House costs to fall as fees slashed

Development fees in Tauranga are to be slashed in a bid to get the city's building industry out of the doldrums.

Tauranga City Council's building impact fee for a new home will drop by $5100 - a 40 per cent reduction on the current fee of $12,600.

And the other component of development fees, subdivision impact fees, will drop by around a quarter to a third in most of the city's greenfield development areas.

The proposed new scale of fees takes effect on July 1 and follows years of complaints that council fees had helped make Tauranga unaffordable for many first home builders.

Peter Cooney of Classic Builders said he had been pushing for the price reductions for a long time. The council had collected high fees during the heyday of Tauranga's growth and, now that those days had passed, it was lowering the fees to get development going again.

"Council fees got out of control. Guys like us were penalised by the higher fees."

He welcomed the reductions as a move in the right direction, recalling how in 1996 council fees for a house totalled $4500, including consenting costs.

Mr Cooney said fees had increased dramatically from then, reaching up to $20,000 for a subdivision fee and $19,000 to $20,000 for a building consent, including the building impact fee. It meant fees sometimes accounted for around 10 per cent of a total house and land package.

The council's decision means the cost of building a home in Welcome Bay will drop by nearly $8200 - 34 per cent less than the current total development fee of nearly $23,900.

Total fees in Tauranga's other major greenfield building areas, excluding The Lakes, will drop by between 31 per cent and 38 per cent. Papamoa's Wairakei development was a special case, with its subdivision fees charged by the hectare rather than per lot.

The difficulty to calculate "robust" subdivision impact fees for infill development in the city's older suburbs led the council to abolish the fee at Mount Maunganui and to levy only enough in the rest of the city to fund the Southern Pipeline.

The new scale of fees will go out for public consultation from March 19, once the council formally adopts the draft plan for 2012-22 on March 17.

Council strategic planner Andrew Mead said the reduction in the building impact fee was mainly driven by the council reducing future capital spending on community facilities and sports fields. "We have not slashed and burned the budget without considering the services to the community," Mr Mead said.

The new charges follow months of workshops with builders and developers.