Housing Minister, Hon Chris Bishop recently unveiled the next steps in the Government’s plan to combat the housing crisis.  In this article, we discuss six key policy changes and what they might mean for councils and developers. 

The Government’s “Going for Housing Growth - Stage One” Policy is the first of three pillars of reform designed to make housing more accessible and affordable, by removing barriers to development and preparing for future growth.

1. Freeing up land for urban development including removing unnecessary planning barriers

2. Improving infrastructure funding and financing to support urban growth

3. Providing incentives for communities and councils to support growth

New housing growth targets

Tier 1 and 2 councils will be required to provide for 30 years’ worth of housing demand in their district plans. Previously, councils had to plan for 30 years of housing demand, but only had to ensure that 10 years’ worth of projected housing demand was zoned in either an operative or proposed plan. Under the new policy, it appears councils will need to zone 30 years’ worth of projected housing demand. The intention behind this change, in the words of Minister Bishop, is to “flood the market with opportunities for development”, in order to drive down land and housing prices. 

Enabling greenfield growth 

Several significant changes are mooted under this heading, all of which are directed at looking beyond existing urban boundaries for future growth. Two of those relate to the National Policy Statement on Urban Development 2020 (NPS-UD) and Future Development Strategies (FDS), with changes being considered to extend the FDS’s 30-year planning period to 50 years, and a strengthening of the NPS-UD’s responsiveness policy (Policy 8), to support unanticipated or unplanned plan changes. The other key change is to remove the ability to impose rural-urban boundaries in planning documents, which will eliminate a policy constraint to greenfield expansion. 

Overall, these changes are designed to better capitalise on development opportunities at urban fringes, and establish a "right to build" on city outskirts, contingent on developers covering infrastructure costs. 

Intensification “in the right places”

Urban intensification possibilities will be bolstered via a package of reforms to the NPS-UD. These include: 

• Reinstating minimum height and density requirements in all urban areas based on demand and accessibility to businesses and services
• Strengthening density regulations along transit corridors
• Clarifying the definitions of “rapid transit” and "walkable catchments"; and 
• Revising the rules around the use of “qualifying matters” to restrict intensification. 

Removing restrictions on apartment size

Minimum floor area and balcony requirements in district plans will be abolished, letting market demand dictate apartment sizes instead. The objective is to foster flexibility in housing design, potentially reducing construction costs and increasing housing affordability.

Making the MDRS optional 

The Government has signalled for some time that it intends to make the medium density residential standards (MDRS) introduced via the 2021 RMA reforms optional, but this recent announcement sheds some light on what that might look like in practice. 

A pathway will be provided for councils to decide whether to incorporate the MDRS into their urban planning frameworks. For those councils which have already implemented the MDRS (eight out of the 15), there will be an opportunity to remove or alter the MDRS through a bespoke streamlined planning process. 

Enabling mixed use development

Minister Bishop discussed the benefits of mixed-use development at a speech earlier in the year, and these announcements align with that messaging. Under this Policy, Tier 1 and 2 councils will need to provide a baseline level of mixed-use activities in their urban areas, and Tier 1 councils must also enable small-to-mid-scale activities like cafes and restaurants, retail, metro-style supermarkets and offices in areas subject to the NPS-UD’s six storey (or greater) intensification requirements.

Our comment 

The Government’s intention to encourage intensification, support expansion of urban areas, and significantly increase supply has been signalled for some time. 

As always, the devil will be in the detail. In terms of how these changes could impact housing affordability, there are other economic and infrastructure drivers that will also need to be addressed.

Given the current uncertainties with the NPS-UD, providing clearer direction on where intensification should occur would be helpful, but listing train and bus routes could be considered a step too far if it means that the Government ends up determining the location of future growth based on services that are currently planned, funded and delivered by other agencies. 

Many of the proposed changes will fall to local authorities to implement, adding to an ever-growing list of council “to-do’s” in relation to urban growth (or potentially “un-do’s”, for those that have incorporated the MDRS). The logistics, timing and politics around the “optional MDRS” process could prove to be particularly complex, and we anticipate the 15 councils that are currently required to implement the MDRS will be watching this space closely. It is also unclear how councils will now be expected to give effect to the (strengthened) NPS-UD, with the structure that was provided by the MDRS having fallen away. 

Developers will no doubt be pleased about the greater levels of intensification and greenfield development promised to be enabled by these reforms, but may want to better understand how public infrastructure to support residential development will be provided for and funded. The counterpoint is that councils will continue to have concerns about both increased intensification and greenfield expansion given the current pressure on infrastructure, and funding constraints that they are experiencing. Removal of urban growth boundaries is likely to make it harder to prevent isolated urban growth in rural areas. Rezoning land alone, does not mean that there is adequate infrastructure (or funding) to service the growth. 

There are several moving parts in the funding and financing space, with a series of decisions to be made over the second half of 2024 and into 2025 about new tools to support infrastructure delivery specifically. The success or otherwise of these changes will depend very much on what infrastructure funding tools the Government comes up with in the coming months. You can read our thoughts on the Government’s Cabinet Paper on Improving Infrastructure Funding and Financing here.

What happens next?

There will be an opportunity to provide feedback on these proposed changes to the RMA and the NPS-UD in early 2025.

Further announcements about Stages Two and Three of the Going for Housing Growth Policy are expected over the course of the next year.
For further information about how these reforms could affect you, or for assistance with getting involved, reach out to one of our urban development and planning experts below. 

You can read the Minister’s speech here and the Ministry’s fact sheets here.

Special thanks to Jade Magrath and Payge Swanson for their assistance in writing this article.