Brendon Harre and Anthony Ireland propose encouraging a greater diversity of housing types, in particular new apartment buildings

By Brendon Harre & Anthony Ireland*

The Kiwi Right to Housing Choice initiative is intended to make the above depicted transformation easier.

Housing policy in New Zealand is currently being reset. KiwiBuild needs to be rebuilt. It is likely KiwiBuild will focus on fewer but larger scale projects which will include a bigger range of housing typologies and ownership/tenure options, that better targets the full cross section of housing demand.

Housing policy would also benefit from a smaller scale bottom-up approach being part of the housing and urban development agenda, as large scale projects are not always possible or the best choice. The Kiwi Right to Housing Choice is my and Anthony’s suggested policy option to fulfil this role.

The Kiwi Right to Housing Choice can be delivered by four simple amendments to the Resource Management Act -in the form of National Policy Statements -and three central government initiatives.

A National Policy Statement (NPS) is a directive issued by the Minister of the Environment -currently David Parker -under section 52(2) of the Resource Management Act 1991. Any Minister can gain approval to scope a new topic to be developed into a NPS. Once the NPS is issued the Environment Court and all local authorities are legally obligated to apply the directive.

Proposed National Policy Statements

1. In an existing residentially zoned and built-up urban area a property owner has the right to build up to a maximum of 5 floors and to a maximum height of 16 metres, excluding the height of foundations.

Rationale: The intent of this proposal is to assist the intensification of existing urban environments. It is not intended to be used in large brownfield or greenfield sites where development may be inappropriate or an Urban Development Authority approach would better develop the site to its full potential. 16m is the height that Auckland allows in its Apartment and Terrace House zone. It is a human scale height, similar to the height of trees. 16m is the maximum height that a conversation can be comfortably held between a ground and top floor. The intent of the foundation rule is to allow consideration for sea level rises and not to disadvantage building on hilly terrain.

2. This right can only be exercised with the written consent of the adjoining property title holders. This consent is to be entered on the property titles.

Rationale: The Kiwi Right to Housing Choice proposal creates a clearer legal pathway so that neighbours can better cooperate to increase construction, therefore it is a bottom-up housing supply mechanism. The proposal is in effect a city-wide ‘up-zoning’, that gives existing households a conditional right to build a commercially significant number of additional dwellings on their property. This valuable ‘developer gain’ will allow some sets of agreeable neighbours to create mutually advantageous housing construction plans.

An international urbanist group have called this broad approach hyperlocalism. Hyperlocalism is discussed further in the paper Rebuilding Suburbia - Hyperlocalism Can Help. In the UK a Conservative Party Minister advocates for a conceptually similar idea of -giving streets power over development -to build up to six floors in a paper titled - How the Tories can Win on Housing Again.

3. Once a property has this consent entered on its title it cannot be retracted (unless all parties agree in writing to reverse the process) and a property title that is granted permission to build up cannot withhold consent for adjacent properties to also build up.

Rationale: The Kiwi Right to Housing Choice initiative should be an inclusive right. A property owner who has used the initiative to build up should not be able to use the same set of rights to create a exclusionary property right by refusing permission for their adjacent neighbours to also build up. Making these rules non-exclusionary helps increase the housing supply potential. This will deliver a greater amount of social dividends, as discussed in the general rationale section.

4. These developments can have their consent withheld if it is proven to the Environment Court by the local authority that existing infrastructure cannot cope.

Rationale: The policies intent is that these developments have a minimum environmental footprint to ensure minimal infrastructure impact.

Central Government Policy Initiatives

1. Central Government to create an engineered design template for a variety of apartment buildings to be available at no cost to developers to encourage more apartment building.

Rationale: This lowers the marginal cost of construction by sharing common design templates. Lowering construction costs is particularly important for the productive use of urban land, because as land prices increase in response to rising demand to be close to city amenities, the market responds by building more floor space on top of the increasingly costly ground floor. Thus the market response to improving urban amenities and rising land prices is to substitute capital for land -in the form of taller buildings. In effect, new land is created by constructing more floor space in the air.

2. For the Commerce Commission to undertake a market study on the construction industry, as suggested by the outgoing Chairman of the Commerce Commission.

Rationale: This too lowers the marginal cost of construction by increasing competition. The more responsive the construction sector is at building upwards as city amenities improve and land prices rise the better. In economic terms this would be called elastic supply i.e. a relative small increase in demand and land prices causes a large amount of upwards building in response. Some cities like Tokyo are better at this than others, as discussed later in this paper.

The debate on whether urban spaces are fixed or flexible in nature is at the heart of many housing policy debates. There is an ideological dividing line between those who are optimistic or pessimistic about this fact. The most famous optimist is Edward Glaeser -author of Triumph of the City. A 10min video interview of Professor Glaeser with policy advice for Australia can be seen here. A fuller discussion about this ideological debate can be read in the paper - What is the True Nature of Cities.

3. For the government to implement a construction subsidy scheme for housing typologies and ownership arrangements that provides new housing for all income groups as discussed in the Future Proofing the Housing Market proposal.

Rationale: This also lowers the marginal cost of constructing buildings to a higher quality standard by way of government subsidy. Construction subsidies, at least in part, should be tied to defined and measurable quality targets as discussed in the paper Future Proofing the Housing Market. Other options for construction subsidies would be to subsidise schemes that allow the capitalisation of the accommodation supplement for approved community rental providers or families capitalising some benefits or tax credits.

General Rationale

The Kiwi Right to Housing Choice initiative can be used by the whole cross section of the housing market. For example -luxury apartment living, affordable community build co-housing projects, community rent-to-build housing and new state housing. Thus this proposal has the potential to improve the housing market at many different levels.

Existing built-up urban areas are good places to add more housing because it is likely to be close to workplaces, public transport, walking and cycling facilities and other desirable amenities. This sort of housing has a lower environmental impact.

Enabling an improvement in the supply of a full range of housing typologies can help combat the housing crisis.

The housing crisis has directly increased inequality by pricing people out of owner-occupied homes. Even worse, for the homeless they are priced out of rental accommodation as well. High housing costs relative to income impacts on many poverty statistics, in particular childhood poverty. Insecurity of rental tenure affects education as it can lead to an unnecessary large number of disruptive school changes.

Indirectly the housing crisis has decreased productivity by inhibiting workers and firms accessing productive city-based labour markets.

Urban land supply has its own productivity effects, as well. The value that is produced from urban land depends not just on its quantity, but on its productivity, and the productivity of land depends on how densely you can build on it. Allowing urban land to be more productive can improve housing supply - and thus bear down on housing costs -even as land prices rise. Greater London Authority’s James Gleeson has a blog post showing that central Tokyo has very high land values yet its house prices are relatively low compared to London, because Tokyo uses its land more productivity and its housing supply is more elastic.

Auckland house prices and Wellington rents have been shown to be significantly less affordable than Tokyo housing too.

Auckland’s 2016 Unitary Plan significantly up-zoned many high amenity locations where there is the most demand to build. Auckland had a good increase in the variety of built housing typologies as a result. Yet fundamentally, low-rise standalone housing remains the planning default setting, that is protected by rules such as set-back and shade-plane requirements. The Right to Housing Choice proposal extends the Unitary Plan’s improvement in Auckland’s housing supply. Given the impact the housing crisis has had on Auckland, all possible beneficial housing policy initiatives, such as this one, should be implemented.

The current government has committed itself to increasing investment in rapid transit, walkable communities and infrastructure for cycling and micro-mobility (e-scooters etc). This will raise urban amenity values and in response many landowners will decide to profit from this improvement by building more residential or commercial floor space. This proposal gives property owners an intensification tool to do that. The Right to Housing Choice being non-exclusionary means the intensification tool is competitive, which reduces capital gains and excessive profit making.

In towns and cities like Queenstown, Christchurch, Tauranga and Wellington that has had less upzoning this proposal could have a significant impact on the variety of housing typologies the market builds.

Policy initiatives that address New Zealand’s housing crisis can deliver social dividends in the areas of the environment, inequality and productivity. Because of the broad range of benefits, housing reform in one form or the other is supported across the political spectrum. Polling consistently shows that housing is the issue that concerns most New Zealanders.

The estimates above use CoreLogic residential dwelling data. The methodology closely follows the US study by Glaeser and Gyourko (2003). Source Sense Partners

*Anthony Ireland has 50 years experience in the building industry. He is a licensed builder, with qualifications in OHS, household sustainability and has completed various papers in town planning. Anthony developed townhouses in Auckland until excessive regulation made it unprofitable. His last project was a repair to an earthquake damaged house in Christchurch where one of the most pleasing achievements of the build was only creating one trailer load of landfill.

This is a repost of an article here. It is here with permission.