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New Rules, New Opportunites

Despite council reservations, new residential intensification rules promise fresh new investment options, writes Sally Lindsay.

By: Sally Lindsay

1 December 2021

The face of cities across the country could irrevocably change with new planning rules allowing development of three houses of three storeys each on most sites without resource or neighbours’ consent or rights of appeal. Introduced in a rare bipartisan agreement between Labour and National, the Resource Management (Enabling Housing Supply and Other Matters) Amendment Bill is designed to improve housing supply in New Zealand’s five largest cities by speeding up implementation of the National Policy Statement on Urban Development (NPS–UD).

Every council in a tier one city – Auckland, Hamilton, Tauranga, Wellington, and Christchurch – will be required to use a new streamlined planning process to accelerate mediumdensity housing with a 50% site coverage on all residential land without resource consent. Most existing district plans typically only allow for one home of up to two storeys. Tier two councils – Whangarei, Rotorua, New Plymouth, Napier/Hastings and Palmerston North – will follow.

The new medium-density rules are being touted as one major measure to solve the housing crisis, giving investors and developers opportunities they have never had before while kicking nimbyism to the kerb.

Modelling has shown an estimated 27,900 to 53,700 homes could be built in Auckland, 3,400 to 12,200 in Hamilton, 3,800 to 8,500 in Tauranga, 6,500 to 14,000 in Wellington and 6,500 to 17,200 in Christchurch over the next five to eight years.

It means suburbs close to metropolitan areas, which are generally zoned for a single house and often have a heritage overlay, could become a forgotten era as terraced housing springs up.

“It will definitely affect character villas in the older suburbs of cities such as Auckland – Ponsonby, Mt Eden, Mt Albert, Remuera, Sandringham and Milford,” says Auckland-based Simon O’Connor, Sentinel Planning’s managing director.
“Protecting these properties due to their heritage status is the subject of much debate among planners.”

There have also been widespread calls over the past few years from activists to allow more intensification in these suburbs. Housing Minister Megan Woods says that she hopes the new bill will be the death of nimbyism.

O’Connor says the opportunities for investors and developers are massive. “There is no doubt opportunity will be plentiful. Across New Zealand’s tier one and tier two councils, these new medium density residential standards will be even more permissible than Auckland’s existing mixed housing urban zone.”

He says while there are opportunities for Auckland, those in other parts of New Zealand are even more remarkable.

“Councils such as Tauranga have promoted minimum density for their cities and 91% of the city’s residential property is zoned as single house. The new law will mean this is not a position that can be maintained. This means the development potential is more than significant.”

Date Set For New Rules

The new rules kick in from August next year and are coupled with the speed-up of the NPS–UD, which stops councils hindering development by banning height limits of less than six storeys and car parking requirements in urban areas. The Government is expected to announce no car parking will need to be provided for the new medium-density rules.

It is a big shock for councils around the country. Auckland and Christchurch councils are already pushing back. One Auckland councillor describes the plans as allowing “Soviet-style” blocks to spring up, while mayor Phil Goff has warned the new intensification rules will bring slums to poorer suburbs. He says cowboy developers are already putting up shoddy developments in lowerincome areas of the city. An Auckland Council planner says Labour’s and National’s focus through the new rules seems to be about bulk and location, not architecture and design. Woods says diagrams put out by the council showing large bulky unsightly developments under the new Government rules compared to the more attractive projects developed under the council’s Unitary Plan rules are “scaremongering and inaccurate”.
Christchurch City Council says the new housing rules are a “blunt, one-sizefits- all” and the Government’s approach will lead to fewer trees in the Garden City. It is “deeply concerned” there are no minimum landscaping requirements for residential developments. The council says trees and plants contribute to more attractive neighbourhoods and play a vital role in mitigating climate change by absorbing carbon dioxide emissions. Auckland-based O’Connor says there will be no minimum size section required to build three, three-storey homes as proposed, so effectively sections could be as small as 100m2. “Many suburbs will move away from reasonably spacious sections to small sites with intensive terraced housing.”

However, any development under the new rules will have to meet certain requirements. Three units can be up to three storeys on most sites, although each one will need some type of outdoor area. Each unit has to sit at least a metre away from side boundaries and 2.5 metres from a front boundary. These requirement can be amended by council to make them more permissive, such as allowing higher buildings. Councils cannot, however, make the rules less permissive.

The Government is also bringing forward its National Policy Statement on Urban Development (NPS–UD) by a year, hoping to have it in place by 2023. This separate plan allows councils to plan for higher density housing within a 10–minute walk from train and bus stations by removing height limits below six storeys and carparking requirements. Those rules are aimed at CBD apartments and suburban townhouses.

Councils need to introduce the three units of three storeys rules by August 22 next year. To do this they need to make changes to their district plans, which will include hearings. Under the new rules councils and nimbys have a limited range of appeals – such as natural hazards (sea level rise, flooding, public land) or heritage value. O’Connor says the new rules will make it harder to protect character areas. “Councils will need to consider how they balance character and densification. They have not had to ask themselves that question before, but that will change if it’s mandated.”

Appeals will be heard by an independent panel set up by each council. If the panel and council can’t agree, the Environment Minister will make the final decision.

Stumbling Blocks

Despite the new streamlined process councils will have to work under, general planning rules apply, as will consent for subdividing, says O’Connor. “Resource consent will be required in cases infringing development controls. All that changes is the new ability to build three homes on one site. Consents are unlikely to drop in number, and they could increase.”
There are stumbling blocks to the new rules. Hamilton mayor, Paula Southgate, says there are huge infrastructure costs incurred in councils’ supporting more density. “You can’t just put more people into more houses and expect existing infrastructure to cope. In some instances it won’t.”

Councils will be looking for Government financial and other support to deliver infrastructure for the new density changes.

O’Connor says there is no doubt opportunity will be plentiful for investors and developers. “However, as new builds increase, they will use up whatever capacity is left in existing infrastructure, leading to potential issues such as new connections being denied.
“It takes many years to plan infrastructure and local amenities, and some areas may not be able to meet the demand of sudden new homes,” he says. “With development potential spread across urban areas, infrastructure providers will have some challenging decisions about where to invest. For some areas, the gold rush could be short–lived.”

Auckland Council’s planner says the implications from the new rules are contrary to achieving a quality compact city. They make it more difficult to provide transport, water and community infrastructure, he says, and it will lead to people living in medium-density areas that may never have good access to public transport and community infrastructure.

O’Connor believes there will be a lot of noise made from a range of people and groups who do not support the law change.

“I believe this will be passed as Labour has the numbers to do it alone, but in this case, the mandate is even stronger with National behind it. So, change is on the way whether people like it or not.”

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