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Building A Denser Future

A fresh era of medium-density housing rules is upon us. We explore the implications for investors and developers, and look at some potential concerns. Sally Lindsay writes.

By: Sally Lindsay

1 November 2022

When done right, medium-density housing can create beautiful built environments.

The Labour Government and National’s bipartisan Medium Density Residential Standards (MDRS) have de-fanged planning laws and allowed residential owners in Auckland, Hamilton, Tauranga, Wellington and Christchurch to build three townhouses, up to three storeys each, on 50 per cent of their land without costly and frustrating resource consent.

But denser housing is a multifaceted issue. Legislation permits developers to build more townhouses in existing urban areas, while the National Policy Statement on Urban Development (NPS-UD), which runs alongside the MDRS, allows for apartments of six storeys, even on small suburban sites, within a 20-minute walking distance of city and metropolitan centres and rapid transit stops.

The new rules remove overly restrictive barriers to development as well as increasing the number of residential units on brownfield and greenfield development sites. It also frees developers from car-parking requirements.

However, the jury is out on what impact the cost, infrastructure and demand will have. People in the industry admit they don’t know what the future of the MDRS, dubbed the “townhouse bill”, will be.

Already, several councils have rejected some or all of the rules and have been accused of exploiting the MDRS’s qualifying matters clause to avoid intensification.

The most vociferous has been Christchurch City Council, which voted against all the government’s intensification rules and will not introduce them.


Under the MDRS qualifying matters clause, Auckland councillors voted to stick with protecting much of the city’s areas of historic housing, in suburbs such as Kingsland, Grey Lynn, Mt Eden, Ponsonby and Devonport, while rezoning other areas of intensification. This is regarded as a middle ground in a culture war over the city’s identity between groups fighting to preserve the city’s heritage and those wanting an increase in housing density.

Hamilton City Council has claimed the entire city is a qualifying matter because all of it feeds into the Waikato River catchment, while Wellington City Council reduced walking catchments – the boundaries within which six-storey buildings can be built – from 15 minutes’ walking distance of areas around the central city, to just 10, enraging many intensification crusaders.

This has set the councils on a collision course with the government, which is having to decide whether to come down hard on recalcitrant territorial authorities. The government can appoint commissioners to councils to force the changes through and Environment Minister David Parker will have the final say. The process does not allow for appeals to the Environment Court.

Before the medium density changes district plans would typically only allow for one home of up to two storeys. Under the new rules anyone can intensify their property without resource consent.

However, any new developments without resource consent will still need to comply with the building code and meet standards for durability, weatherproofing and safety.

Without resource consent planning experts say the time, financial, and political considerations of building medium density housing will be much quicker and less hassle.

For example, a granny flat which could have previously cost up to $50,000 with no guarantee of approval can now skip resource consent and go straight to building consent.

Analysis from PWC suggests the changes will add between 48,200 and 105,500 new dwellings over the next five to eight years.

In Auckland’s single-house zone, for example, most 600-900m2 sites have been limited to one dwelling and an associated minor dwelling. Allowing three dwellings per site will open up new opportunities such as the potential for two further units on the back of an appropriately positioned existing house, says Peter Reaburn, a director at planning consultants Cato Bolam.


“This option will offer the most cost-effective development having regard to the maximum density allowable and minimising build cost.”

In the mixed housing suburban and mixed housing urban zones, it is the new more flexible standards that will allow for the biggest change. Reaburn says more relaxed height to boundary controls, shorter outlook requirements and flexibility around providing parking, will result in more building mass being possible. The main limiting factor is the amount of impervious area, he says. “The 60 per cent impervious area standard will play a major role in determining where parking areas, garages and access driveways will be – more parking will mean less dwelling yield. This will result in developers having a harder look at whether on-site parking is necessary and should be provided.” The MDRS introduces a new “windows to street” standard which requires generous glazing on the building’s front facade. “Windows are an important element in building design which helps improve the visual interest of the buildings facade; breaks up the perceived bulk of the development; improves passive surveillance; enhances the streetscape and usually enhances internal amenity for residents,” says Reaburn.

Auckland Council general manager resource consents, Ian Smallburn, says the changes are significant and complex but needed. By 2048, Auckland’s population is expected to reach 2.7 million.

“While property owners are allowed to build up to three homes of up to three storeys, as of right on their residential site, any development that has potential impacts on the environment and on other people must still comply with all other rules and standards that remain under the Resource Management Act.

“This means it is likely that any property owner who wants to develop using the new density rules will still need resource consent approval to subdivide a site or for earthworks before construction begins.

“All building plans will still need a building consent, and as part of that assessment the council will consider if any resource consents are also required.”


Don’t expect a rush of developers drawing up plans for new intensified development just yet.

Servus Consultants owner Hamish Frizzell says the government is five years too late in introducing the medium density rules.

“In reality Auckland doesn’t need them at all as intensification has already been adopted through the 2016 Unitary Plan, which provides for an extra 900,000 homes in the country’s biggest city,” he says.

“Many three-storey townhouse developments with more than three units have already been built or are under construction in suburbs close to Auckland’s CBD, some without car parks which are now proving hard to sell.

“Also, nationwide developers are pulling back from the housing market because of low sales, higher building costs and material supply issues.”

Frizzell says one good thing to come out of the new rules is that land values will probably even out because there are more than enough zoned properties to satisfy the new density rules and developers won’t need to pay over the odds as in the past.

Bayleys land sales specialists say at first glance the NPS-UD offers greater scope for developers to intensify their projects and potentially maximise their value.

However, they say an immediate development free-for-all is unlikely as developers and investors test the practical application of the new rules against market demand, the availability of investment, and infrastructure pressures such as transport and wastewater.

In Bayleys latest Total Property magazine, development land sales director Gerald Rundle says just because higher-density housing can be provided, doesn’t mean the market wants it.

‘It sounds great, but there is a lot to consider and the advantages could be very site specific’ GERALD RUNDLE


Good examples are the areas around Auckland that are zoned for terraced housing and apartment buildings where the preference is still to build three-level terraced houses.

He says many sites, particularly brownfield areas, won’t have the services necessary to allow for higher density in the short term. “Developers are looking at the opportunity from the NPS-UD against things like will the pipes be good enough? Will there be issues that come from everybody parking on side streets?

“It sounds great, but there is a lot to consider and the advantages could be very site specific.”

Another glitch is that the major house affordability issue across the country can’t be undone any time soon, says Frizzell.

“As soon as developers build above one level the cost skyrockets. Apartments and townhouses are far more expensive to build than standalone homes. Just because they are marketed as affordable, doesn’t mean they are for most people.”

He says the new rules will be of most use to mum and dad property owners, who in some council areas have not been able to put another home or small unit on their property because of restrictive planning rules.

Reaburn agrees, and says this is where most of the development under the MDRS will come from.

For professional developers with an average 800m2 site, they are building five, six or seven units and still need resource consent and input from the council’s design panel.

Since the new rules were introduced, Christchurch-based Servus has had only four enquiries from property owners in Waimakariri and Selwyn district councils’ areas wanting to intensify properties with new housing. “We are not expecting a slew of inquiries because it is not wanted or needed,” says Frizzell.

“In our experience property owners do not want to be overlooked by threestorey buildings next door blocking out their sunlight and views.”

New townhouses are already popping up in many city suburbs.


Reaburn says there is concern right across cities about what sort of development is possible under the new rules and the impact on neighbours. “It comes down to what is enabled vs what should happen. We encourage our developer clients not to go to the ultimate extent of the rules. The framework creates rules for developers to build good projects that will sell. However, not all developers will do this and build to the limit.”

Reaburn says although the government’s intention with the new NPS-UD/MDRS rules is the creation of more affordable houses around town centres, metro areas and near transport nodes, other things come into it.

“Do these changes enable major changes to how Auckland looks? Yes. What are the ramifications?”

Reaburn says while developers are now in a position to build three, three-storey buildings without consent on virtually any site, they have to consider where it is sensible to build and how difficult it will be? For example, it is more expensive to develop on a slope than a flat site and it is difficult to develop sections that don’t have access to on-site stormwater pipes. “There has to be thought given to the costs and returns and paper-thin margins on some projects.”


Parking is an interesting part of the new rules, says Reaburn. It is not required or wanted by the government or councils. Their aim is to get people out of their cars and on to public transport, cycles or walking.

Reaburn says it will create a dilemma for many developers. “Is it better for developers to include parking to get a better return and sell properties more easily or maximise the building site and leave people to park on the street?

“If more nearby developments are built without parking and streets around them fill up and residents have to find bus or train stations, do developers turn to sites further out and hope shopping and amenities might be provided if enough houses are built?” It is social engineering to some extent, he says.

While the government and councils are taking a big step in what they want to happen (reducing residents’ dependency on cars) and the tough leap comes with the MDRS rules that don’t require off-street parking, it is going to be difficult for many people who work shifts or live on the other side of the city to their place of work and don’t have a choice but to have a car.

Reaburn says it’s no wonder councils got upset when they were already working on planning rules to achieve density changes and the government came along and told them what to do.


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