Damning report wants interventionist approaches to unlocking land for housing
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UPDATED: The Property Council says urgent intervention is needed in councils' planning systems, after the damning Productivity Commission report on land for housing.
Chief executive Connal Townsend says there are many land use rules affecting the cost and supply of housing – costs that don't match the likely benefits of those rules.
"For the planning system to work better, land to be used more efficiently, regulations to better match the costs with benefits, and for the costs and risks of infrastructure to stop constraining growth, local authorities need district plans that understand commercially viable development. There is a whole shift needed in the way we view planning and development controls in New Zealand."
Mr Townsend says overly restrictive rules, disjointed planning acts, ill-managed assets and infrastruture funding has come in the way of city building and a better planned, more affordable urban environment.
"Because existing homeowners benefit from a restrictive supply of new houses, they have a disproportionate influence in local council processes. Council land use rules effectively protect the interests and wealth of those who already own housing, to the detriment of those who don't."
He says the government needs to insist local authorities consider how their district plans affect the viability of new housing developments. "If councils make it too strenuous and costly to build, not only will the massive delays in addressing the housing crisis continue, developers are forced to pass on costs to the customer, making houses even more expensive."
The Property Council wants, through RMA reforms, for councils to know, understand and willingly consider the implications of consenting decisons on building.
EARLIER: The Productivity Commission strongly recommends "more interventionist approaches that will unlock land for large-scale developments to alleviate housing shortages and housing costs," which it says will not be solved by policies already in place.
"The scale of shortage in some settings, and especially Auckland, and the complexities in land regulation, indicate a need for bigger steps," the commission says in its draft report, Using Land for Housing, published today. "Business as usual is clearly proving inadequate to deal with Auckland's housing shortfall."
It recommends the removal of all local body building rules that exceed the requirements of the Building Act and that councils should scrap rules relating to balcony and open space for apartments, minimum apartment size, minimum parking requirements, and that they should be required to undertake "robust cost-benefit analysis before introducing building height limits."
It also proposes the creation of a new national urban development authority with compulsory land acquisition powers, which the commission says may be necessary to assemble large enough tracts of land to allow housing developments to occur on a scale that would bring construction costs down and justify the necessary infrastructure investments that many city councils are reluctant to fund.
"An Urban Development Authority could play an important role at the nexus of a number of barriers to land supply identified," the commission says in the 358 page report, on which public submissions are sought by August 4 ahead of a final report to be issued on September 30.
While Special Housing Areas are bringing new land for development to market, the commission says most are not large enough to allow large-scale developments and do not by themselves encourage private sector development or infrastructure funding.
The commission recommends that more user pays charges should be permitted to help fund infrastructure, and that the current ban on local bodies being able to levy road tolls should be abolished.
Rating changes proposed
The commission makes no recommendation on the way rates are levied but argues that the increasing use of capital rather land value to set local body rates is discouraging the development of bare land.
In analysis from Hamilton, where a move from rating on land value to capital value rating is under way, showed rates on bare land would drop substantially as a result of the change.
"Capital value rating acts as a tax on development," the report says. "Yet this sort of tax is increasingly favoured by councils in New Zealand's fastest-growing urban areas: a rating methodology that raises housing costs, discourages development and reduces investment in housing."
Land value rating would also be fairer because there is a stronger correlation between high land values and high income earners than between high capital value and high income.
"Land value is a more progressive valuation base and a better fit for ability to pay," the draft report says.
It also recommends ending the exemption from local body rates enjoyed by central government, saying "the rating exemption on core Crown land does not appear to have a principled justification," while forcing central government to become a ratepayer would encourage the release of unneeded Crown land for housing.
The report also dwells on the political dynamics of residential land development, suggesting local body politics is inevitably captured by existing home owners, who are more likely to vote in local body elections and whose self-interest is to preserve property values rather than the broader public interest of ensuring sufficient and affordable housing.
Many land supply regulations "may be described as promoting amenity, character, productive agricultural land, the environment, or public health," the report says. "But many decisions of local government ... effectively protect the interests and wealth of those who already own housing, at the cost of those who do not."
(With reporting from BusinessDesk)
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