It’s getting ‘harder and harder to build, developer says
Tuesday, 26 March 2024
A Hamilton developer who’s been forced to pull the pin on a townhouse development says anything that streamlines building consents is “a good thing” but resource consents are the “real kicker”.
Councils are now required to share building consent and code of compliance certificates (CCC) data with central government every quarter in a bid from the government to speed up processing times.
Building and Construction Minister Chris Penk made the announcement recently, saying feedback back from the sector indicated consents and CCCs often take a lot longer than statutory 20-day timeframe, causing frustration and costly delays for builders.
But Assured Property Investments chief executive John Kenel, who has been developing homes in the Waikato for 20 years, says processing times aren’t the issue.
“Look, anything that the government can do to help streamline consents is a good thing as long as it's not just another burden for councils because while I'm often very frustrated with councils, I also understand that they are under a lot of pressure from a lot of different stakeholders.”
Kenel said he didn’t have any issue with building consents and CCCs as consent “just about always” went through within 20 working days.
“What I have an issue with is the resource consent process, the engineering consent process. Those are where the difficulties lie and it is getting harder and harder every year.”
Kenel’s taking a $1 milllion dollar “hit” to the pocket after being forced to scrap a 22 townhouse development in Dinsdale because of Hamilton City Council’s new flood mapping, which predicts the 5700m2 site will be impacted by one-in-100-year flooding.
The developer says he did his due diligence when he bought the site but was later told he could only build on 500 metres of the site.
After a lot of back and forth, he says the flood level was raised by another 5m and he had no choice but to take the financial hit as he could no longer build on the site at all.
“It's the uncertainties, the changes in policy just from one day to the next. It's that resourcing consenting process which is the real kicker.”
Hamilton City Council’s regulatory services unit director Cory Lang says the council welcomes moves by central government to improve the building consent process.
“In the 2022/23 our average processing time for building consents was 17.8 working days and code compliance 12.6 working days, well within statutory limits. We report these figures to council every six months and hold ourselves accountable to our results.”
A 2022 MBIE evaluation of the building consent process found while most consents were processed within the 20-day timeframe, many went on hold pending further information which meant the actual processing time was much longer.
It’s “very common” for building consents to be placed on hold while the applicant provides further information, Lang says.
“The length of time these consents are on hold varies greatly depending on the specific information being requested, due to the complexity of the consent and level of information requested.
“As these timeframes are dictated by the applicant and the variables involved, we do not currently report this to council as a performance measure.”
Kenel also took aim at the upcoming rises in Development Contributions that are set to add tens of thousands of dollars to the cost of new developments, warning those costs will ultimately be passed on to buyers and tenants.
“Currently we're paying about $18,000 per townhouse development contribution in Hamilton East. It's going to $41,000 and Hamilton West to $47,000.
“We're officially in a recession, which means people are suffering, businesses are suffering, you know everyone's struggling and the council is raising the fees by more than 100% when people are already on their knees.
“Builders are doing less in Hamilton now than any time I can remember. Personally I’m building six houses at the moment in Hamilton East, that’s it. That’s all I have and I don’t know what else I’m going to do next.
His team easily had the capacity to build, on average, 60 to 80 units per year.
“We build simple affordable housing, that’s all we do. Everything is for rent so we keep the cost down.
“We do smaller sizes but built well but we're not building because the interest rates are too high, the costs are too high. It's too hard to get… it's just everything's too hard and then council come along and, and just jack up fees like this.
“It's just, it's really bad timing and there's no notification and it's right on top of the rates increase as well.”
Data from Statistics NZ show consents for new homes in the Waikato were down 25% to 3,548 in the year ending December 2023. Nationally, there were 37,239 new homes consented in the year ended December 2023, down 25 percent compared with the year ended December 2022.
There were 49,538 homes consented in 2022, which was the highest number in a calendar year since records began.
According to Hamilton City Council data there were 1207 new homes consented last year. This was made up of 844 townhouses, flats or unit, 316 houses and 47 apartments.