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The BulletinApril 5, 2024

Homes of the future to be built with cheaper, more varied building supplies

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Changes to regulatory standards will make it easier for builders to use new products – and for NZ to build more prefab and modular homes, writes Catherine McGregor in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.

Choice of building materials set to significantly expand

Last year Stuff business reporter Miriam Bell published a story headlined ‘Why is it so hard to get new building products approved?’. She talked to entrepreneurs who told her they were confident they could dramatically cut the cost of homebuilding – if only they were allowed to use more cost-efficient building materials. One told her it had taken him five financially ruinous years to obtain consents to build steel-frame homes using prefab materials from China that meet the NZ Building Code. Yesterday the government announced it is loosening those rules to allow the NZ sale of products which meet building standards from trusted overseas jurisdictions. Announcing the changes, building and construction minister Chris Penk noted it’s about “50% more expensive to build a stand-alone house here than in Australia” and some of that is due to NZ’s overly-restrictive building product standards.

Risk to smaller building companies from looser rules

The rule change, which was among the pledges National ran on, is in part a response to the 2022 Commerce Commission market study into residential building supplies. The commission found that the problem isn’t only the building regulatory system itself; it’s also how the system incentivises designers, builders and councils to “favour familiar building products over new or competing products”. Naylor Love chief executive Rick Herd told Newsroom last year that while the leaky building crisis had made the construction industry hesitant to use lesser-known products, he, like the rest of the industry, was in favour of loosening the rules. It comes with some risk, however. “The important thing is the contracting organisation that’s using that product is big enough and has the balance sheet to stand behind it if it fails,” Herd said. A smaller company could be destroyed by the cost of replacing faulty product, he said, leaving property owners to carry the can.

A graphic from the Commerce Commission’s market study on building supplies, showing how the regulatory system encourages the use of familiar materials. (BCAs = building consenting authorities, aka councils)

Councils to publish consenting wait times

Thursday’s announcement was part of a series of government initiatives aimed at making it easier and cheaper to build houses in NZ. Last month Penk announced he would require building consenting authorities – which are generally councils – to report on the time it takes them to issue building consent and code compliance certificates. The idea, he told The Post, was to get a firm grasp on whether consenting delays are as big an issue as many homebuilders say they are, and in which areas the problem is most acute. “Stats NZ data shows that Wellington City issued 77 consents for new buildings in the last quarter of 2023,” report Luke Malpass and Tom Hunt. “That compares to 3408 in Auckland, 1278 in Christchurch, and 256 in Hamilton. Next door to Wellington City, Hutt City issued 186 in the same period, while Porirua issued two.” On Wednesday PM Chris Luxon suggested New Zealand could eventually shift away from having councils act as building consenting authorities, RNZ reports, noting that overseas jurisdictions had far fewer – sometimes just one – for the entire country.

What about the RMA?

While increasing the variety of building products available to the construction industry and accelerating consent-processing times will help make homebuilding more affordable, there are many more problems to address, including the widely reviled Resource Management Act. Last year the newly elected coalition government repealed Labour’s reforms to the act just four months after they passed into law, restoring the old RMA while the government works on a replacement system. In an article for The Spinoff, Mike Fox, founder of modular building company EasyBuild, argues that all smaller residential projects should be removed from the RMA “as it is no longer fit for purpose and the planning process is too subjective – often hijacked by neighbours, anti-commercial practices, personal agendas and nimbyism”.

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