The Property Council New Zealand has welcomed the recent announcement regarding the overhaul of development contribution fees, a move it believes will pave the way for more commercial viability and the construction of much-needed homes across the country.
Property Council New Zealand chief executive Leonie Freeman says with housing affordability becoming an increasingly pressing issue, this reform could go a long way in ensuring that development is not unnecessarily hindered.
Freeman notes that development contribution fees have a significant impact on growth, positively and negatively.
“Development contribution fees have the power to either drive or hinder growth. Recently, some councils have raised these fees by an astonishing 289%, pushing the total cost to approximately $100,000 per home, ultimately adding to the final purchase price for buyers,” Freeman says.
“These increases are unsustainable, and limit the ability to address the growing housing shortage.”
The Property Council has advocated for a more consistent and transparent approach to these fees for many years.
“For too long, development contribution fees have lacked consistency, been used to fund infrastructure unrelated to the development area, and remained entirely at the discretion of councils.
“This has led to unpredictable and, at times, unjustifiable costs for developers and, ultimately, home buyers,” Freeman says.
The Property Council has been a vocal proponent of an independent regulator to oversee development contribution fees in an attempt to ensure greater consistency in the process.
“We’re encouraged that the new system aims to ensure development contributions are dedicated to infrastructure spending related to the area being developed.
“In the past, we’ve seen fees collected in Drury used to fund projects like the Devonport Library — an approach that simply doesn’t add up.”
Looking ahead, Freeman expressed cautious optimism about the potential of the new system, should it adhere to core principles.
“If the new system upholds principles of consistent pricing, accountability, and a standardised methodology nationwide under the new regulator, we can look to the future with cautious confidence.
“This reform is an important step towards creating a more sustainable and transparent approach to development in New Zealand,” Freeman says.
