centres demand for housing exceeds supply, contributing to inflated house prices and reduced affordability. While housing affordability is a complex problem with many causes, urban regulation (development controls and zoning decisions) and the impact this has on land supply (or development capacity) has been identified as a contributory factor to theproblem.
2. The proposal is to amend sections 30 and 31 RMA to make it a function of regional councils and territorial authorities to ensure residential and business development capacity to meet long-termdemand.
3. This legislative change will be supported by a phased programme of national direction and guidance to support local authorities and the wider sector to ensure that the policy intent is delivered in practice. Phase 1 will include a requirement for local authorities to undertake an assessment of demand for and supply of development capacity based on functional urban areas and give effect to the findings of this assessment through their plans; it will be promulgated in 2016. Phase 2 will look at options for a methodology for assessing demand and development capacity, options for providing further direction around what ‘sufficient development capacity’ means, and monitoring the take-up of capacity. This will be delivered in2017.
4. The legislative changes proposed are designed to enable better provision of residential and business development capacity, and contribute to improved housing affordabilityoutcomes.
5. This change would set a fundamental requirement that council plans be explicitly responsive to demand for residential and business land. It would result in change on the ground as plans must ensure adequate residential and business development capacity, which will have flow- on impacts on consent decisions. This should reduce the impacts of land scarcity on price and consequent effects. There would also be more certainty for developers that, where there is demand, planning will not be a barrier to future development (eg, due to reduced front-end costs, fewer delays, and more certain consent outcomes). The change may result in more permissive planning controls which would impact what people can and cannot do to their properties.
6. The costs to implement these changes would mostly fall on local government. Impacts may differ across local authorities depending on growth pressures, previous experience undertaking this kind of work, and existing capability. The costs will be further assessed through analysis of the impacts of national direction, which will provide more detailed direction on how the functions are to beimplemented.
Require territorial authorities to provide a minimum of 10 years’ supply of “appropriately-zoned land”
7. An alternative option (previously agreed by Cabinet in 2013) is to amend section 31 to make the provision of a minimum 10 year supply of “appropriately-zoned land” an explicit function of territorial authorities. However, this option is too narrowly focused to achieve the desired outcomes for housing and development across the range of urban areas in New Zealand, as simply prescribing a specific volume (eg, 10 years) does not take into account the price, type and location of demand and may not be appropriate in allareas.
Require high growth councils to commission an independent expert to assess whether the supply response is adequate to meetdemand
8. Another option is to create a new section to require high growth councils to commission an independent expert to assess whether the supply response is adequate to meet demand. While this could theoretically add more rigour to the analysis, experience with plan audits in
the past (in Christchurch and Auckland) suggests they are often difficult to implement and do not necessarily improve the quality of plans. It also does not necessarily improve the capability of councils to plan appropriately forgrowth.
Require councils to include demand and supply analysis in regional and district planning documents
9. A third option is to amend sections 62 and 72 to require policy statements and plans to forecast housing and land demand (including business land) and explain where and how the council has provided development capacity in response. This option was discounted as the analysis would likely be sizeable (adding more paper to already lengthy plans), and plans should give effect to assessment findings rather than detailthem.
10. This proposal will go some way in ensuring that councils have the evidence to make high quality decisions in regards to development capacity, and set out clear accountabilities for ensuring capacity to meet long-termdemand.
