Impact of covenants on affordable housing

New Zealand has an acute and persistent under-supply of housing, particularly affordable housing. It seems that privately-imposed covenants on residential land, which are growing in number, are having an almost unreported impact on affordable housing and housing affordability according to a new report by Craig Fredrickson and Kay Saville-Smith from the Improving the architecture of decision-making team.

Opinions for the under-supply and New Zealand’s heated house prices are many, with particular attention given to land costs and claims around the restrictive nature of land use planning and consenting carried out by local and regional councils. In 2013, the Government enacted the Housing Accords and Special Housing Areas Act 2013 (HASHAA) to release land from planning constraints; however, there has been little take-up among developers, and some developments that are now labelled Special Housing Areas (SHAs), such as Hobsonville, would clearly have been active without the HASHAA. In addition, SHAs are not producing significant, if any, affordable housing and are likely to have only a minor impact on housing affordability in general.

According to the report, New Zealand shares with many other countries the tendency to cite the land-use planning regime as the major driver of decreasing affordability and housing under-supply. Similar discourses are evident in Australia and the United Kingdom and those jurisdictions have also seen a preoccupation with public planning as the critical driver of the under-supply of affordable housing. Recent Building Better Homes Towns and Cities BBHTC research into the exit of the building industry’s production of affordable housing suggests that the strangling of government capital investment in affordable housing since the early 1990s provides a different view of the dynamics around the under-supply of affordable housing. The BBHTC Research Bulletin, Covenants and risks to the supply of land for modest homes and affordable housing, explores another aspect of the factors influencing affordable housing and housing affordability. That is, the impacts of privately imposed covenants on residential land.

To download a PDF copy of the report, please see: Covenants and risks to the supply of land for modest homes and affordable housing

Update 9 August: See also: Land covenants in Auckland and their effect on urban development. Auckland Council technical report, 76pgs.

For all queries, please contact Dr Kay Saville-Smith, Building Better Homes, Towns and Cities