Achieving competitive urban land markets in new system

The government will establish an independent economic umpire to ensure councils achieve competitive urban land markets through the new planning system, Housing and RMA Reform Minister Chris Bishop and RMA Reform Under-Secretary Simon Court say.

An amendment paper to the Government’s Planning Bill will establish the role of an independent Urban Land Market Officer to determine whether urban land markets are competitive, to monitor and report on land market performance, and to advise central government and councils on actions to increase competitiveness.

“For too long, the Resource Management Act (RMA) has acted as a handbrake on growth and opportunity. It is directly responsible for New Zealand’s housing crisis by limiting the supply of urban land and housing – driving up costs for New Zealanders,” Mr Bishop says.

“Our new planning system will deliver the most significant pro-housing reforms in a generation. It will give homeowners more freedom and give prospective homeowners and renters more choice. It will also speed up consenting and create clear and consistent rules across the country. Additionally, private plan change requests will be made much easier.

“A specific goal of the new Planning Bill is for the system to enable competitive urban land markets by making land available to create abundant development opportunities for residential and business use.

“This creates a statutory obligation on councils to ensure that the supply of urban land is responsive to demand such that land prices do not materially or persistently reflect scarcity premiums. In other words, councils will need to be conscious that their planning rules do not create an artificial scarcity of developable land which in turn pushes up land prices.

“This is fundamental to improving housing affordability, supporting economic growth, and accelerating productivity.

“To ensure councils fulfil this obligation, Cabinet has agreed to establish a new Urban Land Market Officer. They will provide independent assurance to government that planning decisions made locally support competitive urban land markets – getting these critical decisions out of the hands of central government politicians and into the hands of experts.

This new officer will focus on monitoring and advising on urban land market competitiveness. It will have functions to:

If the Officer makes a determination that a local authority’s actions under the Planning Act have contributed to a non-competitive urban land market, then the local authority will need to take action to address this, such as by progressing a plan change to enable more capacity for housing.

“Monitoring in other markets that have monopolistic characteristics drives better outcomes for New Zealanders – like the Commerce Commission and regulated utilities. Urban land markets are similar as a council effectively controls the supply of urban land and development capacity in an urban market.

“What happens in our land markets matters a great deal to growth, productivity and prosperity and deserves appropriate independent scrutiny.

“This is one of the final pieces in the puzzle of Pillar One of our Going for Housing Growth agenda. The independent officer will help ensure that every council is zoning enough land for housing.

Mr Bishop says that the overriding statutory obligation on councils to ensure competitive urban land markets is on top of agreed government policy to make it easier for cities to expand up and outward through:

These policies will be developed through National Policy Direction and National Standards in the new system.

“The government is throwing the kitchen sink at sorting out the fundamentals of housing supply.”

Mr Court says the Officer adds another important accountability mechanism to make sure councils turn the corner from the RMA and start making the decisions needed to deliver the step change these reforms are designed to achieve.

“Regulatory relief and the Planning Tribunal are already key safeguards against the over-regulation that became synonymous with the RMA.

“The Urban Land Market Officer is another lever for driving culture shift, with a clear focus on whether councils are actually enabling enough land for growth.

“For too long councils have been able to weaponise an ever-growing list of ‘effects’, or game theoretical capacity targets, while constraining real development and driving land and house prices to eye-watering levels.

“The Urban Land Market Officer will bring independent expertise, scrutiny, and transparency to that problem. If a council is choking off land supply, there will now be an independent umpire to call it out and require action — without putting those decisions back into politicians’ laps.”

“This is a significant shift that will help ensure the planning system supports rather than hinders the delivery of homes,” Mr Bishop says.

“We’ve also removed all barriers to private plan change applications, allowing developers to request these at any time. In addition, we expect the National Policy Direction to require that where land markets have been found to be uncompetitive by the Independent Officer, the assessment for private plan changes will put the ‘finger on the scale’ towards development.

“It is about making sure New Zealand has enough land for homes, businesses, and infrastructure. Being more transparent on planning rules which are holding us back from growth, will help create the conditions for more housing, lower costs, and ultimately better opportunities for New Zealanders.”