Going for Housing Growth: Providing for urban development in the new resource management system
Housing growth targets
Current status and case for change
Policy 2 of the NPS-UD requires councils to provide sufficient development capacity to meet short, medium and long-term demand, with a competitiveness margin on top of this. This requirement combined with the intensification policies of the NPS-UD (Policy 3) and the MDRS, has resulted in significant increases in development capacity in our main urban areas, contributing to more competitive urban land markets.
Only capacity to meet short-term demand (0-3 years) currently needs to be enabled in an operative district plan. Capacity to meet medium-term demand (3-10 years) can be in an operative or proposed district plan, while long term (10-30+ years) development capacity only needs to be identified in an FDS. This means that plan changes may be required to bring forward, or live zone, development capacity identified to meet demand in the medium-to-long term, often only after infrastructure has been committed or put in place.
For the long term in particular, development capacity being identified in a FDS does not provide sufficient confidence that this capacity will be ‘live’ when a developer is ready to develop, and involves a plan change process which can involve significant cost and time.
The intent of housing growth targets is to better facilitate competitive urban land markets, given the limitations of the current system and that the MDRS will not form part of the new resource management system. Facilitating competitive land markets requires an abundance of development opportunities to shift market expectations of future supply and bring down the price of urban land.
Summary of proposals
Cabinet has previously agreed to set housing growth targets for Tier 1 and 2 councils. We propose that the targets are incorporated into the new resource management system. This would require councils to enable enough feasible and realistic development capacity to meet 30 years of demand based on high household projections, plus a 20 percent contingency margin, in their regulatory plan. This differs from the current staggered approach to providing capacity under Policy 2 of the NPS-UD, as set out above.
While councils will need to enable all the development capacity required to meet the housing growth target in their regulatory plan, it’s not expected that all capacity will be immediately serviced by infrastructure. Infrastructure components of development capacity are proposed to still be staggered over time and based on councils’ assessment of the most likely demand scenario. This recognises that it would generally be unviable for infrastructure to be provided at once to service plan-enabled capacity.
Cabinet has previously agreed that the requirements for infrastructure-ready capacity in the new system are generally based on the NPS-UD requirements, [3] but with more scope for infrastructure solutions that are privately funded or delivered or both to be counted towards medium and long-term capacity. We also plan to ensure the requirements are aligned with changes enacted by the Local Government (Water Services) Bill.
[3] Under the NPS-UD, development capacity is infrastructure-ready if:
- in relation to the short term, there is adequate existing development infrastructure to support the development of the land
- in relation to the medium term, either paragraph (a) applies, or funding for adequate development infrastructure to support development of the land is identified in a long-term plan
- in relation to the long term, either paragraph (b) applies, or the development infrastructure to support the development capacity is identified in the local authority’s infrastructure strategy.
Housing growth targets would be supplemented by a requirement for councils to be responsive to unanticipated or out-of-sequence development, as discussed in the responsive planning section.
Next, we set out specific matters relating to housing growth targets on which we’re seeking feedback.