Housing supply

New RMA housing supply provisions in effect – where to go now?

If there is one thing in New Zealand that our main political parties can agree on, it is that the Resource Management Act 1991 (RMA) needs an overhaul. During its 30-year history, the two main political parties have regularly adopted piecemeal amendments. The result was complex and unwieldy legislation, unhelped by implementation problems and a lack of policy direction, which created barriers to building more homes. The same political parties also oversaw a creeping housing market that led to a “housing crisis” in Aotearoa New Zealand. So it was fitting that the Labor Party and the National stood side by side in October last year to announce another amendment to the RMA; and the Resource Management (Allowing Housing Supply and Other Matters) Amendment Act (the Act) is now in force.

What is the law about?

The objective of the law is to accelerate the supply of housing in our main agglomerations by allowing densification in residential areas. There is no doubt that we need more accommodation in Aotearoa New Zealand. For many, the dream of owning their own home is well and truly over (and rental costs pose serious challenges). During the third reading of the bill, the Minister for the Environment referred to “stress” due to housing costs, overcrowding and resulting homelessness. Other MEPs reflected on the “immeasurable social harm” caused by the lack of housing.

Is the law necessary?

Currently, we are seeing a record of consenting housing and a building boom (as several MPs acknowledged when speaking to the bill). Councils have spent the last few years changing their planning arrangements to allow for more infill and intensive housing in many of our residential areas. These have succeeded in freeing up land for intensification. Developers have stepped up as councils have advanced planning changes to implement the provisions of the National Policy Statement on Urban Development 2020 (NPS-UD) (particularly in relation to six-storey housing ). These changes are beginning to bear fruit although the councils face significant infrastructure inadequacies and costs (like other infrastructure providers) to provide the essential services to provide this supply.

Will the law help?

It undoubtedly allows for greater potential intensification. But there are questions as to other factors that will influence whether availability is taken into practice. As mentioned above, although more intensive development is already being considered, in many residential areas buyers are looking more for two floors rather than three. In addition, there are major issues regarding the availability and costs of finance (particularly the effects of interest rate increases and amendments to the Credit Agreements and Consumer Finance Act 2003), the cost construction and the shortage of skilled workers. It is perhaps telling that one MP mentioned how “good for developers” the law is. It can be difficult for many ‘moms and dads’ to secure the financing needed to maximize housing intensity.

Will the law keep its promises?

The law has a lot to do and members have told us in the House that this law:

  • Means “more New Zealanders can have a healthy home” (despite concerns over lack of adequate provisions and Parliament not including Homestar 6 standards (but Building Act still applies))
  • Will ensure that density and livability “go hand in hand” and that “our communities will have their character strengthened by this bill” (this is the ultimate test and one that has been criticized and disputed through the special committee process. Although the law is an improvement over the original bill, significant “liveability” issues remain)
  • This means that intensification provides “part of the solution to climate change”. However, this ignores the fact, as one MP acknowledged, that it can encourage growth “both upwards and outwards” and can also harm the efficiency associated with NPS- UD on intensive development adjacent to infrastructure connections. Nor does it take into account the significant densification already permitted in our major cities.
  • It is unlikely to increase infrastructure costs as it will “change where development happens rather than if it happens”. It’s not just interesting to question the need for the law, but it’s the billion dollar question (and although the government has recently invested billions, the level of investment needed is vast) . While acknowledging that significant growth is already underway, moving where it occurs, on an ad hoc basis, can increase costs, as systems typically need to be expanded and upgraded, unlike the targeted approach of the NPS-UD. Furthermore, the Act does not change the RMA processes (recently commented on by the New Zealand Infrastructure Commission) to be completed to provide desperately needed infrastructure. Housing and the infrastructure that supports it must be aligned to deliver “liveable” cities
  • Will help ‘homeless’ New Zealanders and ‘this bill means my children can actually afford to live in my suburbs’. Beyond a potential increase in supply, housing affordability is not considered in the law. Given the rising cost of land and the cost of construction, and the focus on controlling the financial/economic drivers behind the housing crisis, the law itself will struggle to ensure affordability.

And then ?

We now need a pause in planning responses to the housing crisis to provide a stable environment to develop and implement the results of this reform and associated NPS-UD changes. Boards that have adjusted their long-term planning and annual planning funding documents to allocate funds to support NPS-UD scale-up will now need to reassess their infrastructure spending. Councils will also need to continue the work associated with the simplified intensification planning process. This process will take much of the next 18 months in addition to all other legislative and policy/planning requirements placed on councils. There are considerable risks that with all of the reform (including Local Government Review, Three Waters Reform, RMA Reform, Freshwater Planning and NPS-UD Planning), resources are overstretched to ensure that it is implemented in a robust and sustainable manner.

This article builds on our previous article, which can be found here.