Building a new house can cost up to $50,000 more because of strict subdivision rules - a major reason behind Tauranga's affordable housing crisis, the mayor says.
Stuart Crosby says it is time to look at building smaller, simpler designs so more people can buy their own home.
The city council estimated covenants in Golden Sands were adding about $48,000 for a three-bedroom home and attached garage with internal access, compared with a base-model 90sq m home with a stand-alone steel garage.
Mr Crosby raised the issue of how much building covenants increased house building costs when he spoke to Parliament's select committee looking at housing affordability this week.
Property developers use covenants to guarantee a certain standard of housing in greenfield subdivisions, dictating the size of a house and even its shape and roof design. Mr Crosby told the committee covenants did not allow for the construction of a basic small home that many New Zealanders had grown up in.
"To improve the affordability of new housing in New Zealand we need to start building smaller, simpler houses again."
People needed to change their expectations of how big a new house should be, he said. The difference between a simple 100sq m house that excluded a garage, and a 140sq m house with an internal garage, was at least $60,000.
Adding a stand-alone traditional steel-clad garage to a basic house added up to $13,000. An attached or detached garage built in the same design as the home added up to $50,000.
Mr Crosby said the Government could regulate private building covenants to remove impediments to the construction of smaller homes. "Focussing on smaller, simpler houses would have a much greater effect on improving affordability than a focus on increasing land supply or reducing development contributions."
Bill Miller, chief executive of Golden Sands developer Bluehaven Management, responded to the Bay of Plenty Times by saying covenants set a minimum standard of housing so people knew what they were buying into. It gave them confidence that the value of their asset would be maintained. "Buyers want to know what is going on around them."
Mr Miller understood the philosophy of what the mayor was saying but said developers had to think about protecting the value of life's biggest investment.
Council estimates of the differences with other developers' covenants in more upmarket subdivisions were from $115,000 to $172,000.
Mr Crosby also told the select committee that the bill before the House did not allow councils to collect development fees on special housing zones. He said the purpose of the bill was to assist with affordable housing but it did not do enough to guarantee this would happen.
Minimum house sizes (ranging from 100sq m plus garage to 200sq m including garage)
Building plans must be approved by developers
Bans on relocatable second-hand houses
Bans on transportable new houses
No carports and a minimum of an attached garage
Controls on roof design and house shape