Proposed cuts to building consent costs will have limited impact
My comments in Stuff today.
In summary, making slight reductions to the cost of building consents won’t make a difference to housing costs.
Allowing building materials already tried and tested in other countries to be easily and cheaply imported would have far more impact on lowering housing costs, as would clear and consistent council planning rules.
John Kenel
Assured Property Investments
See below full article from Stuff.co.nz
By Miriam Bell
A Ministry of Business, Innovation and Employment proposal to reduce building consent costs is minor tinkering and does not address the broader industry issues, developers say.
The ministry (MBIE) wanted to raise the building levy threshold, and reduce the building levy rate, which was payable when the value of building work was over the threshold.
The current threshold was $20,444, and the current rate was $1.75 per $1000 of building work value.
MBIE general manager building system performance Anna Cook said the proposal was to raise the threshold to $65,000, which would reduce the number of levy payers by about 36%.
The levy rate would be reduced to $1.48, and that would reduce the cost of a building consent over the new threshold by about 15% for all levy payers, irrespective of the value of their building work, she said.
“Under the new proposals, a homeowner building their home with an estimated construction value of $467,000 would pay a building consent fee of about $690, down from the current $817.
“Similarly, a property owner building a new commercial building with an estimated construction value of $20 million would pay a building consent fee of about $29,000, down from the current $35,000.”
It was expected there would be minimal financial impact for councils over the next three years and the reduction of the fee should be offset by the reduced workload, she said.
MBIE was also proposing to use a surplus built up from the levy, due to recent unprecedented levels of building activity and noticeable cost increases, to provide more support to the sector.
Cook said the surplus was an opportunity to reinvest in increasing the regulatory reform programme, lifting digital capability and access to information, and/or increasing investment in the building industry around climate change.
But Auckland property developer David Whitburn said the proposed changes to the levy threshold and rates were minor tweaks that would not reduce costs much, and did not address the actual issues.
He did not hear many complaints about the cost of building consents, but there were lots of complaints about the extremely slow time frames involved with the consenting process generally,
“There are not enough building inspectors, especially in Christchurch and Auckland, and that impacts on the time frames involved with getting inspections of sites done, and on the processing of consents.
“That is what needs to be fixed. Potentially, the levy surplus could be best put into recruiting and retaining more inspectors, and maybe paying them more.”
John Kenel, the chief executive of Waikato-based firm Assured Property, said the suggested changes were not a big deal, as it was the uncertainties around development that bothered him.
That included the council’s ability to make changes at short notice, and the fact it was no longer possible to buy property in Hamilton without asking if there was infrastructure to develop, but it took weeks to get vague responses from the council.
“I can factor in the cost of the building consent as I know what they are going to charge, but I can not factor in being told I can not develop land that I have already purchased.”
What was more important, and what MBIE should be doing was allowing anyone to import building products that were approved in other Western countries, he said.
“If cladding works in Canada, Australia, and England, then it is going to work here, but try and bring it in.
“The cost is too high for anyone except large companies because of all the hoops you have to jump through. New Zealand is tied up in bureaucratic knots which are driving up the cost of everything.”
Williams Corp director Matthew Horncastle said the most terrifying words in the English language are “we are from the government, and we are here to help you”.
But anything that cuts costs was a bonus, so at face value the concept of reduced costs was a positive one, he said.
MBIE would be consulting on the proposals under May 29, and Cook said the ministry wanted to understand any challenges and benefits that would come with them.
