How Recent Planning Changes Impact Developers in New Zealand

New Zealand’s urban landscape is on the cusp of significant change. In recent years, we’ve seen major shifts in planning legislation, from repealing the Resource Management Act to introducing new housing intensification measures.

Now, with the National Party at the wheel, we’re facing another wave of reforms to address the country’s persistent housing challenges. These changes promise to reshape how we approach urban development, potentially opening up new opportunities for developers. However, there are still questions left unanswered that could shift how viable these opportunities are.

In this blog post, we’ll explore the recent and proposed planning changes, their potential impacts, and what they mean for developers navigating this evolving landscape.

Overview of recent planning changes in NZ

New Zealand’s urban planning landscape has undergone significant changes in recent years. Labour, in particular, made two major changes: the repeal of the Resource Management Act (RMA) and the Auckland Housing Intensification Plan.

The repeal of the RMA was announced in February 2021, a significant change that came in response to escalating environmental challenges, population growth, housing demand, and the effects of climate change.

The RMA was set to be replaced by three new pieces of legislation:

• Natural & Built Environment Act (NBA)
• Spatial Planning Act (SPA)
• Climate Change Adaptation Act (CAA)

Then, in October 2021, the government introduced the Intensification Streamlined Planning Process (ISPP). This process was coupled with the introduction of Medium Density Residential Standards (MDRS), allowing developers to develop up to three homes of three storeys without the need for resource consent from the council.

These changes aim to increase residential property potential, offer more opportunities to modify residential areas, and ultimately provide accommodation for Auckland’s growing population. The government set an ambitious goal of 57,000 new houses in Auckland within five to eight years.

National Party’s Housing Density plans

Now, the National Party has proposed their own changes to New Zealand’s housing and urban planning. These changes aim to address housing supply issues and give more control back to local councils.

Here are some key aspects of their plans:

1. Enabling greenfield growth
The new government intends to eliminate the ability of councils to set urban limits in their plans, such as Auckland’s Rural Urban Boundary. While councils can still have rural and urban zones, the goal is to make it easier to expand urban zoning. This change could potentially open up more land for development, especially in areas previously restricted by urban growth boundaries.

2. Expanding live zoned land capacity
Councils in major urban areas will be required to live zone land for 30 years’ worth of housing demand. While councils can opt out of the MDRS, the central government retains authority to ensure sufficient land is allocated to meet housing demand targets.

3. Medium Density Residential Standards
Abandoning the previous government’s policy, the new coalition plans to make all councils’ MDRS townhouse rules optional. This change gives local authorities more flexibility in determining the appropriate level of housing density for their areas. However, Housing Minister Chris Bishop has stated that if councils opt out of MDRS, they will still be expected to zone land for 30 years worth of housing demand.

4. Intensification in strategic locations
Tier 1 councils are required to enable appropriate density levels across urban areas, considering factors such as housing demand and access to services and amenities. These councils must facilitate housing intensification along ‘strategic transport corridors’, including major bus routes and other key public transit lines.

5. Mixed-Use Development
Both Tier 1 and Tier 2 councils are mandated to enable a diverse range of activities, including cafes, dairies, and other retail establishments across urban areas. This mixed-use approach is particularly emphasised in zones where Tier 1 councils are required to enable developments of six or more storeys.

The policy maintains the ability to separate industrial activities from residential areas to ensure compatible land use.
While National’s plans aim to increase housing supply by freeing up more land for development and giving councils greater autonomy in their planning decisions – this approach also raises questions about infrastructure capacity and the potential for urban sprawl.

Potential challenges

The issue of infrastructure fundamentally comes down to funding. For the government’s plans to work effectively, infrastructure provision and funding need to align. This opens up long-avoided debates on debt levels and funding models for infrastructure.

Developers, particularly those looking to develop land ahead of council’s indicative timeframes, may bear the financial burden of rezoning land and providing the necessary infrastructure.

The government also faces a complex balancing act between urban growth and environmental protection. The National Policy Statement on Highly Productive Land seeks to protect valuable soils for productive use, yet much of the rural land around urban areas consists of these soils. Reconciling this with freshwater legislation and urban development policies while enabling some fringe growth will be a delicate task.
Ultimately, these are questions that will need to be addressed. However, the government has acknowledged this and plans to produce solutions.

Impacts on developers

The proposed planning changes will have varied impacts on developers, depending on land holdings and development goals.
The removal of rural-urban boundaries could open up significant potential for greenfield development. This change may allow for more flexible and extensive development opportunities in areas previously restricted by urban growth limits.

In terms of brownfield development, the impact may be more nuanced. While the changes don’t radically alter existing themes, they do introduce important variations:

1. The proposed expansion of zoning requirements along transit corridors will extend the area where at least six-storey development is mandated. While the NPS-UD already requires councils to zone for at least six storeys within walkable catchments of centres and rapid transit stops, this change would increase the extent of such zoning along public transport routes. This expansion could significantly increase development potential, particularly for apartments, in areas previously not subject to these height requirements.

2. In Auckland, for land zoned as single-house or mixed housing suburban outside key catchments, making the MDRS optional could potentially reduce development potential compared to current MDRS provisions. This might affect permitted heights and site coverages, potentially reducing yield for some sites.

2. The removal of minimum dwelling sizes and balcony requirements offers greater flexibility in unit design. This could be particularly beneficial for those developing smaller units or those catering to specific market segments with different space requirements.

3. The changes also present opportunities to create more diverse and flexible living environments. The ability to incorporate a wider range of commercial activities within walkable catchments could lead to more vibrant, mixed-use neighbourhoods.
However, it’s crucial to note that these impacts are based on high-level proposals, and the full implications will only become clear as more detailed plans are released. The government’s approach to infrastructure funding, which is yet to be fully outlined, will be a critical factor in determining the feasibility and profitability of many development projects.

CivilPlan’s approach to change

As we’ve seen, the proposed planning changes under the new government represent both opportunities and challenges for developers in New Zealand. However, the success of these changes hinges on addressing critical issues, particularly around infrastructure funding and environmental protection.

As we await more detailed plans and the government’s approach to these challenges, developers should stay informed and adaptable. At CivilPlan, we’re committed to helping our clients navigate these changes, providing expert guidance on how to leverage new opportunities and mitigate potential risks.

While the future of urban development in New Zealand may be uncertain, one thing is clear: staying ahead of these changes and understanding their implications will be crucial for success in the land development sector.