Attachment A
Housing Delivery
Cycle
Prepared by Housing
11 December 2014
Project Office
Foreword
In October 2013, Auckland Council opened the Housing Project Office with new
systems and processes in place to enable the rapid delivery of homes under the
Auckland Housing Accord, the council’s agreement with the Government to increase
Auckland’s housing supply.
Since the signing of that agreement in October 2013, the Housing Project Office has
been operating a one-stop, end-to-end business model to fast track masterplanning,
plan variations and consenting of housing developments in Special Housing Areas
(SHAs). These tools are enabled by the Housing Accords and Special Housing Areas
Act (HASHAA) 2013. The council is confident it is doing all it can under the Accord
and its Housing Action Plan to remove barriers to development.
Even with the best possible regulatory and planning processes in place, there will
always by necessity be a time lag in the delivery of new homes to the market.
Gaining consent for a development is just one of the many steps a developer or
builder has to take to complete a dwelling. The following report provides an overview
of the entire development cycle and the probable components and timeframes of that
cycle based on the experience under HASHAA.
As well, it is clear that the council also has to consider the need to move beyond
“enablement” to “facilitation” as the practical realities of multiple ownership and the
delivery of comprehensive infrastructure in a coordinated and logical manner confront
developers/owners.
Ree Anderson
Project Director
Housing Project Office
Housing Project Office web site:
http://www.aucklandcouncil.govt.nz/EN/ratesbuildingproperty/housingsupply/Pages/specialhousingareas.aspx
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The Housing Delivery Cycle
Land developers and home builders are a key partner to delivering affordable
housing in Auckland. They too face their own challenges to bring houses to the
market.
These include:





The structure and capacity of the development industry to respond to
the significant greenfield opportunities that require extensive and
expensive resources
The development cycle and its impact on the timing, volume and
delivery of houses particularly within larger developments
Market dynamics and competition (including financial imperatives developers/builders will not oversupply the market; traditionally
developments are staged based on market uptake)
The price of land and its impact on what the market can supply
The dynamics of land ownership within large SHAs which can vary
dramatically.
How the above factors influence the timing and affordability of homes being
delivered is discussed below.
1.1 The Development Industry Structure and Capacity
The greenfield SHAs represent a significant contribution to the Auckland Plan and
Accord and comprise large development areas. The process to establish dwellings in
these SHAs involves structure planning, plan variations and concurrent Qualifying
Development consenting processes that involve multiple professional disciplines and
extensive development experience, an area of activity that is limited to a few sizable
players in the market.
The process is outlined below however it must be stated that the capacity and ability
of the industry to respond to these larger opportunities takes effort and time which is
also further complicated by the fact that a number of these SHAs have multiple
property owners which add a significant layer of complexity as detailed elsewhere in
this report.
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The outcome of this is that although the process under HASHAA allows significant
time benefits to the developer the lead time for developers to access these
streamlined procedures is slow due to the complexity of work required to enable
development e.g. one of the largest SHAs that was granted in October 2013 has
only just lodged their plan variation and QD application (approximately 1 year after
approval was given for the area to be a SHA).
1.1.1
The Development Cycle (Greenfields)
Converting rural (greenfields) land from future urban to residential can be viewed as
a three stage development process. . The HASHAA process involves:
I.
Stage 1 – A masterplanned plan variation process that converts future urban
zoned land into appropriate zones and plan provisions to enable residential
development to take place; this can be expedited quickly under HASHAA. It
does include negotiations over the necessary infrastructure required to enable
development to occur. Additionally, a Qualifying Development consent (e.g.
for subdivision) must be lodged concurrently with the plan variation in SHAs.
II.
Stage 2 - The subdivision process. Once subdivision and engineering plans
have been completed by a developer (over 4 – 5 months) and resource
consents issued by the council, a developer will need to contract for civil
works to provide services to the site. This is approximately a seven month
process; with three months following to ensure the developer complies with
conditions of consents; and the surveyor applies to LINZ for title (see diagram
1A – Delivering homes under HASHAA Greenfields).
III.
Stage 3 - Staged release of sections, or “super blocks” to builders. (Note: It is
largely traditional that there is an industry separation between land developers
and residential builders). At Weymouth/Waimahia SHA building of single
houses at post subdivision took 12 – 13 weeks (around three months). Three
builders are engaged to produce the homes at Weymouth (Goodwin Building
Services, Goldsmith Developments Ltd and e-Homes Global). The builders,
based on cashflow and resourcing limitations, will each have anything from 4
– 8 homes on the go at any one time.
IV.
A developer will stage the release of super blocks or sections and homes
depending on market demand to maximise returns. Where the land price is
high a developer/builder will put on homes that reflect the value of the land.
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Diagram 1A
Delivering homes under HASHAA – Greenfields (converting rural/
future urban land to residential)
4
.
Pre-lodgement
meeting with HPO
10.
Decision - within
130 days of
lodgement (subject
to all info)
9
.
Hearing
8
.
Submissions
close
7
.
Limited
notification
6
. Variation and
consent
assessment under
HASHAA- assume
30 day hold on
s94
5
Variation. and QD
consent
applications
lodged
14.
Contracts for civil
works internal
servicing
15.
Earthworks (Oct/
April)
20.
Surveyor applies to
LINZ for titles (1
month)
19
.
Sections 223/
224c processed
issued 20 working
days
18.
Inspection
16.
Balance of civil
works
17
.Application for
s224c (works
meets standards)
and 223c
(apporoval of
survey plan)
Total duration approximately 2 years +
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2 months
21.
Staged release of
sections depending
on market demand,
finance etc
3- 5 months
4 months
3
. Applicant
prepares plan
variation and QD
consent
applications/s
under HASHAA
11.
Assume no
appeals
(QD not over 3
storeys)
22.
Building consents
and house
construction
7 months
7 months
2
. engagement
Early
with HPO
13.
Engineering
approvals process
(after consent)
but in tandem
with letting
contracts
6 months
1.
SHA Approved
12
.
Public notification
- variation
operative
Applicant/
Developer
Council’s
regulatory
processes
(Council/
applicant)
1.1.2
The Development Cycle (Brownfields or existing urban areas)
Developing within existing urban areas has the advantage of utilising “live”
residential zoning and optimising the capacity of existing bulk infrastructure such as
water, wastewater and public transport bus and rail nodes. Even in “live” zones
under HASHAA, a Qualifying Development consent is required for developments
over 4 dwellings. As well, the development cycle or the private sector market still
relies on:
I.
Financing: Some developers are well financed and will not rely on pre-sales.
However, most would rely on some form of pre-sales to finance their
investment in apartment dwellings or terraced dwellings. These pre-sales can
occur before plans have planning and building consents and prior to a
commitment to contracting services for building. The timing of building and
release to the market is currently at the discretion of markets (within a window
of five years allowed to deliver on a consent under RMA; or 1 – 2 years if the
development is within a SHA). Again, most developers have a portfolio and
will release homes/units to the market based on demand and price points.
II.
The construction cycle: By way of example, Ockham Investments is an
active apartment builder in Auckland and requires approximately 9–16 months
following the issuing of all consents by the council to deliver apartments to the
market. Hence the apartments at the Khyber Pass, Newmarket SHA will not
likely be completed until May 2016 (with construction starting March 2015
following the issuing of building consents anticipated in December 2014).
Similarly the apartments at the Akepiro St, Dominion Rd SHA, are likely to
take 9 months following issuing of the consents. The anticipated completion
for those apartments is December 2015 as the site has less geotechnical site
constraints and is an easier site to develop than the Khyber Pass Rd site.
There are no other constraints affecting the latter two developments, they are
in a SHA; consents/approvals are expedited quickly and the developer has
financing and a construction company to undertake the works. The delivery of
the apartments is strictly related to the construction cycle.
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Diagram 1B
Delivering homes under HASHAA – Brownfield Non Notified
12
10
Building Consent
& Engineering
Plan approval
Approved
3 months
2
Early engagement
with HPO
3
.
Applicant
prepares
QD subdivision
consent
applications/s under
HASHAA
2 months
SHA Approved
11
.
Contracts
for civil
& construction
works
9
.
Engineering
Plan
8
.
Building
Consent
lodged
approval lodged
7
14
Application for 223c
(approval of survey
plan if subdivision
involved)
13
4 - 12 months
1
Civil & construction
works commence
Statutory
Inspections
16
223 Issued
Approval of survey
plan
15
Complete civil &
construction
works
17
Sections 223/224c
processed issued
20 working days
Decision - QD within
20 days of lodgement
(subject to all info)
18
4
Pre-lodgement
meetings with HPO
6
QD
. assessment under
HASHAA &
PAUP
Infrastructure sign off & Code
of Compliance Certificates
19
5
QD consent
applications lodged
(land-use & subdivisions
Total duration approximately 12 months +
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Completed
dwelling
Applicant/
Developer
Council’s regulatory
processes (Council/
applicant)
1.1.3
Market Dynamics
Market opportunities clearly vary depending on location – typologies that earn good
returns in one location may have little/no demand in others, section and dwelling
prices vary greatly although land development and building costs may be reasonably
consistent across the region with some exception depending on site/location
specifics. In addition underlying land prices, many times the subject of land
speculation, represent costs to development that cannot always be financially
sustained in any logical development scenario. There are also usually different
players in the land development and building development segments that creates
additional challenges in delivery.
The implications for deliverability are as follows:

Areas that are desirable for greater intensification may be unable to deliver
this density due to market considerations/risks

Underlying land values may represent optimistic views of development
typologies or returns that are not financially achievable

Land development activity that is separate from building delivers, at times,
inefficient land parcels for building that may add additional costs or represent
an underlying land cost that is not valued by the market

Higher density development in multi-level structures comes at higher
construction cost per square metre and usually at higher risk as it cannot
largely be staged, involves the sale of more product and traditionally prompts
developers to “pre-sell” to mitigate risk and to meet financing conditions.
1.1.4
Land Ownership
Multiple land ownership within large greenfield SHAs has posed significant
challenges to both the proponents of QDs and Plan Variations and the HPO in
dealing with the applications in a comprehensive way.
From the perspective of the applicant, multiple ownership reveals the following:

Vastly differing knowledge and skills among owners in respect of planning
processes and development activities.

Owners with differing life stages, financial abilities and objectives.

Lack of consensus among owners on desired zoning and location, staging
and funding of major infrastructure.
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From the perspective of the council multiple ownership reveals the following:

Challenges to the delivery of comprehensive planning and efficient service
delivery having regard to the issues detailed above.

A requirement for the council to take more of a facilitation/project director role
to ensure that development can proceed rationally at times, if at all.

Use by the council of some statutory powers to unblock problems within
owners consortia when local consensus cannot be gained among the
applicants (e.g. special consultation areas to define targeted development
contributions).

Council is in the process of considering the degree to which it is required to
undertake a greater facilitation role to unlock development opportunities with
multiple ownership SHAs as owners are struggling to present a unified
approach and to coordinate their objectives and activities with a unified whole.
Brand new homes in the Weymouth, Manukau Special Housing Area
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