Massive liberalisation of planning rules to end housing woes

House zoning targets will be set for councils; urban-rural limits will be scrapped; mixed use zoning will be encouraged; minimum floor sizes and balcony requirements for apartments will be abolished, and the government will more tightly define high density transport corridors eligible for development.

This comes in the wake of Bishop calling for average house prices to drop, even if it scares existing homeowners.

“We need change. After inflation, house prices have increased by more than any other OECD  country in the past 30 years. Between 2000 and 2021, inflation adjusted  house prices rose 256% in New Zealand.”

The slew of changes to New Zealand’s planning laws have recently been agreed by cabinet.

Bishop says the changes will "ensure abundant development opportunities in key urban areas" by freeing up land markets and allowing developers to deliver high and low density housing and commercial developments.

The biggest change relates to the land under development rather than the developments themselves.

The government will require the 24 city, district, and unitary councils, such as Auckland, Wellington, Christchurch, Tauranga, Hamilton, and Dunedin to zone for 30 years’ housing growth.

Although some councils already have plans in place for 30 years’ housing growth, the existing National Policy Statement on Urban Development (NPS-UD) only requires councils to “live-zone” feasible development capacity to meet three years of demand at any one time.

Under the changes, councils will have to make changes to “live zone” this “feasible development capacity” for the next 30 years, rather than the next three, freeing up vastly more space. “In effect, this will flood the market with opportunities for development, and over time, drive down land prices and the cost of housing,” Bishop says.

“Live-zoning” means the land can be used for housing under a plan that is legally operative and in effect and “feasible development” means housing capacity that is commercially viable for a developer to build and make a profit from. That means it can be built on now and isn’t just set aside for future growth.

Other changes are more than likely to be controversial. After many complaints about shoe box apartments proliferating in cities a couple of decades ago, councils tightened up the rules, but under these changes councils’ ability to mandate floor area sizes for developments will be abolished. This means the market, not councils, will set the minimum size of new apartments.

He says getting rid of the balcony size requirements could knock up to $70,000 off the cost of a new apartment in Auckland.

“People often complain to me about all these ‘shoebox apartments’, and I agree that they won’t be the right housing solution for everyone. But you know what is smaller than a shoebox apartment? A car or an emergency housing motel room,” Bishop says.
Councils’ ability to set urban-rural boundaries will also be abolished, another controversial move that is likely to raise the hackles of council planners.

“Councils will no longer be able to impose rural-urban boundaries in their planning documents. This doesn’t mean they can’t have land zoned for rural use, but it does mean they can’t set hard regulatory boundaries that constrain growth,” Bishop says.

In the past city fringe developments have been criticised for passing on high infrastructure costs to councils. Bishop says these developments will be allowed on the condition the infrastructure costs of new developments are covered and that “growth pays for growth”.

The government will also “strengthen” zoning requirements around transit corridors. Previous changes required councils to enable at least six-storey developments around rapid transit corridors, but they only applied to Auckland and Greater Wellington’s rail networks and the Auckland Northern Busway.

Councils will be forced to add more transport corridors to this list by adding zone density around “strategic transport corridors”. The corridors will be determined by councils, but subject to criteria set by central government, which could be simply listing the specific train lines and busways that trigger the requirements.

All the changes are designed to make it more difficult for councils to get out of liberalising planning rules for new housing. The changes limit the scope for councils to creatively interpret them to reduce the amount of development they allow.

In setting the 30-year goals, Bishop says the government will require councils to use “high” demand projections when assessing the amount of houses they need to zone. This will stop councils from understating housing demand.