10 Nov 2014

CCC set to increase rural building costs

6:56 pm on 10 November 2014

The amount developers have to pay Christchurch City Council to build new homes in rural areas could be about to rise 30 percent.

The Christchurch suburb of Halswell, where 237 homes are to be built.

The Christchurch suburb of Halswell, where 237 homes are to be built. Photo: PHOTO NZ

The change is proposed in a report going to the council this week under which developers will pay more for the costs the council incurs in providing roads and sewerage to service new subdivisions.

Up until now, development contributions have mostly been at a flat rate, regardless of the amount of new infrastructure a subdivision may require.

A change to the Local Government Act earlier this year asked that councils apply more of a user pays-type model, charging developers in so-called greenfields areas where infrastructure is non-existent, more than those in brown fields areas, where roads and sewerage are already in place.

Property Council spokesman Connal Townsend, representing property developers, said while the new formula would increase prices for green fields housing, the cost of brown fields homes should come down.

Mr Townsend said the proposal was fairer and more transparent.

In Christchurch, the maximum amount a developer could be charged in a green fields area would increase 30 percent, from $45,000 to just under $60,000.

Mr Townsend said while the change would help meet the council's aim of moving development away from green fields areas to brown fields locations, it should not be used as a tool to help meet the council's planning objectives.

"I have a real anxiety about trying to use changes to development contributions policies to try to encourage particular types of development that might appeal to local planners," he said.

"I think that's an extremely dangerous approach. The best way to view it is that the actual true cost of the infrastructure needed for the development be part of the development contribution. And that should be the beginning and the end of it."

Gary Garner, a senior lecturer in property studies at Lincoln University, said it remained to be seen if a proposal to further discount development contributions for those building apartments would encourage more intensive housing.

"In the bigger picture of things, if you're talking about what will make a difference for individual property development projects, to me it's the macro-economic policy, rather than these micro issues that are going to make the biggest single difference."

But Mr Garner said any movement towards bringing down the cost of housing had to be welcomed.

The proposed changes to development contributions need to be signed off by the council by the end of the month and will be consulted on as part of the Long term Plan early next year.