Manukau property developers face new levy

The cost of a new home in Manukau, New Zealand's fastest-growing city, will be higher from next week as a development levy kicks in.

From Tuesday, property developers or owners applying for resource consents will pay the levy of $4505 plus GST, which will help to cover infrastructure costs.


From May 31 they will also have to pay for building consents.

The levy might be hidden or absorbed in the cost of new developments but they already attract about $35,000 in separate council fees for stormwater, wastewater, water supply and roading contributions.

Manukau's population grew by 8600 last year.

About 3000 new homes and hundreds of commercial building projects were completed.

"The idea is that we capture new development within the city and that's allowed for under the Local Government Act as part of our funding arrangements for the costs of growth," said Gary Pritchard, council senior policy analyst for development contributions.

The levy, which is on top of site-specific financial contributions under the Resource Management Act, was expected to bring in about $153 million over 10 years for transportation, including roading and public transport needs resulting from growth, community infrastructure such as libraries and swimming pools and town centre development.

Mr Pritchard said it was difficult to estimate the RMA contributions towards reserves and stormwater and wastewater work, but it was about $35,000 for an average property.

That was separate from the new development contribution levy.

"The city council recognises the new levy adds to the cost of a property development but it has undertaken work to ensure the impact is minimised."

Property developers or owners pay the levy if they want to subdivide or cross-lease sections, build granny flats or self-contained units, build new commercial, retail or industrial buildings, expand existing offices or factories and change the use of properties from commercial to residential.

Mr Pritchard said changes to existing homes such as building a deck or installing a swimming pool would not attract the levy because no new housing was being created.

The levy for commercial developments will be set at $14.62 plus GST per square metre of gross floor area, calculated to bring in about the same amount as the levy for residential developments.

Mr Pritchard said the policy had been developed with consultation. He did not think it would be a blow to affordable housing.

But the chief executive of the Certified Builders Association, Garry Shuttleworth, said the levy would have a flow-on effect and a severe impact as councils throughout the country adopted similar policies.

"For young people looking to make their first home, these costs are getting out of hand."

John Pfahlert, chief executive of the Building Industry Federation, the levy would make a substantial difference to house-buyers.

"It is a cost but it's not a show-stopper."

* Upfront development costs charged by the North Shore City Council over 95 per cent of the city are between $8000 and $13,000, as well as 7.5 per cent of an individual site's land value.

* The Waitakere City Council says each consent is unique but building consent costs for an average new house in Kelston are about $3020.

* A Waitakere development contribution for a vacant lot is just under $7500, with a refundable street-damage deposit of $2500.