Government announces major plan for urban growth

On July 4, 2024, the Government announced decisions on the first stage of its 'Going for Housing Growth' programme to "fix the housing crisis". The objective of the programme is to facilitate greater housing development and urban growth.

The programme is intended to be rolled out in three stages:

Stage 1 - Unlocking land: Six key changes will be implemented to unlock land and urban growth potential through amendments to the Resource Management Act 1991 (RMA) and the National Policy Statement on Urban Development (NPS-UD).

Stage 2 - Infrastructure financing: Reform of the Infrastructure Funding and Financing Act is proposed to reduce red tape for developers in funding infrastructure, along with targeted rates to fund greenfield developments (as opposed to council funding).

Stage 3 - Housing performance incentives for councils: A $1 billion fund is proposed for Build-for-Growth incentive payments for councils that deliver more new housing. This scheme would be funded by stopping existing programmes like KiwiBuild.

The Government has released some of the more detailed decisions it has made in relation to stage 1. The details for stages 2 and 3 are expected to be released over the course of 2025.¹

Six key changes in Stage 1 - Unlocking land

1. More ambitious Housing Growth Targets for Tier 1 and 2 councils: Tier 1 and 2 councils (as defined in the NPS-UD, comprising 24 city, district and unitary councils) would need to 'live zone' land to meet at least 30 years of housing demand, rather than the current minimum requirement to provide for three years of demand. Instead of the current requirement for councils to show that the land is 'infrastructure ready', the Government's focus appears to have moved to ensuring that a wider range of funding sources would be available to meet medium-term infrastructure requirement.²
   
2. Expanding cities outwards at the urban fringe: Councils will no longer be able to use rural-urban boundaries (RUBs) as a planning tool. In addition, the Government is exploring options to 'improve' Future Development Strategies, including requiring Tier 1 and 2 councils to plan for growth over 50 years (instead of the current 30 years).
3. Strengthening the intensification provisions in the NPS-UD 'in the right places': There are several changes in this which will apply to Tier 1 councils (no changes to Tier 2), including:
   
   • Tier 1 councils will be required to allow levels of density across their urban areas in line with the accessibility of services or demand for housing (a shift away from the current focus of growth around neighbourhood/local/town centres).
   • Increased density will also be focused around 'rapid transit' corridors and 'strategic' transport corridors. Related changes will simplify the 'rapid transit' definition and specify minimum catchment sizes.
   • The reduction of housing capacity through the use of 'unlisted' qualifying matters (such as special character) will need to be offset by councils by increasing housing capacity elsewhere. Stronger justification will be required where councils are seeking to apply a qualifying matter.
4. Enabling mixed-use development: National direction relating to mixed-use development is proposed. Tier 1 and 2 councils would be required to enable a baseline level of small-scale mixed use (such as cafes and dairies) in residential areas.
5. Making MDRS optional: As proposed by the Government, the medium density residential standards (MDRS) requirements contained in the RMA will be made optional only (see our previous article on the MDRS requirements here). Tier 1 and Tier 2 councils across the country are currently at different stages of implementing the MDRS as per the current legislation. Accordingly, it is proposed that:
   
   • Where MDRS provisions are already operative (or will be by mid-2025), councils will be required to hold a 'ratification vote'. If passed, the MDRS provisions remain in place and no changes are needed. If not passed, a plan change will be required to remove/alter the MDRS requirements, along with implementing the new housing requirements (i.e. implement the Housing Growth Targets, intensification changes to the NPS-UD and mixed use provisions discussed above).
   • Where MDRS provisions will not be operative by mid-2025 (the Government has indicated that at this stage, this applies to Auckland Council, Christchurch City Council and Tauranga City Council (Variation 1)), the Government is still considering what the best approach is, and is working with the councils on this issue.
6. No minimum floor area and balcony requirements: Councils will no longer be able to set minimum floor areas and balcony requirements.

What next?

Formal consultation is expected to open in early 2025. The changes are expected to be in place by mid-2025.

The proposed changes, particularly the inability to impose a RUB and the requirement to live zone ten times the amount of land required currently under the NPS-UD, signal a relatively significant departure from the previous Government's focus on intensification.

The changes will need to be supported by some strong direction on, and funding for, infrastructure provision. While details in that space are set to come as part of the "Stage 2" announcements, a requirement to enable 30 years of growth without clarity (yet) on how to fund the supporting infrastructure could create some nervousness for councils and infrastructure providers.

No doubt there will also be debate over the next few months about whether it is possible to encourage development in the way proposed, without compromising the objective of achieving a compact urban form and a well-functioning urban environment.

1. Factsheet: Going for Housing Growth at a glance
2. Factsheet: New requirements for councils

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