Development contributions review in response to housing cost concerns

The Government is looking at changes to the way Councils charge for new sections and other developments by today releasing a discussion paper as part of its work on housing affordability and local government reform.

“Section prices have more than doubled in the past decade. A significant factor has been the sharp rise in the development contributions charged by councils. The average charge nationally has increased from $3,000 per section to $14,000 per section over the past decade, an increase of 360%, and can be as high as $64,000 per section. These costs need to be contained if more kiwi families are going to be able to afford their own home,” says Dr Smith.

“Development contributions are needed to enable Councils to provide the necessary infrastructure to support new developments, but we also need to ensure the costs are fair and well justified. There are pockets of excellence in local government in the way infrastructure is financed and we want to build on this to achieve greater consistency and certainty. The current system has been in place since 2002 and this review, as part of the Better Local Government programme, is timely and needed," Mr Tremain says.

The Development Contributions Review Discussion Paper includes options for reform of the Local Government Act 2002 to cap the charges, tighten the criteria, reinstate appeals, provide discounts for types of housing, change the timing of charging, enable alternate provision of infrastructure and abolish the charges. The paper builds on the recommendations of the Productivity Commission inquiry into Housing Affordability and of the Urban Design Technical Advisory Group that raised concerns about the way the system of development contributions has been working.

“We welcome feedback on these proposals from builders, councils, developers and the wider community. Our reform objective is a fairer system that will support development and growth, and make home ownership more affordable while supporting Councils efforts to improve New Zealand’s infrastructure,” the Ministers concluded.

Submissions are due with the Department of Internal Affairs by 15 March.

A copy of the Development Contributions Review Discussion Paper can be viewed at
http://www.dia.govt.nz/vwluResources/Local%20Government%20Development%20Contribu