Property

Taskforce reveals way forward for Auckland

Targeted “value capture” rates look likely to be on the cards for Auckland property owners if the recommendations of the Mayoral Taskforce on Housing’s report are implemented.

Monday, June 12th 2017

The report, which was released today, suggests a raft of major changes across three key areas in a bid to address Auckland’s severe housing shortage.

The three key areas revolve around removing impediments which stop the construction sector developing at scale – and through dips not just boom periods; unlocking land with appropriate zoning and infrastructure; and enabling more efficiency and innovation in consenting.

When broken down further, there are 33 recommendations across those three key areas – some of which have the potential to be controversial.

Mayor Phil Goff, who set up the Taskforce earlier this year, said the first issue identified by the report is that unless greater continuity and certainty in building work can be provided the industry will not scale up sufficiently.

That would mean Auckland would continue to build fewer houses than needed and, to this end, the Taskforce recommends a deliberate policy to build through the economic dips, he said.

“In a small country like New Zealand, central government has in the past played a key role in this and today still needs to. But the report also recommends ways to tackle skills shortages that create constraints and cost pressures.”

These include scaling up joint venture building programmes on publicly-owned land; introducing a “badging” system to boost skills in the construction industry; and increasing the preference for skilled construction workers in the work visa system.

However, it is the second key area that has recommendations likely to create opposition.

Infrastructure development funding is widely acknowledged as a major problem and the report emphasises the constraints created by this. 

Goff said the Unitary Plan has freed up land by zoning it for development - but in order for the necessary development to take place roading, water and community facilities need to be provided.

While the Government’s Housing Infrastructure Fund has to play a part in this, the report recommends the broadening of revenue sources for Council.

This could include road pricing and devolution of funds from central government but the report also promotes the potential to use other sources of funding.

One such source of funding, which is now being looked into, is targeted rates on those realising windfall profits from rezoning and new infrastructure so they contribute to the cost of that infrastructure, Goff said.

“If you get a property value uplift from new infrastructure it makes sense that some of that uplift would then go towards the funding of that infrastructure.

“The principle behind that is strong but we need to find the way to properly implement it. And we are keen to work with the government on that.”

He added that work on the concept has not progressed far enough to speculate on any sort of numbers.

Another infrastructure funding idea put forward in the report is to move from using the capital value of properties to using their land value in rating systems.

 While this would incentivise people to develop empty land, the Taskforce recognised it would also be a challenge to change the ratings base and there would be both winners and losers.

Recommendations in the third key area focus on more effective consenting and risk management to facilitate housing being built quicker.

One recommendation is the introduction of a warranty and insurance scheme to give assurance to consumers and to allow the Council to be more supportive of innovation in building methods.

The report also calls for the Council’s trial Consenting Made Easy process to be fully implemented and for the Building Code and other legislation like the Unit Titles Act to be updated.

Additionally, the Taskforce points out the advantages of innovation, like prefabrication, to improve the speed and quality of construction and lowering costs.

Goff said that Auckland has a shortfall of around 30 to 40 thousand dwellings and needs to have about 14 thousand built each year to keep up with demand. But last year, 10,000 consents were issued and just over 7,000 dwellings were built.

As a result of this supply shortfall, Auckland has become unaffordable for first home buyers and renters – but it is not just Auckland’s problem, Goff said.

“Unless we address these problems, housing shortage and unaffordability in Auckland will not only continue to cause serious social pressures, but will also hold back Auckland’s and New Zealand’s economic growth.”

The Taskforce, which included developers, builders, bankers, economists, architects and central and local government officials, has pointed a way forward to better tackle the problems in the report, he said. “It deserves the close attention of central and local government.”

Read more:

Making a difference for housing supply 

Fund infrastructure differently – ASB 

Comments

On Thursday, June 15th 2017 3:13 pm Lifestyle4u said:

If the councils were to rezone then that opens up the option for current property owners with decent sections sizes to subdivide and either sell off the section for someone else to develop or leverage off their existing property to build the home themselves and thereby add to the rental pool or homes for sale. This has 2 bonuses, it increases houses for rent or purchase depending which option they choose. It also helps them to either help their children into a home or for their retirement. The houses directly around me are all zoned for development and have 2 - 3 houses on all of them. 75% of the street I live in also have multiple dwelling on them. Yet the 5 houses at the end of the street all with large sections are not able to put on more than a minor dwelling. Doesn't make sense really when your sitting on land size of 1063 and the other house are being developed on 350. Also the price of consents needs to be addressed. The average person doesn't have $20.000-40.000 to invest in consents with no guarantee that what they want to acheive can be done. The consent process being simplified and the fee's being adjusted to something that would entice property owners to subdivide is just common sense.

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.