Councils to be allowed to charge developers with new levy from 2029
The New Zealand government plans to implement a new development levy system from 2029, allowing councils to charge developers for infrastructure costs related to new housing. This aims to replace the current 'development contribution' system, which is criticized for inconsistency and under-recovery, ensuring that "growth pays for growth" rather than existing ratepayers. The new system is intended to free up land for housing while ensuring proper infrastructure funding.
Why it matters
This policy change could significantly impact housing development costs, property prices, and local government funding in New Zealand, potentially reducing the financial burden on existing ratepayers for new infrastructure. It aims to create a more sustainable and equitable funding model for urban growth.
The government has confirmed it will let councils charge development levies from 2029, as it seeks to change the system by which infrastructure growth is paid for.
Currently, councils charge developers a 'contribution' to help cover the costs of growth.
But the development contribution system has long been criticised as inconsistent and inflexible, and leading to ratepayers cross-subsidising the costs of growth elsewhere.
Councils are also under-recovering the cost of growth, with the gap between planned growth-related capital expenditure and the anticipated cost recovery estimated to be as high as $11 billion from 2021 to 2031.
Housing minister Chris Bishop said the development contribution system would not work under the government's planning changes, which were designed to be more flexible.
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