17,800 Homes Planned Pukekohe to Drury

Housing Crisis at Boiling Point for Developers


Written by Joanne Taylor

The New Zealand housing crisis continues to concern developers, builders and buyers.

The Labour government bragged about its plan to address the housing crisis with the introduction of its KiwiBuild programme and an amendment to the Tenancy Act whereby it wants to ban letting fees altogether. But, is that enough? With seemingly no practical urban planning and no vision, Auckland appears to be headed for housing and infrastructure disaster.

In a nutshell, the process is to plan a successful build, get consent from the council, and then build. Simple enough? Not really. Elocal spoke to many independent developers in the building industry to get their take on the situation at hand…

Consenting

Currently, Auckland is 57 000 houses short and we need to build more houses that are affordable. There is a massive inconsistency in the council in terms of what the region needs to move forward and curb the housing shortage, and the way the council hinder the development process at every possible angle.

Regular kiwis and home building companies in Auckland battle it out behind the scenes in a desperate fight against the Auckland Council’s consenting process. Our sources provided evidence of the painstaking barriers they face to get new builds consented by the Auckland Council.

The costs involved in building a house are ridiculous before you have even put a spade in the ground, our source explains. On a standard build of a 180m2 three-bedroom, double garage house, after they subdivide a subdivision, the development contributions, council fees, building consent fees and engineering fees, the house has cost up to $80 000. “Where is the money going? The label of ‘affordable housing’ doesn’t exist.

“The council can charge up to $16 000 for one water meter, but to buy the parts in a shop, they cost $436. The pipes are in the ground, the house plumbing just needs to be connected. Then, more often than not, the council refers the plan to public notification, which slaps on another $20 000 to the cost of the new build that will be added to the purchase price that Joe Public will cough up, with interest over the next twenty or thirty years – interest that you pay tax on too.”

Pokeno was meant to offer affordable housing but most of the prices range from $800 000 to over $1-million. In Belmont, one consent for a single story, 117m2 house had a site infringement of size and took 43 days to get through council for consent. Council argued that the house should be two stories. The buyer did not want two storeys. “The council cut the land to that size and then have a problem with the size of the single-story house we want to build,” says the source.

Labour’s plan to fix the housing crisis

With the change in government in late 2017, there has been a new initiative to increase building of affordable homes.

Called the KiwiBuild programme, . The government said: The stand-alone KiwiBuild homes in Auckland will be priced at $500 000 to $600 000 with apartments and terraced houses under $500 000. Outside of Auckland prices are likely to range from $300 000 to $500 000. These will be high-quality homes built to modern standards. Scale and modern offsite manufacturing techniques will enable these homes to be built at low cost. 1

Currently, two- and three-bedroom houses are being built at Hobsonville and Waimahia and sold for under $550 000. KiwiBuild will enable more homes to be built in this price range.

KiwiBuild homes will only be sold to first home buyers. To avoid buyers reaping windfall gains, a condition of sale will require them to hand back any capital gain if sold on within five years.

Construction of the KiwiBuild houses will be financed by an initial $2-billion capital injection, which will be recycled as the houses are sold, and returned to the Crown at the end of the KiwiBuild programme. The Affordable Housing Authority will be the primary delivery mechanism for KiwiBuild homes, building them as part of its development projects.

However, existing local developments do not fall into the Kiwibuild scheme at this point and attempts by these developments to provide ‘affordable’ housing are being blatantly thwarted by Auckland Council with excessive fees, prolonged timeframe and its consenting process.

Both sources agree that the KiwiBuild is a great idea if it works. “The $80 000 we spoke about earlier goes to drainage infrastructure, water meters, and the like. It’s an affordable housing situation that can’t be afforded. The Auckland Council is contributing to the housing crisis. They say they are 30% down on staff that consent. Resource planning consent is supposed to take 20 working days, but we have had some going up to 70, then they go to public notification, and we have to spend another $20 000 per house to notify, with no guarantee that it will be granted,” they explain. “An advertisement in the paper costs around $200, so at least $19 500 is being swallowed up by the council and no one can answer as to where it goes.”

The two sources have proof that zero consents go through in the timeframe they are meant to. When builders enquire about the status of the consent, they are given the standard Section 37 letter saying they are doubling the timeframe because they are busy.

“Nothing runs to time – sub division, resource consent or building consent.”

In a recent article, published in the elocal April 2018 issue, deputy mayor of Auckland, Bill Cashmore, said that the Special Housing Areas (SHAs), which are meant to have affordable houses built in them in Franklin include Belmont, which “very quickly got its SHA status, and now looks almost complete”. He also said that developers he has spoken to are satisfied with the process and that “consenting made easy” is being rolled out and that's about getting things done in live time. “In the top end categories for the consenting, we are completing around 80% within ten days…” – this is a massive contradiction to what elocal sources have said.

So What’s going wrong?

“Thousands of dollars are paid to the council for every development, so why are staff overworked, offices short-staffed and processes inconsistent at best.”

The only thing in the way of fixing the housing crisis and building new affordable homes is the Council itself. Development in Green belts such as Pukekohe and Drury require a substantial amount of infrastructure development and that requires dollars, but with no caps on land pricing, no regulation of the building industry, the dream of affordable housing appears to be evaporating. The costs of developments are snowballing and all that cost has to be passed on to the end consumer.

“We need to shake-up the Auckland Council. We need to stand outside and protest the inefficient consenting process. It’s time to go into recovery mode and plan and build infrastructure, roads, houses, sewers, and drainage.”

“More kiwis need to get in to the property market. It needs to be affordable for us to buy and build houses. Foreign investors should not be allowed to flip houses for profit and send the money offshore.”

Funds from these new developments should be going into upgrading old infrastructure so that it can handle more houses, this includes water works and sewerage works. The answer is to be proactive, not reactive. “Fix it before something goes wrong. That’s how cities grow.”

Auckland Council’s infrastructure provisional study from March 2017 sees it in a different light. The study places the responsibility of infrastructure squarely back on to the developer within the development. But with no improvements due in our area until the second decade of the Unitary plan is this burden too heavy for an already stretched network. 2

The overall vision for the development of new houses in Auckland appears to be flawed, a confused jumbled mess of bureaucratic red tape that does little to provide ‘affordable housing’.

Sources highlight developments such as Paerata Rise. “ How are we going to get out of Pukekohe when there’s 5000 houses sitting there? The current road infrastructure will not cope with it. Apparently, there will be 17 800 new houses between Drury and Pukekohe by 2030.”

Unfortunately, the problems with urban planning boil down to money. Auckland Council succeeds in squeezing as much money out of its people as it can. From excessive fees during the consenting process to forcing you to use council water for toilets and gardening because they make home owners jump hoops to install waste water recovery systems. But major infrastructure investment doesn’t seem to be top of mind. Ironically our cousins across the ditch ranked highly in a 2016 World Economic Forum Global competitiveness survey that includes infrastructure development. New Zealand didn’t feature in the top 20. 3.

“From a planning perspective, we are not a first world country. We are second or third world. There is no vision, no proactive response to infrastructure development and maintenance. Perhaps Auckland Council need to lose their licence to consent, perhaps that will provide the shake-up it needs,” the source concludes.

References:

1. http://www.labour.org.nz/housing

2. http://temp.aucklandcouncil.govt.nz/EN/ratesbuildingproperty/housingsupply/Documents/infrastructureprovisionstudy2017-2027.pdf

3. http://uk.businessinsider.com/wef-countries-in-the-world-with-the-best-infrastructure-2016-10//?r=AU&IR=T