Council seeks new plan to boost population as central city building incentive ends

Wednesday, 3 November 2021

New homes being built by Fletcher Living opposite Latimer Square in central Christchurch.

Time has been called on an incentive for building new homes in central Christchurch, but the city council is on the look-out for other schemes to replace it.

Councillors have voted to end rebates on development levies charged on central city housing construction, eight years after the scheme was launched to help repopulate the inner city after the earthquakes.

It meant anyone building new homes in the central city qualified for a rebate of their city council development levy.

The levies, called development contributions, are charged on residential and commercial property development by councils nationwide to help fund community facilities.

The city council wants 20,000 people living in central Christchurch by 2028.

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Christchurch, pictured in more recent times, had 8000 central city residents before the earthquakes.

The incentive scheme will end on December 24.

The Government announced in March it was extending the bright-line test, reducing tax deductions on property investments, and would step up investment in communal infrastructure to support housing developments.

A staff report presented to councillors before the vote said the effects of closing the scheme would be lessened by the recent reduction of the development contribution charge.

The reduction, from about $22,000 to $8000 per home, took effect in August, although levies are set when consents are applied for.

The report also said the real estate sales boom and property price rises made the development contribution charge “a fraction of the value of a new inner city dwelling”.

About 1350 new homes have been built under the scheme. The rules were tightened last year to prevent properties qualifying if they were used for Airbnb-type guest accommodation.

This year the council expects to take in $25.9 million worth of development contributions city-wide, more than forecast because of the amount of construction being approved.

Cr James Gough says ending the incentive scheme will push up house prices and rents in the central city.

Mayor Lianne Dalziel and four councillors – Sam MacDonald, James Gough, Phil Mauger, and Aaron Keown – voted against ending the incentive scheme.

An amendment proposing that council end the scheme immediately instead of waiting until December was defeated.

The council has set a target of having 20,000 residents in the central city by 2028. As of last year the central city population was estimated by Statistics New Zealand at 7170, lower than the 8000 pre-quake population.

Cr Pauline Cotter says the scheme has contributed to the revitalisation of the central city.

The incentive scheme was extended for another year in 2020, partly due to the effects of the pandemic on construction.

Councillors agreed to ask staff for a future briefing on “possible new development contributions rebate scheme options that would aim to promote the goals of relevant council policies and strategies”.

Of the 2700 homes consented for Christchurch in the past year, about 10 per cent were in the central city.

Gough said he felt ending the scheme was “incredibly short-sighted, when it is in line with a policy that council itself has signed off on”.

The decision would further fuel price and rent rises for housing, he said, especially when construction costs were rising and tax changes added more costs for landlords.

It would also push higher density housing into the suburbs, Gough said.

Voting to end the scheme, Cr Sarah Templeton said there was “no lack of development in the central city, and no shortage of demand for those homes”.

Cr Pauline Cotter said the scheme has “really contributed to the revitalisation of the central city”, and it had been given plenty of time.