New law simplifying rules for building granny flats could bring extra costs for ratepayers, an economist says.
The Government announced last week that people can build structures of up to 70 square metres in their backyards without a building consent.
Economist Brad Olsen from Infometrics said, in general, people could have an increase in rates on sections with new granny flats.
“Effectively, you would have another unit that would be using resources,“ he said.
“The question would be how that plays out in the change in value of the property, and how councils across New Zealand deal with it.
“If you build a granny flat on a property, which did not previously have one before, presumably there will be an increase in local rates for that property.”
Olsen said if this was not the case, it would mean an increased use of local resources which was effectively unfunded.
“Existing households would be subsidising properties with new granny flats.”
A spokesperson for both Masterton and Carterton district councils said rates were based on whether a part of a property was occupiable – not its size.
“If a new structure, like a granny flat, includes a toilet, shower, and kitchen sink, it’s considered occupiable and will attract additional fixed charges for services like water, sewerage, and recycling [if available], plus a roading charge.
“This applies regardless of the dwelling’s size. Adding granny flats may also affect a property’s overall valuation, which in turn could impact its valuation-based rates,” they said.
A spokesperson for South Wairarapa District Council said the district rated secondary dwellings based on whether they met the definition of a separately used or inhabitable part, and not just on whether they had things like a kitchen or bathroom.
“A separately used or inhabitable part is any part of a property that can be separately used or lived in – such as a self-contained flat,” they said.
“If a new dwelling qualifies as a separately used or inhabitable part, it will attract additional fixed charges for water, wastewater, roading, and the uniform annual general charge.
“It may also increase the property’s capital value, which affects rates based on value, including general rates, stormwater, footpaths, infrastructure resilience, and part of the roading rate.”
The South Wairarapa spokeperson encouraged people to check the funding impact statement [rating] in the district’s long-term plan or email the rates team to help consider the impact.
In announcing the legislative change last week, Housing Minister Chris Bishop said it was currently too hard to build the homes New Zealanders needed, with even the simplest dwellings needing complicated and expensive consent processes.
“These simple dwellings have the potential to be part of the solution for providing families with more housing options. This will be great for grandparents, people with disabilities, young adults, and workers in the rural sector,” he said.
Plans to cut costs and rules for building have been welcomed as a way to reduce homelessness, but concerns are raised about quality control. (Source: 1News)
He said councils could charge development contributions for them which would vary depending on where councils were at and what they choose to charge.
“So that’s meant to recover the costs of growth,” he said.
Bishop said there was no one silver bullet to New Zealand’s housing crisis.
“It’s part of the solution having more multigenerational family units. We just need more houses, and having a 70 square metre granny flat, or a one or two bedroomed unit at the back is part of the solution. I think it’ll be relatively popular,” he said.
Building and Construction Minister Chris Penk said the legislative change could also help boost productivity in New Zealand’s construction sector.
“The exemption is expected to deliver roughly 13,000 more granny flats over the next decade, meaning we’ll see more work for builders in the pipeline without local councils managing unnecessary consenting burdens for simple building work,” Penk said.
An amendment to the resource management act to give effect to the change is expected to be in place by the end of the year, with new exemption coming into effect in 2026.
By Sue Toedoro for Local Democracy Reporting
LDR is local body journalism co-funded by RNZ and NZ On Air.
