Councils oppose granny flat proposal

Following a consultation on the Government’s ‘granny flat proposal’, councils have responded saying they’re not convinced it will achieve its stated aim of increasing housing affordability.

The Government’s so-called ‘granny flat proposal’ is intended to make it easier to build small, self-contained, detached houses of up to 60m² on a property with an existing home on it, without requiring a building or resource consent.

The Ministry of Building, Innovation and Employment (MBIE) consultation ran from 17 June to 12 August 2024 and received a total of 1,970 submissions. Council/Building Consent Authorities/Building Consent Officers (referred to as councils) made up 4% of submitters, while builders, architects and designers made up 28%. Homeowners made up 32%, and ‘not identified’ 25%.

The discussion document stated that regulatory compliance costs and the time it takes for homes to reach the final inspection – and then receive a Code Compliance Certificate (CCC) – is a major barrier to reducing the cost of housing.

“Council submitters generally agreed with the problem definition, stating that housing affordability was a major issue in their respective regions,” stated MBIE. “However, submitters were concerned that the proposed outcomes could not be achieved by enabling granny flats as the cost of consenting only made up a small fraction of the cost of building.

“A major theme from council submissions was that regulatory barriers to building were overstated, especially given the cost of consenting only makes up a small fraction of the overall cost of building, while providing a significant level of quality assurance to the work.”

Additionally, some councils noted that the granny flat proposal may exacerbate housing supply issues by using land in an inefficient way.

Does the risk match the reward?

During the consultation, MBIE identified a series of risks of the proposal, including:

• Building safety and performance.

• Trust in building quality.

• Environmental effects.

• Infrastructure planning.

• Infrastructure funding.

• Rating/property information.

However, councils generally didn’t consider all the risks had been identified. Concerns included a ‘likely’ failure to notify councils of new granny flats and increased ratepayer costs for monitoring granny flats.

“Councils strongly disagreed with the assessment of the risks and long-term costs associated with the proposal as presented in the discussion document,” said MBIE. “Submitters stressed that the mitigating conditions proposed were not enough to prevent sub-standard, non-compliant building work from occurring. An additional risk raised was the possible reputational harm to the industry due to increased levels of non-compliance.”

Consent required

Councils were not supportive of options to make it easier to build granny flats without some form of building consent.

“Councils submitted that to sufficiently manage the risk of building failure, there must be a building consent, pointing to residential inspection failure rates as evidence of this. They are further concerned about having to manage impacts of any poor-quality building after construction.”

Most believed that a ‘fast-track’ consenting process, in which responses would have to be made within 10 days, would be a better solution and create less risk than consent-free building work.

Unnecessary versions of regulation

Most councils thought existing district plans were more appropriate than some or all of the proposed standards. They raised concern that the proposed policy does not align with other national direction policies – such as the medium density residential standards and the National Policy Statement on Urban Development (2020) – which provide increased development opportunities. Existing standards such as site coverage rules would also apply for granny flats.

Site coverage rules in New Zealand vary by region but, generally, the maximum percentage of a site that can be covered by impermeable surfaces is about 70%. Of that, buildings can account for between 30% and 50%.

“Some councils have raised concerns with specific implementation and interpretation issues with some of the standards,” said MBIE. “On building coverage, concern was raised about how this standard would interact with existing building coverage standards for other activities, such as dwellings.”

Notification mechanisms and cost contribution called for

Councils were generally of the opinion that, if the proposed change went ahead, notification of works should be mandatory and occur as early in the process as possible. The proposal document outlined two possible options for notification of works:

1. Create a ‘Permitted Activity Notice’ (PAN) tool to record a new granny flat that would not need resource consent, which would be managed under the Resource Management Act.
2. Through a ‘Property Information Memorandum’ under the Building Act.

“Council submitters generally preferred option 2, as it already exists, and councils were familiar with the processing requirements,” said MBIE. “They echoed the statements of industry that the project information memorandum is used to identify key information relating to the land, which is important for building, prior to construction.”

A large majority of council submitters thought that granny flat development should contribute to the cost of council infrastructure like other new houses do.

Poor quality housing concerns

The consultation document also asked whether submitters consider the proposals to support Māori housing outcomes. Generally, there was concern from councils that it would exacerbate existing issues, such as poor-quality housing.

“Councils generally considered Māori housing outcomes would be best addressed through papakāinga national direction and that many barriers exist outside of the building and resource management systems.”

Next steps

Feedback received from the consultation will “help inform analysis and further policy development”, which MBIE will refine and present to Ministers.