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Changes to RMA to Enable and Accelerate Intensification

By Iain McManus

The Resource Management (Enabling Housing Supply and Other Matters) Amendment Bill will enable more intensive development within New Zealand's main urban areas.

In this blog, I outline the main components of the Bill and summarise the alleged benefits and costs.

What are the main components of the RMA Amendment Bill?

The Bill builds on the National Policy Statement – Urban Development (“NPS-UD”) adopted in 2020.  Of most note, the Bill:

1. Requires changes to district plans to enable intensification within New Zealand’s main urban areas beyond that already required under the NPS-UD;
2. Refines policy 3(d) of the NPS-UD (one of the policies requiring intensification).  Ostensibly, this is to simplify implementation of the NPS-UD; and
3. Creates a new plan change process to enable the NPS-UD to be given effect to quicker than would otherwise be the case.

The Bill will enable more intensive development in areas that might otherwise not be changed under the NPS-UD

The Bill requires the 14 territorial authorities in Auckland, Hamilton, Tauranga, Wellington and Christchurch to amend their district plans to:

1. Provide for developments of up to three residential units per site as a permitted activity in all existing and new urban residential zones, where they comply with the building standards in the Bill;
2. Provide for developments of more than three residential units per site as a restricted discretionary activity in those zones, where they comply with the building standards in the Bill;
3. Incorporate a set of relatively permissive building standards (compared to the standards in most district plans) as a minimum enablement in those zones;
4. Provide for infringements of the specified building standards as a restricted discretionary activity in those zones;
5. Prohibit public (but not limited) notification of developments of up to three residential units infringing the building standards;
6. Prohibit public or limited notification of developments of more than three residential units complying with the building standards; and
7. Remove minimum lot size, shape size and other size-related subdivision standards for subdivision around existing or approved residential units.

The intent of the above changes is to enable more intensive development within New Zealand’s main urban areas than currently allowed under most district plans.  In particular, the intent is to:

1. Enable developments of up to three residential units of up to three storeys without need for resource consent;
2. Ensure that the resource consent process for developments of more than three residential units is not unduly onerous; and
3. Give certainty to parties seeking to infringe the building standards re the matters that will be relevant to a decision on their application.

Tier 2 authorities will also need to implement the above changes if the Minister for the Environment and Minister of Housing consider there is an acute housing need within their territory.

Councils may only depart from the above where a “qualifying matter” applies and only to the extent necessary to accommodate the qualifying matter.

The qualifying matters are the same as listed in the NPS-UD for up-zoning in other areas (e.g. within a walkable distance of the City Centre and Metropolitan Centre zones).  Auckland Council has interpreted these to be the matters listed here.

The Bill removes the requirement to have regard to the “relative demand” for land when considering up-zoning under the NPS-UD

As noted in my earlier blog, policies 3(a) to (c) of the NPS-UD require councils to enable developments of at least six storeys in certain locations. 

Policy 3(d) deals with all other locations and requires councils to provide for intensity of development commensurate with the greater of:

1. The level of accessibility by existing or planned active or public transport to a range of commercial activities and community services; or
2. Relative demand for housing and business use.

The Bill deletes the requirement to have regard to the relative demand for housing and business use.

Ostensibly, this is to simplify implementation of the NPS-UD, although policy 3(d) was probably one of the easier policies to implement given the obvious link between demand and land value.

In my earlier blog I noted that property in an expensive area was more likely to be up-zoned (and up-zoned more) under policy 3(d) than property in a lower priced area (because of the obvious link between demand and land value).

In addition, I noted that, given that intensive zoning tends to increase the value of land, the implementation of policy 3(d) was likely to put more money in the pockets of people who were already relatively wealthy, which was an ironic outcome for a government that has been  determined to close the wealth gap through its other policies.  The deletion of reference to the relative demand for land removes this potential wealth effect.

Edit: Note that policy 3(d) was ultimately replaced under the final Amendment Act with a completely different policy - see my later blog here for details.

The Bill creates a faster process for the plan changes required under the NPS-UD

The Bill creates a new plan change process called the “intensification streamlined planning process” (“ISPP”).  This process is similar to the process used for the Auckland Unitary Plan.  In broad terms:

1. The process includes public submissions and further submissions (a.k.a. cross-submissions) like a “normal” plan change;
2. Councils must appoint an independent hearing panel (“IHP”) to hear those submissions and issue recommendations;
3. The IHP has a broad discretion over the matters in the plan change and is not limited by the scope of the submissions received on the change;
4. If the Council accepts the IHP’s recommendations, the plan change becomes operative.  However, if the Council does not accept the IHP’s recommendations, the Minister for the Environment becomes the decision maker; and
5. There is no right of appeal against the Council’s or Minister’s decisions, however, submitters may seek judicial review on a point of law. 

The government anticipates that this process will allow the plan changes required by the Bill and the NPS-UD to be fully operative by August 2023 (the Bill amends the RMA to make the MDRS operative from the date of notification of the ISPP but the other provisions will not be operative until the Council or Minister issue their decisions on submissions).

This seems somewhat optimistic in the case of Auckland where the changes to the plan are likely to be extensive and the number of submissions very high.

Other matters

The Bill gives the Minister for the Environment the power to amend the NPS-UD to remove inconsistencies with the eventual Act without going through the normal public process of amending a national policy statement under the RMA.

The Bill gives councils the ability to levy financial contributions against permitted activities, enabling councils to charge developers reserve contributions etc. even if their developments do not require resource consent.

 

What are the expected benefits and costs of the proposed changes?

The government’s economic analysis claims the changes will:

1. Enable nearly 75,000 more houses to be built across the five main urban centres (including more than 39,000 more houses in Auckland) over the five to eight years following enactment of the changes and 213,000 more houses (including 112,000 houses in Auckland) over the 20 years following enactment of the changes.
2. Facilitate “more efficient labour markets and knowledge spillovers that accompany dense urban agglomeration” – claimed benefit of approx. $5.5b over the 20 years following enactment of the changes.
3. Suppress growth in the cost of housing – claimed benefit of approx. $1b (meaning dwellings present on enactment of the policy will be worth $1b less in 20 years than would otherwise be the case).
4. Reduce the cost of providing infrastructure for housing – claimed benefit of approx. $50m in the 20 years following enactment of the changes.

By the same token, the government’s analysis identifies the following key costs:

1. Increased congestion – estimated cost of nearly $2b.
2. Loss of sunlight – estimated cost of $514m.
3. Loss of views – estimated cost of $434m.
4. Environmental costs – approx. $409m.

It’s hard to know what to make of the above numbers given the difficulty in accurately quantifying with any certainty most of the benefits and costs identified in the analysis – I suspect the estimates should be treated with a high degree of caution.

It’s also interesting to note that the government’s economic analysis assumes a free-flowing supply of materials and a significant increase in the construction workforce to build the extra homes.  Neither assumption seems realistic any time soon.

 

Feel free to get in touch if you would like any advice re the implications of the Bill on your land holdings.

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