Greenfield growth: Government’s grand plans for housing
- ChanceryGreen
- 5 days ago
- 4 min read
Introduction
In a push to increase housing supply, the coalition Government has announced several additional, short-term changes aimed at making greenfield development easier and more financially viable.[1]
These changes are designed to work with the Going for Housing Growth programme[2] and ongoing three-phase RMA reforms; with Phase 2 involving making targeted amendments to the RMA and amending, and introducing several other, national direction documents, and Phase 3 being the replacement of the RMA by two new Acts.[3]
The latest reforms are intended to free up land for urban development, streamline planning rules, and improve infrastructure funding. In doing so, the Government aims to encourage greenfield housing projects, which it considers essential to addressing the housing crisis, by:
For developers, providing less restrictive planning rules, more certainty around infrastructure costs, and access to low-cost loans – overall, encouraging more housing projects.
For councils, providing more tools to fund infrastructure, but also more responsibility to meet housing supply targets.
For homebuyers, increasing housing supply in greenfield areas to help ease pressure on prices.
Key changes at a glance
$100m boost for greenfield housing
Recognising that many of its proposed changes (in particular the Phase 3 reforms) will take some time to come into effect, the Government has announced it will allocate $100 million in loans to developers, to help kickstart greenfield housing projects in the short term. This initiative is aimed at lowering financing costs for developers and accelerating the construction of much-needed housing.
This funding is expected to enable the construction of 1,000–2,000 medium-sized homes in greenfield areas.
Funding will be provided through the National Infrastructure Funding and Financing Agency (“NIFFCo”). Key features of the funding initiative are that it will:
lend to developers at competitive rates during the early development phase;
ensure that debt is refinanced to private markets once developments are completed; and
allow repayment through an annual levy, ensuring future homeowners contribute to infrastructure costs.
Removing some NPS-HPL restrictions
To further support greenfield development, the Government has also announced it will remove protections on LUC-3 land (land with moderate productive value) under the NPS for Highly Productive Land (“NPS-HPL”).
While LUC-3 land is used for activities like cropping, viticulture, and pastoral farming, the Government considers that opening it up for housing could unlock land equivalent to the size of the Waikato region.
However, recognising the importance of protecting agricultural land, the Government is considering “special agriculture zones” that would protect highly productive LUC 1-3 land when grouped in key horticultural regions, such as Pukekohe.
These amendments are proposed to be incorporated as part of the national direction changes during Phase 2 of the RMA reforms.
Changes intended to support the Going for Housing Growth programme and wider RMA reforms
These short-term funding and NPS-HPL amendments are intended to work with the Going for Housing Growth programme and wider RMA reforms:
Going for Housing Growth programme
To support urban growth, the Government has previously announced the Going for Housing Growth programme, to be rolled out in three stages:
Stage 1: freeing up land
Through enacting the RM Amendment Act and proposing changes to the NPS on Urban Development (“NPS-UD”), six key changes aim to free up land for housing.
The RM (Consenting and Other System Changes) Amendment Bill proposes to achieve one of these changes by making medium density residential standards requirements contained in the RMA optional.
The other five changes will be implemented through reform of the NPS-UD, including to provide targets for Tier 1 and 2 councils to meet 30-years of housing demand, support expansion of cities at urban fringes, strengthen intensification provisions in certain areas, create new rules to enable mixed-use development, and do away with minimum floor areas and balcony requirements.
Consultation on these changes to the NPS-UD is proposed to take place in May this year. However, they won’t be implemented until the replacement of the RMA in Phase 3.
Stage 2: improving infrastructure funding and financing
The second stage is to improve infrastructure funding and financing, including by:
Replacing development contributions with a new levy system intended to give developers certainty about costs and allow councils more flexibility in funding new infrastructure.
Introducing regulatory oversight, imposing stricter rules on councils on how to allocate project costs, and ensuring transparency and reducing administrative complexity.
Expanding the use of targeted rates so councils will be able to set rates specifically for new developments and combine them with levies where projects benefit both new and existing residents.
Amending the Infrastructure Funding and Financing Act to make it easier and more effective for councils and developers to fund infrastructure projects.
The Government intends to introduce proposed legislation by September 2025, with changes to take effect in 2026, and councils having to implement these into their plans in the 2027 Long Term Plan cycle.
Stage 3: incentivising councils to improve housing performance
The third, and final, stage is to incentivise councils to build more new housing by providing $1 billion of funding. Details on this initiative are yet to be released.
RMA reform
More generally, as part of its Phase 3 reform of the RMA, the Government is overhauling planning rules, intending to remove unnecessary planning barriers that slow down development and standardise zoning rules across councils to make it easier for developers to operate nationwide.
Comment
Much of the planned reform will not take effect until 2027. In the meantime, it’s unclear whether the interim measures proposed will materially assist to meet housing demand and ease housing prices in the short term.
We also expect that the removal of LUC-3 protections from the NPS-HPL will spark strong debate, particularly among rural and agricultural communities, as LUC-3 land remains important for certain production activities.
Lastly, the proposals place a strong emphasis on unlocking greenfield land for development. If successful, this may be at the expense of brownfield development, which many experts consider should be prioritised for quality urban outcomes.
If you have any questions about these changes, please reach out to a member of our team.