Productivity Commission recommends changing everything from the way rates are calculated to which buildings are protected to increase housing supply

Changes to the way council rates are calculated, a change in emphasis on heritage protection in the suburbs and a greater involvement by central government in urban development are among key recommendations of the Productivity Commission’s final Using Land for Housing Report released today.

The report was commissioned by the government to look into the processes that councils in fast growing areas use to make land available for housing and has particular relevance for Auckland because of the severe housing pressures the city is facing.

It has made 70 wide ranging recommendations which, if adopted, could have a major impact on the way new housing is developed in this country.

Some of its recommendations are clearly aimed at making it easier to develop more high density housing such as apartments.

These include:

  • Requiring councils to undertake a cost-benefit analysis before introducing height restrictions on buildings and increasing current height limits where it cannot be shown that the benefits they create outweigh the costs.
  • Avoiding wide-ranging heritage or special character policies that restrict redevelopment of housing stock. The report recommends that councils should instead concentrate heritage and special character policies on individual structures rather than whole suburbs.
  • Councils in high growth areas should avoid explicit limits on housing density and review existing limits with a view to removing them.
  • Remove requirements for apartments to have balconies and restrictions requiring apartments to be a minimum size.
  • Remove minimum parking requirements from District Plans.

The report also recommends changing the way councils calculate their rates.

It recommends basing rates on the land value of a property rather than its capital value (which includes the value of any buildings on it).

This would also favour multi-unit dwellings such as apartments and would be likely to increase the share of rates paid by houses on larger sections.

It would also encourage owners of vacant land to develop it more promptly rather than land banking. 

The report also recommends that the current rates exemptions on Crown-owned land be removed, which could see government institutions such as schools and hospitals having to start paying rates.

And it recommends that the government amend the Resource Management Act, so that councils would only need to notify “directly affected parties of proposed plan changes that are specific to particular sites.”

It also proposes making it easier for foreign property developers to operate in this country, by enabling them to purchase land without Overseas Investment Office approval, provided the land is developed into housing “within an acceptable timeframe.”

The report is supportive of the concept of council-backed urban development authorities and has recommended that the government introduce legislation that would enable them to operate in a similar to Special Housing Areas provide that fast tracked approval of new developments, which would include “restricting public notification.”

It also wants urban development authorities to have compulsory acquisition powers that would allow them to acquire land for new development following the processes outlined in the Public Works Act.

Another major theme of the report is a greater involvement by central government in increasing the supply of new land for housing and its recommendations in this area include:

  • Having the Government monitor and report on the relative price/values of developable and non-developable land in the fastest growing cities.
  • Establishing a price threshold in the difference between the developable and non-developable land, that would act as a trigger to release more land for development.
  • Having the Government involved with local councils in the process of bringing forward the supply of new land for development where it is required, and of ensuring that the necessary infrastructure for such development is also provided.
  • Having the Government make the preparation of long term infrastructure strategies part of its normal planning and reporting framework.

The report has also made specific recommendations about the way Watercare (Auckland’s council-owned water and wastewater service provider) charges for installing infrastructure to new developments. It recommends that these should be adjusted to reflect the different costs involved to supply infrastructure to different types of developments in different locations.

To read the Productivity Commission’s full report, click on the link below: