Enabling Housing Supply Legislation: Speed above quality and democracy?

The Resource Management (Enabling Housing Supply and Other Matters) Bill was introduced into Parliament on 19 October 2021 and was passed into law on 20 December 2021.  It has amended the Resource Management Act 1991 (RMA) to promote greater intensification in our major cities (Auckland, greater Hamilton, Tauranga, Wellington, and Christchurch).   The amendments to the RMA also amend the National Policy Statement on Urban Development (NPS-UD), released in 2020, which sets out objectives and policies councils must give effect to in resource management decisions.

These amendments have significant impacts on private property rights, remove rights to participate in democratic decision-making processes, and will affect and shape the urban environments that we live in.  Despite this, the Bill went through a fast-track select committee process.  Hearings on the Bill were almost completed before submissions closed.

The amendments, among other things, do the following key things:

• Require councils in our major cities in to change their planning rules so that most residential areas become zoned for medium density housing of up to three storeys. Medium density residential standards (MDRS) have become a schedule to the RMA that major city councils must now implement.  In practical terms, the MDRS removes single house zones, and allows three dwellings up to three storeys high to be built as a permitted activity (without requiring resource consent).  This new rule applies across the board, on any sized section, provided that other development controls such as height, height in relation to boundary, yards, outlook space and outdoor living space can also be complied with.
• Directs councils in major cities to implement the MDRS by publicly notifying new rules and policies to enable intensification in their district plans. This is to be done by 20 August 2022 and using a new Intensification Streamlined Planning Process (ISPP).
• Removes the need for many resource consents by redefining the permitted building envelope for medium density housing. Residential developments that exceed the permitted standards will require resource consent as restricted discretionary activities, however, rights to appeal to the Environment Court on such developments have been removed.

Select Committee Recommendations

I first published an article on the Urban intensification law reform, when the Bill was first introduced.  Since then, changes as a result of the Select Committee process include:

• The scope of the ISPP has been broadened. It can now be used to change provisions in district plans that are consequential and complementary to the NPS-UD and MDRS  (e.g. relating to subdivision, fences, earthworks, district-wide matters, infrastructure, stormwater management, provision of open space and community facilities / commercial services).
• If a qualifying matter has already been through a plan-making process, it does not need to be reconsidered under the ISPP. Qualifying matters include considerations such as historic heritage and special ecological areas that make it inappropriate to apply the MDRS.
• The MDRS now apply in relevant residential zones in the relevant councils’ plans, rather than in “urban environments”. This amendment recognises that the NPS-UD and the ISPP will allow for commercial activities to service residential areas and will widen the application of the MDRS to more areas.  There is also now a standard suite of objectives and policies included in a schedule ready for councils to “drop in” when they incorporate the MDRS into their plans.
• The height in relation to boundary control now measures from a point four metres high rather than six metres high. The standards relating to glazing and landscaping were changed, requiring at least 20 percent of a site to be set aside for planting, grass, or tree canopy, and at least 20 percent of the front façade of a building to be glazed.  These changes may mean that in practice it will be difficult to fit three, three level dwellings on smaller sites without triggering the need for resource consent.  There were also changes to the outlook space and outdoor living space requirements to provide for communal outdoor spaces.

Councils can now vary a plan or plan change that had already been notified rather than having to withdraw and renotify a new plan change incorporating the MDRS.

Concerns with the amendments

While many submissions to the Select Committee supported the overall intention of improving housing affordability, submitters questioned whether the amended legislation would achieve those aims or would instead lead to unintended negative consequences.  Some of the key criticisms included that:

• An excessive focus on housing supply and affordability may undermine existing planning regimes in our major urban centres.  Zoning is but one of several factors affecting housing supply and affordability.  Critically, these factors include a lack of infrastructure capacity.  The difficulties that can arise with lack of infrastructure causing delays are demonstrated by developments on the periphery of Auckland (see here).
• Introducing new processes such as the ISSP may increase the cost and complexity of participating in resource management processes.
• The MDRS could result in worse built form and urban growth outcomes than would be achieved in accordance with the NPS-UD and current planning provisions.

There has also been significant commentary on the adverse environmental and amenity outcomes from the resulting lack of sunlight due to intensification.   Some commentators have described this as “daylight robbery”.  PWC’s cost benefit analysis for the government costed this loss of amenity due to reduction in sunlight at up to $1.3 Billion dollars (see here).

Conclusion

If you are looking to undertake a residential development, then you will need to consider carefully whether the new MDRS standards will help you to achieve a high quality development outcome that will be market attractive and whether the costs of delaying your project until the new rules come into effect will be offset by a potential increase in yield.

If you are an existing home owner in an area zoned for lower density residential who has chosen (and most likely paid a premium) to live in such a zone, assuming that there was certainty that the level of development would remain moderate, then your expectations will not be met by the amending legislation.  You will also want to be aware that the MDRS are a blunt instrument.  They provide a “one-size fits all” approach to planning that will make it difficult for district plans to respond appropriately to the needs of different environments. The amendments are specifically designed to ensure that it will be difficult for councils to take into account the wants and views of communities that do not want intensification.

If you are a first home buyer in a major city you will want to be aware that predicting the effects of law and policy change on the residential housing market is akin to crystal ball gazing and the amendments to the RMA may not have the desired effects on housing affordability.  In Auckland, land values have continued to increase despite (or arguably because of) the significant increase in intensity in urban residential areas enabled by the Unitary Plan.  There is therefore, understandably, scepticism about whether the amendments to the RMA to allow for increased intensification will improve housing affordability or whether it will just decrease the quality of new builds.

Given the implications of the MDRS we expect that developers, potentially affected landowners and potentially those looking to enter the residential property market will want to submit and be heard on the plan changes.  Housing affordability is inherently political and the diverse range of views on the topic means aspects of the plan changes are likely to be contentious.

If you or your clients need help to better understand the implications of the upcoming intensification plan changes contact Joanna Beresford, Partner I Environmental Law, joanna@beresfordlaw.co.nz +64 21 114 1277.

Disclaimer.  The information in this article is intended to provide a summary of the topic covered and is for general information only.  It is provided without charge, is not comprehensive, and does not provide legal advice or other advice.  Please seek independent advice before acting on any information in this article.