Speech to the Property Council of New Zealand Residential Development Summit

Introduction

It’s a pleasure to be back here with you at the Aotea Centre. It’s just over a year since I spoke to this conference as the Opposition spokesperson for Housing and Infrastructure.

I’m proud to return this year as the Minister for Housing, Infrastructure and somewhere along the way I became the Minister Responsible for Resource Management Act reform as well.

A year ago I said that our country’s collective failure to build enough houses has significantly impacted almost every aspect of New Zealand society – from homelessness, inequality, poverty, poor productivity, economic growth, and intergenerational mobility.

I stand by those comments. A year ago I outlined a plan to fix these problems and now I get to put it into action, alongside my Coalition government colleagues from ACT and New Zealand First.

Solving our housing crisis is going to take all of us – the people in this room today, the tradies out on building sites all over the country right now, the planners, local government, the investors, the developers, and the builders. It’s going to take collective effort, and I think government leadership is critical.

So today I want to talk about the government’s five point plan to address our housing crisis and give you a bit of a run through of where we are at on each of the actions, as well as our work programme for the year and the rest of this Parliamentary term.

Our Housing Agenda

The Coalition Government’s agenda to fix the housing crisis consists of five interlocking actions.

• First, our Going for Housing Growth policy to smash urban limits holding our cities back, fix infrastructure funding and financing, and introduce incentives to encourage cities and regions to go for growth.
• Second, improvements to the rental market to make it easier to be a landlord, and easier to be a tenant.
• Third, building and construction changes to improve competition and lower building costs.
• Fourth, better social housing to better look after those who need support.
• Fifth, fundamental reform of the Resource Management Act 1991.

Going for Housing Growth

Last month I gave a speech to the Wellington Chamber of Commerce where I announced that Cabinet has agreed to our ambitious Going For Housing Growth policy agenda, which aims to deal with the underlying cause of our housing problems.

I call it the housing trifecta – land supply, infrastructure funding and financing, and incentives for councils to go for growth.

On land supply, I think most in this room are aware of my views. New Zealand is a small country but we are not short of land. But restrictive urban planning laws have held our cities back from growing, both out at the edge of our cities and up inside them.

Some say we should just make our cities more dense. I reject that. Density is very important and has a major role to play in addressing our housing challenge. But we need to allow our cities to grow out at the fringe as well, as long as the infrastructure can be delivered economically, because artificially high land prices at the city fringe suffuse themselves into price of houses everywhere else.

Some say we should just go for urban sprawl. I reject that too. There are so many benefits of density – economically, environmentally and socially. I believe we can create thriving, beautiful, and highly connected cities in New Zealand that drive economic growth and allow for affordable housing. 

The right path forward is to allow both greenfields growth and more density. We need abundant development opportunities and we need housing choice. So we will be advancing policies that smash urban limits, that allow more greenfields growth, and that make housing growth easier.

We’ll also be making some changes to the National Policy Statement on Urban Development, particularly to allow for mixed-use zoning, especially around transport nodes. 

I know this audience will appreciate that more access to mixed-use zoning – allowing for shops and restaurants on the lower floors of apartment buildings, for example – will allow us to create the types of vibrant cities that New Zealanders currently travel overseas to enjoy.

We will be allowing Councils to opt out of the Medium Density Residential Standards if they wish. The government position is that the MDRS tools were too blunt and one-size-fits all. Councils that wish to continue to use them will have to ratify their continued use.

One complexity to this is that many councils are at different stages of altering their plans to give effect to the NPS-UD and MDRS. 

When I spoke to the Wellington Chamber of Commerce I mentioned that from now on I will be the decision-maker on relevant district plan changes relating to housing where councils and Independent Hearings Panels do not agree, or where there are requests for extensions to timeframes. This is in my capacity as RMA Reform Minister.

I can update you on a couple of things in relation to that.

In Wellington’s case, the City Council rejected many of the Independent Hearings Panel recommendations, and instead adopted many of their own.

That landed in my inbox on Tuesday this week. I now have to follow a very careful process where I consider the Council’s recommendations to me, and I will be taking advice from officials on that.

I will then make the final decision on whether the Council’s recommendations should be followed or those of the Independent Hearing Panel.

I’m expecting to receive that advice in mid-April and I intend to make my decisions promptly after that.

In Auckland’s case, you might be aware that Mayor Wayne Brown has written to me asking for an extension of time for them to work through Plan Change 78.

Auckland is in a unique situation at the moment for two reasons: one is the impact that the Anniversary Weekend floods and Cyclone Gabrielle had on the city in areas that were tagged for intensification. The other is that our Government has scrapped Labour’s failed Auckland Light Rail project meaning Auckland no longer has to take theoretical future light rail stations into account for upzoning decisions, and are therefore having to do some rethinking.

I can announce today that I spoke with Mayor Brown on Tuesday and confirmed that his Council may have a further one-year extension for their process, to 31 March 2026.

However I also let him know my expectation that his Council continue progressing the National Policy Statement on Urban Development elements of Plan Change 78 to ensure development capacity is enabled as soon as possible.

The further one year extension will allow the Council to take into account a large amount of zoning work where light rail was theoretically going to take place, the impact of the floods, and our intention to make the MDRS optional.

The other two elements of our Going For Housing Growth policy are improvements to infrastructure funding and financing, and creating financial incentives for councils to allow for even more growth – such as, for example, potentially sharing a percentage of the GST of new housing with councils as the ACT Party campaigned on. I’ll have more to say about both those elements in the coming months.

Rental market changes

The second part of our housing agenda is fixing the private rental market. The previous government declared war on landlords and tenants paid the price, with rents increasing $170 per week from 2017 to 2023.

The government’s interest deductibility changes were unprincipled, poor public policy and counterproductive.

We’re phasing back in the ability to deduct interest expenses on rental properties from 1 April 2024. From that date, all affected taxpayers will be able to claim 80 percent of their interest expenses and 100 percent from 1 April 2025 onwards.  Advice from officials is that this will put downward pressure on rents. We are also planning a series of sensible changes to tenancy laws to encourage landlords back into the market.

We’re going to change the Residential Tenancies Act to restore no-cause 90-day tenancy terminations – not because we want people to kick tenants out, nobody wants that. 

We’re doing it because we’ve had strong feedback from landlords that they’re far more likely to take a risk on a tenant who, for example, may not have perfect references or may not have a steady 9-5 job, if they know they have that backstop there if the tenancy becomes problematic. 

We’re also going to make it easier for tenants to have their much loved furry, four-legged family member live with them in a rental home. We’ll do this by changing the Residential Tenancies Act to allow landlords to charge an additional pet bond. That will give landlords the peace of mind to allow pets in their rental properties. 

I’ll have more to say about those changes to the Residential Tenancies Act in the coming weeks.

Build to Rent

Another part of the rental market that I’m keen to encourage is Build to Rent housing.

A year ago I said that the next National government would legislate to make it easier for foreign investment in Build to Rent.

It was part of our 100 day plan and a couple of weeks ago I announced that Cabinet has agreed to make it easier for overseas investors to invest in Build to Rent Developments. 

We know that New Zealand’s complex overseas investment laws have been holding the Build to Rent sector back. There are currently only 22 registered developments in New Zealand, but there is great potential for growth.

Cabinet has therefore agreed that the Overseas Investment Act will be amended to create a new streamlined consent pathway that will allow investors to purchase land with the intention of building a new Build to Rent development, or purchasing an existing one.

Cabinet has also agreed that a ministerial directive letter will be issued under the Act to provide immediate certainty that New Zealand is open to foreign investment in Build to Rent developments.

The Coalition Government remains committed to the ban on overseas investment into existing residential housing and land in New Zealand (unless the investor is eligible for a consent). These changes are all about adding to supply of housing and making it easier for Kiwis to get into a warm and dry home.

Building and Construction

The third element of our plan is changes in building and construction to reduce red tape, cut costs, and get more competition.

My colleague Chris Penk, the Minister of Building and Construction, is very focused on delivering the government’s plan to streamline the building consent system. In the short term this includes placing more scrutiny on building consent delays by publishing processing times for each council every quarter. 

We also intend to remove the need for a building consent and a resource consent for structures under 60 sqm like granny flats.

Secondly, the Government is focused on driving down the cost of building products by increasing competition and reducing barriers to high quality building products entering New Zealand. 

It is around 50% more expensive to build a stand-alone house in New Zealand than Australia. This needs to change. 

Last week the Government announced that small projects under $65k will no longer have to pay the building levy, which will provide some relief to kiwis doing bathroom and kitchen renovations. 

In addition to these changes we are looking for ways to reduce unnecessary red tape and to better manage seismic risk in relation to earthquake prone buildings. 

Social housing 

Let me talk briefly about social housing.

We’ve inherited a real mess. The social housing waitlist grew by around 20,000 families from 2017 to 2023 and there are around 3000 families living in motels, costing taxpayers around $1 million per day.

Recently Louise Upston and I announced a new Priority 1 Category for the social housing waitlist. Priority 1 is for families with dependent children who have been in Emergency Housing for 12 weeks or more, and bumps them up to the top of the wait list so they’re first in line for social houses that become available. Our view is that families and kids shouldn’t be in motels. We need to do as much as we can to get families with kids out into warm and dry housing.

At the same time, we are tightening the eligibility for emergency housing. Living in a motel should be a last resort.

Last year we launched an independent review into Kainga Ora, led by Sir Bill English.

We are not happy with the performance of Kāinga Ora – from a financial situation, procurement, and asset management point of view. Kāinga Ora’s performance has a significant impact on the government books, including on OBEGAL.

It is critical that Kāinga Ora is focused on efficiently building social houses for people in need while also delivering value for taxpayers’ money.

We are expecting the review to report back in a couple of weeks.

You’ll have seen that earlier this week that I instructed Kāinga Ora to take a tougher stance where there are instances of threatening, abusive or destructive tenants. There’s been a lot of media coverage about this, so let me just say this:

In New Zealand, social housing will always be a right for those who need it. But with that right comes responsibility – to your family, to your neighbours, and to the taxpayers. Treat them with respect and you don’t risk eviction. 

But if you threaten or assault your neighbours or deliberately damage your house or refuse to pay your rent, you risk your family being evicted from that house so that another family can leave a scungy motel room and move into that house. It’s a very basic expectation, and I make no apologies for it. 

I’ll be working closely with my colleague Tama Potaka, Associate Minister of Housing, to grow the Community Housing Provider sector as another way of housing families in need, and we will have more to say soon.

RMA Reform

Finally, no discussion of housing would be complete without talking about the RMA.

The Resource Management Act 1991 is the legal framework that underlies so many of the issues I’ve already touched on today. We can’t fix the massive housing shortage and infrastructure deficit in New Zealand without reforming the RMA.

One of the first things we did after forming a government late last year was to chuck out the previous government’s failed reforms, which would have made it harder to do things in New Zealand.

We are currently in phase two of our reform agenda, which includes the introduction of our new ‘one-stop-shop' fast-track consenting regime for infrastructure and regional and nationally significant projects, as well as a series of surgical and targeted amendments to the RMA and national direction to consent new infrastructure including renewable energy, allow farmers to farm, build more houses, and enable aquaculture and other primary industries.

Phase three will focus replacing the RMA with a new regime based on the enjoyment of property rights.

That’s a very once-over-lightly precis of an absolutely massive work programme, but I’ll be going into it more detail on it in the days to come.

Conclusion

So that’s what we’re doing, and in some cases what we’ve already done, to get New Zealand’s housing crisis turned around – but as I said at the start, the Government is only part of the solution.

I’ve met with many of you already, and I’m looking forward to meeting with more of you over the next three years.

Because your ideas and your projects and your investment and above all your bravery to take on something new are the other ingredients for how we solve this thing. 

We are collectively in for a tough slog to solve the housing crisis – but I genuinely believe that all the ingredients for success are there. And I for one am not willing to accept anything less.

I look forward to working with you.