Government to ‘flood’ cities with more housing by liberalising planning rules

• Housing Minister Chris Bishop will announce plans to increase land for development to tackle the housing crisis.
• Bishop’s reforms will remove council powers over urban boundaries and development standards.
• The Government will require councils to plan for 30 years of housing growth.

Housing Minister Chris Bishop will today unveil the Government’s plan to “flood the market’ with land for development in a bid to end New Zealand’s housing crisis.

Bishop will use a speech to the Real Estate Institute of New Zealand today to announce a slew of changes to New Zealand’s planning laws recently agreed by Cabinet. He will argue the changes will flood the market with affordable land to develop and make it easier and cheaper to develop that land into housing.

Some of the changes are bound to be controversial; the Government will abolish councils’ ability to set fixed urban-rural boundaries and will abolish powers that let councils mandate balconies or minimum floor area sizes for developments.

This means the market, and not councils, will set the minimum size of new apartments. This could be controversial, but Bishop will defend his changes in his speech, noting the rules “can significantly increase the cost of new apartments, and limit the supply of lower cost apartments”.

“People often complain to me about all these ‘shoebox apartments’, and I agree that they won’t be the right housing solution for everyone. But you know what is smaller than a shoebox apartment? A car or an emergency housing motel room,” Bishop will say.

The changes will be controversial on the pro-development side too. The Government is making good on National’s coalition agreement with Act to make National and Labour’s bipartisan Medium-Density Residential Standards (MDRS - often called the sausage flat rules) optional for councils.

All councils currently required to implement the MDRS will be required in legislation to carry out a ratification vote to determine whether they want to retain, alter, or remove the MDRS planning changes.

Councils that vote to alter or remove the MDRS can do so, provided they give effect the new Government’s other pro-development policies in the very same plan change.

The biggest change relates to the land under development rather than the developments themselves. The Government will require the 24 city, district, and unitary councils representing our largest cities to zone for 30 years of housing growth. This covers larger cities like Auckland, Wellington, and Christchurch, as well as smaller cities like Tauranga, Hamilton, and Dunedin.

This was a pledge National had made on the election when the party announced it would break from the bipartisan housing accord with Labour. The policy was criticised for the fact that some councils, like Auckland and Christchurch, said their existing plans already provided for 30 years of growth.

In Government, Bishop has added two details to the policy that appear to make it far stronger.

The National Policy Statement on Urban Development (NPS-UD), former Housing Minister Phil Twyford’s landmark housing policy to liberalise land use, already requires councils to plan for 30 years of housing demand, however, it only requires councils to “live-zone” feasible development capacity to meet three years of demand at any one time.

“Live-zoning” means that the land can be used for housing under a plan that is legally operative and in effect and “feasible development” means housing capacity that is commercially viable for a developer to build and make a profit from.

Bishop’s changes will require councils to soon make changes to “live zone” this “feasible development capacity” for the next thirty years, rather than the next three, freeing up vastly more space.

“In effect, this will flood the market with opportunities for development, and over time, drive down land prices and the cost of housing,” he will say in the speech.

The 30 year housing growth target will be set in an updated version of the NPS-UD, which will include methodology for calculating the demand target. Councils will then have to demonstrate whether they are meeting those targets. The Minister determines those policy settings but does not have a role in setting the exact figure.

Bishop will also announce a suite of changes designed to make it more difficult for councils to wriggle out of liberalising planning rules for new housing. In many cases, these changes will tweak existing rules by limiting the scope for councils to creatively interpret them to reduce the amount of development they allow.

The changes will make apartments easier to build. Photo / Jason Oxenham

In setting the 30-year goals, the Government will require councils to use “high” demand projections when assessing the amount of houses they need to zone. This, Bishop will argue, will stop councils from understating housing demand.

Bishop will say the Government will “strengthen” zoning requirements around transit corridors. Twyford’s changes required councils to enable at least six-storey development around rapid transit corridors. Bishop said these requirements currently only apply to Auckland and Greater Wellington’s rail networks and the Auckland Northern Busway.

Bishop will say the Government will force councils to add more transport corridors to this list by adding requirements for councils to zone density around “strategic transport corridors”. The corridors will be determined by councils, but subject to criteria set by central government.

The Government will also look to end the fight around what actually qualifies as rapid transit under the existing rules, which has triggered an “interminable and frankly boring debate” about Wellington’s Johnsonville train line.

The speech will say the Government will “probably” reach over the head of councils by simply listing the specific train lines and busways that trigger the upcoming requirements.

The Government will make it easier to develop on the fringes of cities. This work is not yet complete and will be progressed with some of the Government’s other infrastructure work.

Bishop will say that “councils will no longer be able to impose rural-urban boundaries in their planning documents. This doesn’t mean they can’t have land zoned for rural use, but it does mean they can’t set hard regulatory boundaries that constrain growth”.

This has often been criticised for the fact that city fringe developments often pass expensive infrastructure costs to councils. Bishop’s speech will say that these developments will be allowed “on the condition that the infrastructure costs of new development are covered” and that the “growth pays for growth”.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.