Mayor hits out at charges curb

wta261112lflocal06.jpg Local government press conference at Masterton District Council. Pictured Mayor Garry Daniell.

A new government plan to rein in council-imposed development costs would impose a burden on the Wairarapa community, a local mayor has warned.

The Government announced new measures this month to curb spiralling charges levied by local authorities on property developers for providing infrastructure such as roads and sewerage.

It is the latest bid to control rising housing costs and help struggling first-home buyers on to the property ladder.

But Masterton Mayor Garry Daniell said the changes should not apply to rural New Zealand, where costs were already being shared fairly.

"[To] see development costs slashed would impose a real burden on the rest of the community who are sharing these things."

The cost of housing in rural areas had dropped substantially recently and the community was already making contributions, he said.

Mr Daniell rejected suggestions that councils had enjoyed free rein to charge what they liked.

Masterton had just seen the completion of a new wastewater system, sewerage repairs and broadband upgrades.

"We would expect to recover the costs of that infrastructure when sections were sold."

The average charge per residential section in the Wairarapa was $12,000, which was $2000 less than the national average.

Housing Minister Nick Smith and Local Government Minister Chris Tremain said they would change the Local Government Act to rein in council development contributions, which had trebled over the past decade.

Development contributions are fees levied on property developers by councils to help cover the costs of services such as water, sewerage and roading to new housing, commercial and industrial developments.

The charges average $14,000 per section but can be as high as $64,000, adding to the cost for homebuyers.

Dr Smith said the huge increase could be attributed to local government law change in 2002 which gave councils "carte blanche" to charge whatever they liked while removing checks or appeal rights.

"We are going to narrow the charges councils can put on new sections, provide an independent objections process and encourage direct provision of necessary infrastructure to get costs down."

Property analyst Alistair Helm said the changes would be a positive move away from "profiteering" councils.

"A government move like this is great because it sends a signal that the Government is proactively wanting to stimulate new house building, which is needed."

Infrastructure costs were long-term investments that should borne by councils.

"Why should the person who buys the house pay for all that up front?"

In theory, the changes should mean more affordable housing but whether it would flow into the market was yet to be seen, Mr Helm said.

The law change will be included in a Local Government Reform Bill to be introduced to Parliament this year.

The announcement comes ahead of expected changes by the Reserve Bank to restrict the number of low-deposit home loans banks can offer customers.

Prime Minister John Key also recently announced threshold changes to help more people qualify for a government subsidy under the KiwiSaver and Welcome Home schemes. APNZ