The government intends to “flood” cities with more apartments by liberalizing planning regulations.

By Thomas Coughlan, NZ Herald

Housing Minister Chris Bishop will on Thursday unveil the government’s plan to “flood the market” with development land in a bid to end New Zealand’s housing crisis.

Bishop will speak at the Real Estate Institute of New Zealand today to announce a series of changes to New Zealand planning laws recently approved by Cabinet. He will argue that the changes will flood the market with affordable development land and make it easier and cheaper to develop that land for housing.

Some of the changes are sure to be controversial. The government will remove the ability for councils to set boundaries between urban and rural areas, as well as the power for councils to impose balconies or minimum floor areas for flats in buildings.

This means the market, rather than councils, will set the minimum size of new homes. This could be controversial, but Bishop will defend his changes in his speech, noting that the rules “could significantly increase the cost of new homes and restrict the supply of lower-cost homes”.

“People often complain about all these ‘box apartments,’ and I agree that they’re not going to be the right housing solution for everyone. But you know what’s smaller than a box apartment? A car or a motel room with emergency housing,” Bishop said.

The changes will also be controversial on the pro-development side. The government is pursuing National’s coalition deal with Act to make National and Labor’s bipartisan medium-density housing standards (MDRS – often called “saddle flat” rules) optional for councils.

All councils currently required to implement MDRS will be required to hold a ratification vote to determine whether they wish to maintain, amend or remove the MDRS planning changes.

Councils that vote to amend or remove the MDRS may do so provided they implement other pro-development policies of the new government in the same plan amendment.

The biggest change is to development land, not development itself. The government will require the 24 city, district and unitary councils representing our largest cities to zone themselves for 30 years of housing growth. This includes larger cities such as Auckland, Wellington and Christchurch, as well as smaller cities such as Tauranga, Hamilton and Dunedin.

This was a commitment made by National at the election when the party announced it would scrap its bipartisan housing agreement with Labour. The policy has been criticised with some councils, such as Auckland and Christchurch, saying their existing plans already provided for 30 years of growth.

In Government, Bishop added two details to the policy that appear to strengthen it considerably.

The National Policy Statement on Urban Development (NPS-UD), former Housing Minister Phil Twyford’s groundbreaking housing policy to liberalise land use, requires councils to plan for housing demand over a 30-year period, but only requires councils to ‘zone’ buildable areas to meet demand over a three-year period at any one time.

“Live zoning” means that the land can be used for residential development under a plan that is legally effective and in force, while “feasible development” means the potential for housing that is commercially viable for a developer to build and make a profit from.

Bishop’s changes will force councils to quickly make changes to the “residential zone” – or “developable” areas – for the next 30 years, rather than the next three, freeing up much more space.

“As a result, the market will be flooded with development opportunities, which will over time lead to falling land prices and housing costs,” he said in a speech.

The 30-year housing growth target will be set in an updated version of the NPS-UD, which will include a methodology for calculating the demand target. Councils will then have to demonstrate whether they are meeting these targets. The Minister sets these policy settings but has no say in setting the exact number.

Bishop will also announce a series of changes designed to make it harder for councils to wriggle out of liberalising planning rules for new housing. In many cases, the changes will amend existing rules, limiting the scope for councils to interpret creatively to reduce the amount of development permitted.

By setting 30-year targets, the government will require councils to use “high” demand forecasts when assessing how many homes need to be zoned, which Bishop says will stop councils underestimating housing demand.

Bishop said the government would “strengthen” zoning requirements around transit corridors. Twyford’s changes required councils to allow at least six-storey developments around rapid transit corridors. Bishop said those requirements currently only apply to the Auckland and Greater Wellington rail networks and the Auckland Northern Busway.

Bishop will say the government will force councils to add more transport corridors to the list by adding requirements for councils on the density of zones around “strategic transport corridors”. The corridors will be identified by councils but are subject to criteria set by central government.

The government will also seek to end the dispute over what actually qualifies as rapid transit under current rules, which has sparked an “endless and frankly boring debate” over Wellington’s Johnsonville rail line.

The speech said the Government would “likely” reach an agreement over council heads by simply naming the specific train and bus routes that would trigger the upcoming requirements.

The government will facilitate development on the finger of cities. This work is not yet complete and will continue along with other infrastructure works of the government.

The bishop will say that “councils will no longer be able to impose rural and urban boundaries in their planning documents. This does not mean they cannot have land zoned for rural purposes, but it does mean they cannot set rigid regulatory boundaries that restrict growth.”

This has often been criticised for the fact that urban investment in the fringes often passes on high infrastructure costs to councils. Bishop’s speech will say that this investment will be permitted “provided that the infrastructure costs of new development are met” and that “growth pays for growth”.

-NZ Herald