Developer fee hike would hit house prices – Property Council
A property industry group that includes many of Waikato’s largest developers is deeply concerned about Hamilton City Council’s plan to crank up development fees.
As reported in the Waikato Times on Monday, a draft development contributions policy could see a rise of more than 100% and tens of thousands of dollars in some cases, potentially impacting house prices and development feasibility.
The central regional chair of the Property Council, Morgan Jones, said in a statement on Monday that he had serious concerns about the scale of the new charges, which help fund growth.
“If we are serious about our commitment to ensuring all Hamiltonians are wellhoused and that Hamilton is a city that attracts new businesses, we need to work together to find a better solution to Hamilton City Council's funding gap, rather than relying on proposed development contribution increases.”
He said raising these fees by up to 131 per cent is a “hefty addition” to the cost of building a home or planning a development.
“The math is simple - the higher the cost to develop and build, the higher the cost of purchasing a home.
“Worse still, this proposal could stop new developments from getting off the ground across Hamilton, which has greater flow on effects for both our housing supply [and] the local economy.”
He said development in Hamilton is already “an uphill battle”, with high interest rates, increasing construction costs, falling demand from home buyers and ongoing regulatory uncertainty.
Increasing DCs while expecting the property sector to still be able to deliver new projects to keep up with demand was wishful thinking.
“The development community is happy to pay its fair share of infrastructure costs, and we empathise with the council’s funding and financing difficulties.
“But the determination of what ‘fair’ looks like needs to be considered alongside the need for the private sector to provide housing and commercial developments that support the future growth of the city.”
Hamilton, like much of New Zealand, was facing an infrastructure deficit, Jones said.
Local authorities were trying to plug this gap with fee and rate increases when alternative approaches needed to be looked at.
“Given the cost pressure on development contributions, and proposed increases to city rates, there needs to be a wider conversation on what we want the future of Hamilton to look like, and how we plan to pay for infrastructure moving forward.”
Earlier, local developers also raised concerns.
While he didn’t have exact details of what’s being suggested, Leonard Gardner, director at construction firm Foster Group, said: “DCs are just a component but it is an important part of costs.
Additional costs just make it harder to make things happen.”
Clapson Construction owner Keith Clapson said some developers were finding it tricky to build because of reduced buyer interest in the current economic climate. Higher DCs - as well as higher fees and charges - would add pressure.
“It will further slow the recovery down a bit and increase the price of houses.”