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As foreshadowed in the 2016 Budget announcement, the Government has released the proposed National Policy Statement on Urban Development Capacity (NPS UDC) for consultation. 

The NPS UDC has been described as the Government's response to New Zealand's current housing crisis. What might surprise many is that it is not just set to address the problem in the Auckland region, but Tauranga, Hamilton, Queenstown and Christchurch are also grouped in the "High Growth Urban Area" category where minimum targets will need to be set by regional councils for the supply of sufficient residential development capacity for the medium and long term.

The need for regional and district councils to ensure sufficient development capacity is also referenced in the Resource Legislation Amendment Bill 2015 (read more about the proposed changes here.)

The initial consultation phase began with selected stakeholders and iwi authorities in early December 2015 after the Minister for the Environment advised of his intention to develop this Policy Statement in conjunction with the Ministry for Business, Innovation and Employment.  The proposed NPS UDC is now available for public consultation with submissions closing on 15 July 2016. 

Government's response to the housing "crisis"

Environment, Building and Housing Minister Nick Smith has been clear that the NPS UDC will not be a quick fix for Auckland's housing shortage (or housing shortages in other regions), but is simply a tool in the toolbox for addressing this issue. 

The Government has clearly identified that land supply is the key issue for unaffordable housing, and an increase in the supply of land will be part of the resolution to that issue.

The suggestion of a "price to income ratio" as the trigger for freeing up more land for housing received heavy criticism by commentators following the 2016 Budget announcement and leading up to the release of the NPS UDC. However, local authorities will be required to monitor the relative affordability of housing, including the ratio of house price to income and the relative cost to rent, among other indicators, to inform an area's development capacity. If that monitoring indicates that development capacity is not sufficient in any of the short, medium or long terms, local authorities must respond by providing development capacity as soon as possible, in accordance with policies in the NPS UDC.

The NPS UDC also goes some way to addressing the criticism directed at the Government by some commentators who suggest that it is the lack of infrastructure that is hindering the building of houses on that land, by including a definition of "development capacity". That definition includes a requirement to take into account the provision of adequate infrastructure when assessing whether land for urban development meets demand. 

What does this mean for the resource management profession?

We expect that more land will be identified and rezoned for residential development based on assessments of estimated demand for dwellings, including for different types of dwellings, locations and price points. Other assessments will also be required to assess the demand for business land, which includes industrial, commercial, retail, business parks and mixed use land. 

Local authorities in High Growth Urban Areas will also be amending their regional policy statements to give effect to the policies in the NPS UDC by the end of 2018, or earlier if a housing assessment shows development capacity is insufficient to meet demand.
How to make a submission

Details of how to make a submission are on the Ministry for the Environment's web page. 

Submissions close at 5.00pm on Friday 15 July 2016.
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