Private housing infrastructure charges could speed up delivery of NZ housing



As house prices continue to shoot ever-upwards and out of reach for many, speakers at a recent event hosted by The Property Foundation suggested that private housing infrastructure charges could be an effective way of speeding up the availability of land and the delivery of housing.

The online debate hosted by Professor Graham Squires of The Property Foundation featured a highly regarded panel of speakers comprising:
• Ian Purdy, Head of Property and Infrastructure at ACC
• Laura Harris, Head of Infrastructure, Government & Specialised Finance, Institutional Banking at BNZ
• Hamish Glenn, Policy Director at Infrastructure NZ
• John Beaglehole, Manager, Housing & Urban Growth at Treasury
• Sean Wynne - Deputy CEO-Bulk Housing Infrastructure, Crown Infrastructure Partners.

Key themes that emerged from the event included:
• Longer-term private housing charges for infrastructure could speed development up.
Accelerating the required enabling infrastructure will accelerate the delivery of housing supply. If alternative funding and financing tools are successful they could speed up the delivery of much needed core housing infrastructure supporting new housing being developed earlier, which will be a positive impact on the supply side of the housing market. 
This type of financing avoids the constraint that local authorities have in terms of borrowing limits allowing for more rapid progress on infrastructure development. This may allow land developers to progress projects more quickly and release greater volumes of land to the market.

• Enabling large-scale communities development.
This will lead to a greater supply of social, affordable and quality market houses, benefitting a wide range of the housing continuum in terms of renters and owners. 

• Costs could become more transparent through the IFF Act. 
In separating the financing decisions for infrastructure from a council’s usual long term planning and rating processes, and overcoming council financing constraints by ring-fencing debt away from their balance sheets, the IFF Act will result in the costs of infrastructure becoming more transparent and borne by the communities and homeowners who benefit. Over time, the ambition is for increased use of the IFF Act to result in more serviced land and housing, and increased affordability.

Professor Squires says: “It was particularly interesting to hear the main opportunities people identified through the event, such as aligning funding more closely to the beneficiary, and accelerating financing by spreading costs, which could bring forward significant housing developments that may not otherwise occur for decades, if at all. Also, hearing that there is an enormous amount of funds under management around the globe that is looking for long-term investments offering secure returns in politically stable countries, like New Zealand, offers strong opportunities to find new ways forward.”

The debate followed the publication of a research paper authored by Professor Graham Squires of Massey University - The use of housing charges to fund and finance bulk infrastructure: Is this what innovation looks like? - that asked if there is room for long-term private housing charges to finance infrastructure and help mitigate New Zealand’s affordable housing crisis. The report detailed a range of models, including the creation of development-related special purpose vehicles to fund required infrastructure for new housing land subdivision and construction. 

To read the report in full, click HERE under ‘The Property Foundation’s Commissioned Reports’:

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