Te Waihanga, the New Zealand Infrastructure Commission, recently made a surprising discovery: some councils charge reasonable building consent application fees of less than NZ$2000 per project, while others charge more than NZ$7000. For example, obtaining building consent for a property worth NZ$750,000 in the Far North is expected to cost NZ$1500, whereas consent for a property of the same value in Queenstown could cost the owner nearly NZ$8000.
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So why is there such a large gap? Surprisingly, the New Zealand Infrastructure Commission says it found no clear explanation. The commission recently surveyed administrative charges, road maintenance costs and building consent application fees across 67 councils nationwide. Its data showed differences of more than NZ$5000 between some councils' building consent application fees. Auckland and Christchurch councils responded that the figures collected were estimates and actual fees could differ.
Mike Greer had to wait nine months for resource consent to build 70 townhouses, and now faces another long wait for building consent. Image source: Stuff
The commission examined upfront costs for building properties worth NZ$350,000 and NZ$750,000 in different parts of the country. It found that median building consent application fees for the two construction values were NZ$3780 and NZ$4376 respectively. The study considered cost factors including population density, workload and differences between in-house and outsourced services.
New Zealand Infrastructure Commission director Peter Nunn
New Zealand Infrastructure Commission director Peter Nunns said that despite the large differences, there was no way to identify what caused them. He stressed that councils should only be permitted to charge reasonable costs incurred in processing building consent applications. By contrast, the commission's research into road maintenance costs found that population density and road use could explain why some councils spent more on infrastructure than others.
The study found that 7 councils nationwide charged more than NZ$7000 for a building consent application for a NZ$750,000 home, with Auckland among them. The other 6 were Kaipara, Tararua, Waitaki, Queenstown-Lakes, Mackenzie and Whakatane. However, an Auckland Council spokesperson questioned the commission's findings. They said that although the study's figures provided a useful guide to final costs, actual fees could be slightly higher or lower, mainly depending on the number of consent inspections and whether applications supplied the correct information. The spokesperson also said the study reflected only how councils set their charges, rather than actual average costs in practice.
Robert Wright, head of building consents at Christchurch City Council, raised similar concerns. He said the report's Christchurch figures came from the 'consent fees' webpage, which stated that 'actual charges will be calculated when the decision is processed'. Another point of interest is that councils differ considerably in how they use the fees they collect. In Auckland, all related fees go towards operating the consent processing department. At Far North District Council, however, 40% of the department's funding comes from council rates, with the remaining 60% from consent application fees.
Dr Dean Myburgh, Far North District Council's general manager of services, said his council was working to engage subcontractors to provide services at a reasonable price.
YIJU believes the current building consent approval system is a major contributor to persistently high construction costs and project delays for local builders and developers. According to the latest Stats NZ data, residential construction costs rose 17% over the 12 months to June, while non-residential construction costs rose 11%. Even as construction cost pressures continue to mount, the volume of building work under way is still increasing. Of course, rising building consent application numbers do not mean the industry has no complaints about the approval system.
The New Zealand Master Builders Association recently expressed dissatisfaction with local government building consent application systems. It recommended regulatory action against councils that fail to perform, potentially even removing their authority to approve consents.
In July, the Government announced that, as part of its reforms, it would seek feedback on the consent application system, covering the entire process from design through to certification. The Ministry of Business, Innovation and Employment (MBIE) also released a document identifying 'four desired outcomes' for the system and its existing problems.
Master Builders Association chief executive David Kelly welcomed the opportunity for industry feedback. He saw it as a chance to fix an approval system plagued by inefficiency, inconsistent assessment standards and inadequate investment in technology, addressing the delays and high construction costs currently faced by homeowners and builders. He wanted the assessment system to enable project delivery and innovation, rather than act as a bottleneck. In its submission to the review, the MBA recommended 'rationalising' the country's 67 consent authorities, establishing consistent assessment standards, simplifying processes and recognising the expertise of builders constructing 'low-risk' buildings.
Kelly believed MBIE needed to exercise its regulatory powers effectively and give councils less discretion over regulations. Where councils could not complete assessments within statutory timeframes, he recommended regulatory intervention or removal of their assessment authority. During recent building material shortages, some councils' reluctance to accept alternative materials and streamline processes had contributed to rising construction costs and prolonged housing shortages. The association's recent state-of-the-industry survey of builders and homeowners found that 80% of respondents were affected by consent application delays, with 45% of builders waiting 5 weeks or longer for approval. In addition, 60% of homeowners faced cost increases of 11% to 20% because of consent application delays.
A spokesperson said Building and Construction Minister Megan Woods declined to comment on individual submissions but welcomed participation by organisations and individuals in the ongoing consultation to improve the building consent system. Consultation on the current system reportedly closed at 5h in the afternoon on 4 September.