Key Points:

Local councils have rejected the Government's new affordable housing bill, warning that associated costs will push up rates and make all ratepayers subsidise first-home buyers.

The Affordable Housing Bill is intended to add about 1000 new cheap homes to the national housing market each year.

But councils can choose not to use its provisions, and all that have made submissions to a parliamentary select committee considering the bill have rejected it.

Auckland-region councils want the bill to be withdrawn, saying it pushes unnecessary costs on to councils and will lead to rate increases.

The Christchurch, Wellington and Nelson City Councils are also against it.

Housing Minister Maryan Street says the bill is the Government's response to councils' requests for more tools to encourage affordable housing.

She said some councils were keen on some areas of the bill, and she was relaxed about changes the select committee might make.

But Local Government NZ said the bill was fundamentally flawed and its processes were "complex, open-ended and involve unacceptable risk and cost."

It did not know of any council which would adopt it, even among those that had sought new ways of encouraging affordable housing.

The costs of taking up affordable housing plans would be prohibitive for many councils and would open them to greater risk of legal challenges.

The Auckland City and North Shore City councils have accused the Government of trying to pass central government's responsibilities to local councils. Auckland said the bill would require it to analyse who qualified as needing an affordable home.

"This bill requires [councils] to take an interventionist role in social policy and the domestic arrangements of residents that Auckland City Council does not consider appropriate for local government."

The Manukau and Waitakere councils favoured councils taking a more active role in providing affordable housing, but said the bill was badly drafted and created unnecessary costs.

Manukau City's submission called for the bill to be withdrawn, saying it left councils and ratepayers effectively subsidising cheaper houses.

"There is nothing in the bill to encourage the sort of innovative solutions that drove the rise in home ownership in New Zealand in the 1960s and 1970s."

The North Shore City Council said it would need two years and up to $250,000 to establish a policy on implementing the changes.

The bill's provisions would push up the overall cost of housing, leaving "middle-income New Zealanders" paying more for their homes.

Christchurch City said the bill would add to urban sprawl by pushing developers to take the cheaper option of developing new areas, rather than existing housing areas.

Business NZ said the bill was "truly draconian" and effectively stripped personal property rights from landowners without compensation.

Ms Street said she did not expect the legislation "to be universally welcomed on every point" but councils would have to look at "where the economic development lies".


* The Affordable Housing Bill allows councils to make developers put cheap homes on new developments, pay levies or give land to be used for affordable homes elsewhere.

* In return, they can offer incentives such as reducing development levies or allowing more homes on a development than usual.