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Battling red tape

Claims that residential construction regulations are to blame for Auckland’s housing crisis are making waves again.

Monday, January 18th 2016, 11:30AM

by Miriam Bell

Complex land use and construction red tape have long been highlighted as a contributing factor in Auckland’s supply shortage.

Last year, the Productivity Commission recommended removing a range of regulations that it said prevent the efficient use of land for housing. 

Now, the issue has re-emerged.

Following the Fitch Ratings housing report, which said Auckland’s supply issues are being exacerbated by lagging construction, Property Council chief executive Connal Townsend pointed to planning and regulations as the major issue.

“We have a planning system in crisis with excessive restrictions on development which are hampering delivery efforts,” he said.

“Add to that burdening regulations and a construction sector unable to meet new housing demand, and we are fast approaching the point of no return.”

Townsend said it isn’t just an Auckland issue.

“But, with Auckland’s population projected to explode, high regulatory costs and restrictions and a lack of cohesive integration between our three planning laws, it’s no wonder we’re doing terribly.”

Auckland mayoral candidate Stephen Berry said the blame for the hyper-inflation in the SuperCity’s housing market lies squarely at the feet of left wing central planners and their NIMBY acolytes.

A ban on residential construction outside of the Metropolitan Urban Limit has created an artificial land shortage in a city with plenty of room to build, he said.

Further, the cost of complying with Council regulations and obtaining permission to build or make alterations is also excessively expensive.

“Talking to Aucklanders tells me that a five figure bill per property is routine. The estimates range from $15,000 to $30,000 per home.”

Berry said developers don’t simply reduce their profits and absorb these costs – rather they are factored into the price they will eventually charge for their finished product.

This is all contributing to affordability issues within Auckland, he said.

According to the Council itself, the issues are more complex.

Auckland Council general manager building control Ian McCormick said it’s important to recognise that building a home is, in many ways, a more complicated business today than it once was.

Assurance that the work has been completed to a compliant standard is very important, he said.

“As an example there are a range of building products and systems that often require quite careful consideration about how they will work together.

“You cannot assume that all products available in the marketplace are necessarily code compliant either for a given application.”

When it comes to costs, McCormick said the average consenting costs for a typical three bedroom single storied dwelling come in at around $5,500 and $6,500.

This includes lodgement, inputs by building processing, planning, development engineering and one of our structural engineers, along with 12-14 inspections and the CCC finalisation process.

“In terms of development contributions, this varies depending on a range of factors, he said. “It will depend on the attributes of the development and site in question.”

There is a lot of work going on, and initiatives under way, to improve the system and streamline regulatory processes, McCormick added.

These include a digital consenting application which is currently being piloted with Group Home Builders and work with BRANZ on a quality assurance tool for the residential construction industry.

Auckland Council general manager plans and places John Duguid said that, in the proposed Auckland Unitary Plan, the Rural Urban Boundary (RUB) will replace the Metropolitan Urban Limit.

“It does not ban residential development outside the RUB, as you can still build a house on your land.”

However, the Council is aiming for up to 70% of residential development in the existing urban area and up to 40% in new greenfield areas, rural areas and satellite towns.

Duguid said that infrastructure considerations are a key reason for this.

Meanwhile, Townsend advocated decreasing the bureaucracy and red tape which is reducing the effectiveness of the development community.

Berry said the most effective thing the Council can do to make Auckland housing more affordable is to minimise its interference.

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

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