Source: WarkWorth Web
The Auckland Council is planning a considerable hike in development contributions, which are the monetary fees residential property developers pay to fund local infrastructure projects. These contributions, currently calculated over a 10-year timeframe, are proposed to be spread over 30 years, leading to significant cost increases for developers.
The average development contribution in Auckland is projected to increase from $21,000 per lot to around $50,000 per lot. In some areas, such as Tamaki, the rise is even steeper, jumping from $31,157 to $119,000 per lot. The Inner Northwest region is set to see contributions soar from $25,167 to between $89,000 and $101,000 per lot.
Troy Patchett, Director of Auckland residential development company Subdivide Simplified, expressed concern over these proposed changes. “This increase could halt housing developments. Many developers may struggle to pass these costs on to consumers, making some projects unfeasible. This could further restrict future development and worsen the housing shortage in Auckland, New Zealand’s largest and fastest-growing city,” Patchett stated.
Patchett also warned that the increased contributions could lead to fewer housing developments and place upward pressure on the value of existing properties.
He strongly advises developers to submit their council applications as soon as possible. “If you can get your applications in before March, you should only need to pay the current development contributions and avoid this increase. Don’t delay starting your development projects,” he urged.
The calculation of development contributions takes place when development applications are lodged, with this window expected to close around April.
