Development levies add up to $45k to new homes

Last updated 05:00 12/04/2014

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Building industry experts are calling for the Christchurch City Council to justify or slash "greedy" development levies which add as much as $45,000 to the price of new homes.

Its levies on each new building are among the highest in the country, reaping over $20 million last year.

Development contributions, spent on items including parks, stormwater systems, cemeteries and roads, last year averaged $14,000 nationwide.

Christchurch's averaged $35,000 including GST, to which a proposed rise to help fund libraries and leisure centres could add another $3544 this year.

Christchurch building company owner Clive Barrington said he thought the council was "just getting greedy".

"They're killing a lot of projects."

Barrington, who is building homes in the Heathcote Valley, said the levy programme was "out of control".

"There doesn't seem to be a strategy for working them out."

John Clancy, of Global Group, which has built apartments in Riccarton and is doing more in Linwood, Waltham and Edgeware, said there was no transparency in how the levies were spent. With land, labour and construction cost materials all rising, it was already hard to build affordable homes.

"What's it going towards? Nobody seems to know. I'd like to see something done."

New Zealand Property Council chief executive Connal Townsend said that while the industry accepted that infrastructure had to be funded, councils used the levies as a "cash cow" and lacked full understanding of the law.

Housing Minister Nick Smith has criticised the national effects of development contributions on home affordability, and is redrawing the laws governing them. The charges had tripled in a decade and risen more than any other component of housing costs.

A council spokesman told The Press development contributions funded the added demand on infrastructure that new buildings created. Calculations were based on 30-year spending forecasts, and were higher for commercial buildings.

The spokesman said if the levies were not charged, ratepayers would foot the bill and property prices would not drop because developers would pocket the extra profit.

The development contributions go into the council's capital works programme, and are not specifically tracked through its books.

Development contributions are not charged for homes or other buildings being replaced.

In a special post-earthquake incentive, the council has waived the levy for central-city homes built until mid-2015.

Legally, councils can only spend any levies on their express purpose, or refund them.

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Land surveyor David Fox said the development contributions on two sites he was surveying in Hillsborough and Hornby were both around $41,000.

The charge had "leapt up dramatically" in the past few years, he said.

Compared with Waimakariri and other districts, Christchurch's charge was "disgraceful".

"The developers pay to put in all the services, the pipes and roading and the rest of it. And the buyers pay rates," Fox said.

Developer Richard Diver described the levies for office developments as "big fees" and said the council should extend the "forward-thinking" waiver available for new central-city housing.

- The Press


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