Feedback Sought To Reduce Building Consent Costs And Improve Sector Performance

We’re seeking feedback on proposals to reduce the consent costs of building work and use some of the surplus Building Levy funding to improve regulatory services, says Anna Cook, General Manager Building System Performance.

A consultation is now open to anyone who interacts with Building Levy, whether as a home or building owner who has, or may in the future, build or undertake renovations; building consent authorities; or someone who receive services the Building Levy funds.

“We are proposing changing the Building Levy threshold to $65,000, which will reduce the number of Levy payers by approximately 36 per cent.

“We’re also proposing to reduce the Building Levy rate to $1.48 including GST per $1000 of building work value. This would reduce the cost of a building consent over the new threshold by approximately 15 per cent for all Levy payers, irrespective of the value of their building work.

“For example, under the new proposals, a homeowner building their home with an estimated construction value of $467,000 would pay a building consent fee of approximately $690, down from the current $817.

“Similarly, a property owner building a new commercial building with an estimated construction value of $20 million would pay a building consent fee of approximately $29,000, down from the current $35,000.”

Councils collect the Building Levy and retain a three per cent fee to cover administrative costs. It is expected there will be minimal financial impact for councils over the next three years and the reduction of the fee should be offset by the reduced workload. There may also be up-front administrative costs for the councils to update their systems with the new Building Levy threshold and rate however, we anticipate the remaining fee retained will cover this.

"The financial impact on building consent authorities will vary depending on the number of consents they process. We want to understand the impact of these proposals to fully appreciate any challenges and benefits.

“Over time, a significant surplus has built up from the Building Levy despite reducing the rate previously in an attempt to reduce this balance. However, the recent unprecedented levels of building activity and noticeable cost increases over the last few years have meant the surplus continued to grow.

“This surplus is an opportunity to provide more support to the sector, and we’re proposing to reinvest some of this surplus into improved regulatory services.” Anna Cook said.

For more information, including details on how to make a submission, visit https://www.mbie.govt.nz/have-your-say/the-building-levy or email building@mbie.govt.nz. The consultation closes 5pm, Monday 29 May.

· The current Building Levy threshold is $20,444 including GST.

· The current Building Levy rate, payable when building work value is over the current threshold, is $1.75 including GST per $1,000 building work value.

· Three proposed areas of investment in the sector from the surplus Building Levy:

o Lift digital capability and better support the information, education and operational policy functions to deliver content through improved digital channels. Providing easier access to information to increase capacity, capability, improve confidence and reduce misinformation in the sector.

o Increase the regulatory reform programme to enhance the performance of the sector with improved guidance. Supporting greater building system compliance and improving the safety and resilience of our built environment.

o Increase investment in the building industry around climate change including support the provision of policy advice on regulatory changes within the Ministry’s Building for Climate Change programme to ensure homes and buildings are built to withstand the future effects of climate change.

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