The Government has released a five-point plan to tackle New Zealand’s housing crisis – our Commercial Property team unpacks the initiatives.
The plan was outlined in a recent speech by Hon Chris Bishop – Minister for Housing, Infrastructure, and the Resource Management Act 1991 (RMA) reform.
Whether you’re an investor exploring the Build to Rent Scheme, a commercial landlord interested in mixed-use zoning, or a homeowner navigating consent requirements, reach out to our Commercial Property team for guidance and support. Together, we can navigate the evolving landscape of New Zealand’s property sector, including the initiatives outlined below.
Housing Growth
New Zealand’s housing crisis has placed significant financial strain on many households, with rent expenses skyrocketing.
The ‘Going For Housing Growth’ policy tackles this crisis through a three-pronged approach that addresses:
- Land supply: Ensuring housing choice and affordability through a balanced approach that allows both greenfield development and urban density;
- Incentivising council growth initiatives: A possible initiative could be sharing a percentage of the GST of new housing with councils – we can expect to hear more about this in the coming months; and
- Infrastructure funding.
The Minister has indicated that we can expect to see reforms to the National Policy Statement on Urban Development to facilitate mixed-use zoning. Councils will also be permitted to opt out of the Medium Density Residential Standards which was introduced by the Labour government in 2022.
Rental Market
The Government intends to make changes in the rental market to improve conditions for both landlords and tenants. Landlords will be able to claim 80 percent of their interest expenses from 1 April 2024, and 100 percent from 1 April 2025, with hopes that this will inflict downward pressure on rents.
The Residential Tenancies Amendment Bill recently passed its first reading and proposes changes to the Residential Tenancies Act including the reintroduction of no-cause 90-day tenancy terminations and the introduction of pet bonds. The Minister comments that both changes will provide landlords with peace of mind when it comes to potentially problematic tenancies while also providing opportunities for tenants without perfect references to find the perfect home to live in with their furry friends. These changes are expected to come into effect in early 2025.
Build to Rent
To bolster housing supply, Cabinet is making it easier for overseas investors to invest in Build to Rent developments.
The Overseas Investment Act will be amended to create a new streamlined consent pathway that will allow investors to purchase land with the intention of building a new Build to Rent development or purchasing an existing one. These changes will not lift the ban on overseas investment into existing residential housing and land in New Zealand (unless the investor is eligible for a consent).
A ministerial directive letter was issued to Land Information New Zealand (LINZ) in April to provide immediate certainty that New Zealand is open to foreign investment in Build to Rent developments and serves as a stop-gap until the new consent pathway is available.
Building and Construction
The Government has suggested two initiatives which aim to reduce red tape, lower costs, and foster competition for building products:
- Removing consent requirements for structures under 60sqm; and
- Quarterly reporting of consent processing times for each council in order to place more scrutiny on consent delays.
In addition, it recently announced that small projects under $65k no longer have to pay the building levy, which provides some relief to Kiwis doing bathroom and kitchen renovations.
Social Housing
Addressing the pressing issue of social housing, the Government plans to introduce a new Priority 1 Category for the social housing waitlist alongside a tighter eligibility criteria for emergency housing. Additionally, the findings of an independent review into Kāinga Ora was recently released with several recommendations on improving its performance and value for money, and highlighted the public housing agency’s significant debt with annual deficits that are forecast to grow to more than $700 million – read more here.
Resource Management Act
The Government plans to take a three-phase approach to reforming the Resource Management Act (RMA):
- Phase one (completed): repealing the Natural and Built Environment Act and Spatial Planning Act.
- Phase two: introducing a new ‘One-stop-shop’ fast-track consenting regime for infrastructure, and regional and nationally significant projects – applications opened 3 April 2024; RMA amendments focused on renewable energy, support for farmers, building more homes and enabling primary industries.
- Phase three: replacing the RMA with a new regime based on the enjoyment of property rights.
Author: Paige Sullivan
