Part 2: Proposals across the resource management and building systems

The Ministry of Business, Innovation and Employment (MBIE) has identified options to achieve the objective of enabling granny flats, with related benefits, costs and risks. They include regulatory and non-regulatory options, options that do not require a building consent and fast-tracked building consents. See Appendix 1 for a full description.

Options that do not require a building consent include:

• Option 1: Add a new exemption to Schedule 1 of the Building Act for simple standalone dwellings up to 60 square metres.
• Option 2 (proposed option): Establish a new Schedule in the Building Act to provide an exemption for simple standalone dwellings up to 60 square metres. It would contain additional criteria compared to the existing Schedule 1 to recognise increased risk from these buildings.
• Option 3: Introduce a new opt-in self-certification regime for accredited companies and professionals for, but not limited to, small standalone houses.

Fast-tracked building consent options identified include:

• Option 4: Targeted promotion campaigns of BuiltReady and MultiProof, specifically for standalone dwellings up to 60 square metres.
• Option 5: New MBIE/Government MultiProof approval for a 60 square metre standalone dwelling.

Option 2 (proposed option) would establish a new Schedule in the Building Act that provides an exemption for simple, standalone dwellings of up to 60 square metres in size. Compared to the existing exemptions under Schedule 1, the new schedule would have additional criteria to recognise the increased health and safety risks associated with granny flats. To mitigate these risks, it would use existing occupational regulation of qualified professionals and would also require using certain Building Code Acceptable Solutions (structure, weathertightness and plumbing related) unless MultiProof or BuiltReady schemes are used. Property owners would also have to notify councils of the work.

This option is expected to reduce time-to-build and regulatory burden (red tape) for simple, standalone dwellings of up to 60 square metres, including avoiding building consent fees in the order of approximately $2,000 to $5,000.^[1] It would also provide flexibility for consumers to choose the particulars of the design and build.

Notification requirements would provide a record to councils that the new dwelling exists, informing infrastructure and financing decisions and enabling monitoring of quality issues.

This option would also mitigate any negative impacts on MultiProof and BuiltReady because these schemes will be included in the exemption, and complements changes recently announced to improve flexibility of the MultiProof scheme.^[2]

However, this option also comes with risks.

• Without the oversight of BCAs, there is an increased risk of non-compliant buildings. The notification requirement, and other criteria, are proposed to help mitigate this risk. But it is unclear whether these mitigations will be enough to resolve potential difficulties with finance, insurance and re-sale.
• This option makes owners responsible for ensuring qualified professionals complete the work. However, as no entity would be actively monitoring this requirement, there is a risk of non-compliance.
• Creating a new schedule to the Building Act also adds complexity to the building regulatory system.

Proposed building consent exemption conditions

Option 2 described above would create a new schedule to the Building Act that would allow a small standalone house to be built without a building consent. MBIE considers a building consent exemption is only appropriate if the building meets certain criteria that help limit the health and safety risks given it is not checked by a regulator.

These criteria would require the small house to be built by trusted workers, to a simple straightforward design, and be notified to councils. Meeting these criteria would reduce the risk of building failure, that the inspections and approvals process safeguards against. They are specifically targeted at reducing the risk of structural failure, fire and the spread of fire, weathertightness failure and insanitary conditions. Views are specifically sought on the 2 options identified for a height to boundary guardrail.

We are proposing that an engineer’s report would not be required. Requiring such a report could introduce engineering services where they otherwise may not be required, imposing an additional cost to the consumer. Instead, we are proposing that building work would need to be completed (or supervised) by suitably competent, regulated professionals, such as Licensed Building Practitioners and authorised plumbers.

Conditions that must be met to build a small standalone dwelling without a building consent

Condition, detail and comments

The Resource Management Act 1991

Scope of the policy under the Resource Management Act

What the granny flat policy will apply to

The focus of this policy is to enable small, detached, self-contained, single storey houses for residential use. Under the RMA, the term ‘minor residential unit’ (MRU) is defined in the National Planning Standards as “a self-contained residential unit that is ancillary to the principal residential unit and is held in common ownership with the principal residential unit on the same site”. The proposal is to focus the policy in the RMA on enabling MRUs.

The National Planning Standards defines accessory buildings as “a detached building, the use of which is ancillary to the use of any building, buildings or activity that is or could be lawfully established on the same site, but does not include any minor residential unit”. Accessory buildings are generally permitted under the RMA but can be subject to different standards than MRUs.

Adding an additional bedroom or an attached granny flat to an existing principal residential unit is considered differently in most district plans and is not an MRU. MRUs are ‘detached’ as defined in the National Planning Standards. Additions and attached granny flats have significant risks in relation to fire safety and are not currently being considered as part of the proposed changes to the Building Act.

Where the granny flat policy will apply

It is proposed that this policy applies across New Zealand and is not limited to certain territorial authorities. The proposed focus of the policy is on enabling MRUs in rural and residential zones, as described in the National Planning Standard Zone Framework Standard.^[3]

The policy could also apply in other appropriate zones, for example mixed use zones^[4] and Māori purpose zones.^[5] A range of activities are anticipated in these areas including residential, commercial, community and cultural activities.

Matters that are out of scope of the granny flat policy 

The proposal is to target specific zone rules and standards relating to MRUs which typically trigger a resource consent requirement (such as building coverage or setbacks from neighbouring properties). However, there may be other rules in district or regional plans that could trigger the need for a resource consent. We propose that these matters are not managed through this policy, and include:

Subdivision

If a landowner wants to subdivide the MRU after it has been developed, they will need to meet the subdivision requirements set out in the relevant district plan.

Matters of national importance (RMA section 6)

The RMA outlines matters of national importance^[6] that all persons exercising functions and powers under it must recognise and provide for. They include matters relating to:

• natural character of the coastal environment, wetlands, and lakes and rivers and their margins
• outstanding natural features and landscapes
• significant indigenous vegetation and significant habitats of indigenous fauna
• relationship of Māori and their culture and traditions with their ancestral lands, water, sites, waahi tapu, and other taonga
• historic heritage
• significant risks from natural hazards.

Councils identify and manage these important risks and values in their district plans through additional overlay provisions. The policy proposal is to not override any of these provisions in plans, and any additional requirements would remain.

The specific use of the minor residential units

District plans manage the activities that occur in certain buildings, including visitor accommodation such as Airbnb properties, home businesses and childcare services. It is proposed that existing district plan provisions relating to activities still apply and are not managed through this policy.

Regional plan rules

MRUs may require a resource consent requirement under a regional plan. Rural areas are more likely to require consents, particularly where they are needed for an on-site wastewater system. It is proposed that these requirements stand and are unaffected by this policy proposal.

Proposal under the Resource Management Act

The options for implementing this policy in the resource management system are set out in Appendix 2 and include:

• Option 1 – status quo
• Option 2 – national policy statement for minor residential units
• Option 3 – national planning standard for minor residential units
• Option 4 – national environmental standard for minor residential units with consistent permitted activity standards (proposed option)

The proposed option (option 4) is a national environmental standard (NES) which is regulation under the RMA that can set out rules and standards. Setting out consistent permitted activity standards in the NES (see table below) will ensure a nationally consistent approach to MRUs. Permitted activity standards could be different in residential and rural zones.

Councils could be enabled to have more lenient standards than what is set out in the NES,^[7] however this might undermine national consistency. A NES takes effect on commencement and would not require councils to go through a plan change process. This would reduce implementation requirements for councils, compared with other options.

The preferred option is for the NES to include a nationally consistent permitted activity standard, that may be different in residential and rural zones. The proposed standards will work together as a package. For example, a minimum permeable surface requirement will ensure that stormwater drainage on site is managed, even if there is high building coverage of the net site area (see below).

Permitted standards – proposal and options

Internal floor area

The maximum internal floor area is 60 square metres and is measured to the inside of the enclosing walls or posts/columns. This is consistent with the proposal under the Building Act.

Number of MRU per principal residential unit on the same site

1 MRU per principal residential home on the same site.

Relationship to the principal residential unit

The minor residential unit is held in common ownership with a principal residential unit on the same site (as defined in the National Planning Standards).

Building coverage

The percentage of the net site area covered by the building footprint

Residential zones

The options for maximum building coverage for MRUs and principal residential units collectively are:

• Option a – 50%
• Option b – 60%
• Option c – 70%

Rural zones

No maximum building coverage.

Permeable surfaces

Areas of grass and planting and other surfaces where water can filter naturally into the ground.

The options for minimum permeable surface in are:

• Option a – 20%
• Option b – 30%

Permeable surfaces shown in green.

Setbacks

Residential zones

The options for minimum setbacks are:

• Option a – 1.5m front boundary, 1m side and rear boundaries
• Option b – 2m front boundary, 1.5m side and rear boundaries
• Option c – no minimum front, side or rear boundary setbacks.   

Rural zones

The options for minimum setbacks are:

• Option a – 8m front boundary setback, 3m side and rear boundaries
• Option b – no minimum front, side or rear boundary setbacks.

Building height and height in relation to boundary

No building height and height in relation to boundary standards are proposed. This is because the policy intent is to enable single storey MRUs and existing building height and height in relation to boundary setbacks in underlying zones will already enable this.

Current district plans manage MRU through other permitted activity standards not covered in this proposal. This includes the minimum distance from the primary dwelling, maximum distance from the primary dwelling (typically in rural zones), and minimum outdoor space requirements.

Where standards are not met, development could still occur via a resource consent process to manage any risks or effects. There are options for the NES to require a restricted discretionary activity resource consent, or that existing district plan provisions will apply. If there is a restricted discretionary activity resource consent requirement, the limited matters of discretion that the council can consider through the consent process will be set out in the NES.

Notification and funding infrastructure

The proposals in this document would enable a granny flat to be built without needing resource or building consent. Notification of a granny flat is important for local and central government to:

• provide trusted information for buyers, financiers and insurers
• track new home construction data and trends
• value properties for rating purposes
• plan for infrastructure
• provide information to support post-occupancy compliance, where required
• undertake council functions under the Building Act including managing dangerous or insanitary buildings.

Resource or building consents also trigger the ability for councils to charge development contributions. Councils use development contributions to help pay for the increased demand the new house has on the infrastructure that it provides. This typically includes transport, water, wastewater, stormwater, parks and reserves, and community infrastructure such as libraries.

Councils use a unit of demand such as the household unit equivalent (HUE) to charge development contributions, which measures the average household in a standard residential unit and the demands they typically place on infrastructure. Most councils treat minor dwellings as less than 1 HUE (typically charging between 0.4-0.75 of a HUE),^[8] recognising that small dwellings create a lower demand for infrastructure than larger dwellings.

The options to still require an owner to notify the relevant council of a completed granny flat are through a ‘Permitted Activity Notice’ under the RMA or a ‘Property Information Memorandum’ under the Building Act, outlined in Appendix 3.

Broader work on infrastructure funding and financing (including on development contributions) is being considered as part of the Government’s Going for Housing Growth work programme. More information on this will be available online when decisions are made.^[9]

Māori land, papakāinga and kaumātua housing

An issue for Māori wanting to develop housing is the cost and time to consent small, simple houses and other buildings. The proposals in the building and resource management systems may go some way to addressing the regulatory and consenting challenges for developing on Māori land,^[10] and for papakāinga^[11] and kaumātua housing,^[12] where the circumstances of these proposals apply.

There are broader challenges to building and development on Māori land beyond the building and resource management systems. Barriers include a requirement to obtain a Māori Land Court order to use or occupy Māori freehold land, access to finance and the lack of infrastructure,^[13] which are not in scope of these proposals.

The proposals for the resource management system are focused on enabling MRU, defined in the National Planning Standards as outlined on pages 11 to 15. This is proposed to apply to Māori land (if zoned residential or rural), and papakāinga and kaumātua housing where they are ancillary to a primary dwelling and are held in common ownership.

The Government is separately scoping more targeted national direction under the RMA to enable papakāinga. More details on this will be available later in 2024.

The Building Act proposals are focused on enabling small houses and would allow small houses being built on Māori land, and papakāinga and kaumātua housing providing the conditions in the proposed schedule are met.

Footnotes

^[1] In a 2022 report Does size matter? The impact of local government structure on cost efficiency, the New Zealand Infrastructure Commission estimated the median fee to process a building consent for a $350,000 new build residential dwelling at $3,780, but also noted that there was considerable variation in costs between councils (standard deviation: $1,540). Note that the Building Levy ($1.75 (incl. GST) per $1,000 of building work at $20,444 (incl. GST) and over) and BRANZ Levy ($1.00 per $1,000 of the total value of construction work at $20,000 and over) also attach to building consents (rates as at June 2024).

^[2] Streamlining Building Consent Changes(external link) — Beehive.govt.nz

^[3] National Planning Standards (2019) Zone Framework Standard [PDF, 932 KB](external link) — Ministry for the Environment

^[4] Areas used predominantly for a compatible mixture of residential, commercial, light industrial, recreational and/or community activities.

^[5] Areas used predominantly for a range of activities that specifically meet Māori cultural needs including but not limited to residential and commercial activities.

^[6] Resource Management Act 1991 section 6.

^[7] RMA section 43B (3) allows for rules that are more lenient than a national environmental standard to prevail, if the national environmental standard expressly says that a rule or consent may be more lenient than it.

^[8] Based on analysis of Tier 1 Councils’ development contributions policies.

^[9] Hon Chris Bishop, Minister of Housing’s speech to the Wellington Chamber of Commerce on 27 February 2024 outlines Going for Housing Growth:

Speech to the Wellington Chamber of Commerce(external link) — Beehive.govt.nz

^[10] Includes Māori customary land and Māori freehold land (as defined by Te Ture Whenua Māori Act 1993).

^[11] Can be described as communal settlements on ancestral Māori land.

^[12] Housing specifically provided for kaumātua (elders).

^[13] Government planning and support for housing on Māori land [PDF, 1.82 MB](external link) — Office of the Auditor-General

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