Over 172,000 new homes expected as RMA amendments are enacted

In 1991 the National government passed an unwieldy piece of legislation that governed the use of natural resources such as water, air and land. Since then the Resource Management Act (RMA) has been a constant source of controversy.

Late last year the Labour government and the opposition worked together to pass the ‘Resource Management (Enabling Housing Supply and Other Matters) Amendment Act’, which makes it easier to build affordable housing where it’s needed. Jono Ball, Director of Fortis Capital says it’s a welcome change:

“The RMA has widely been considered one of the major impediments to providing affordable housing. Often tossed around as a political football, it’s great to see a collective bipartisan effort to encourage much needed new housing supply.”

Intensification made easier

The updated RMA adheres to the National Policy Statement on Urban Development (NPS-UD), which provides a clear direction on how our cities should grow. The NPS-UD incentivises intensification close to cities, scraps the requirement for development to have car parks and urges councils to be more responsive and strategic when considering private development plans.

To enable these changes the medium density residential standards (MDRS) have been introduced into the amended RMA. These standards require councils in Auckland, Hamilton, Tauranga, Wellington, Christchurch, and Rotorua Lakes to rezone most residential areas to allow people to build up to three dwellings, up to three stories tall on each site  - with no resource consent required. Other councils experiencing acute housing shortages may also be required to include the MDRS in their plans. 

These dwellings can be up to 11 metres tall (plus one metre for qualifying pitched roofs) and have a maximum site coverage of 50%. Ball says this rezoning is a good start but there’s more work to be done:

“The zoning changes allow for significant intensification which will increase the demand on local infrastructure, such as wastewater and stormwater. Such changes are a step in the right direction, however it’s critical to have adequate infrastructure in place to support the increased intensification.”

120,000+ homes to be built

The zoning changes under new legislation are expected to decrease the cost of building medium-density properties, which Ball says should mean more homes:

“We expect to see a significant increase in small to medium multi-unit developments over the medium-term assuming market fundamentals remain favourable.”

PwC analysis provided to the Labour government estimated that 72,000 additional dwellings could be expected by 2043 as a result of implementing the intensification policies in tier 1 urban areas. A further 48,200 to 100,500 dwellings can be expected on top of that, over the next five to eight years.

Labour’s Minister for the Environment, David Parker, commented that the changes should have immediate effect as soon as plans are publicly notified by councils in August 2022.

With that in mind, developers in affected cities should keep a close eye on land that may be affected by changes as new opportunities may arise in the coming months. Ball adds that the value of such land may also be affected in the near future:

“We expect to see some softening in land values over the short to medium term as the supply of suitably zoned land increases.”

Choose a lender who knows property

Fortis Capital understands property development - we know what it takes to get a project built, and we’re here to ensure you get it done with fast, flexible finance.

If you’d like to take advantage of upcoming development opportunities as a result of RMA changes get in touch with our expert team. 

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