Monday 19 December 2011

Zoning costs

Delays in zoning more land for higher density residential use on Christchurch's fringes have very real human cost. Here's David Haywood's nightmare case, though it does have a happy ending.

Despite having total replacement cover for his house, his land having been "Red Zoned" meant the only way of not incurring substantial losses on his riverside Edwardian villa would be to move the house to a new section elsewhere. There is no shortage of land around Christchurch, but very little of it has zoning allowing for smaller section subdivision; consequently, there's been a boom in property prices near town.

And, sections available near town are encumbered. Here's David:
Fourthly, there’s the issue of ‘covenants’.
I’d never even heard of covenants before I started looking for a replacement section, but here’s how they work in New Zealand: when a landowner wants to subdivide rural land into residential sections they must obtain permission from their neighbours – and this usually involves the imposition of various ‘covenants’ that constrain the actions of any future owners of that land. These range from the permitted height of the hedges, to the permitted position of buildings, to the type of dog they’re allowed to own (I’m not kidding). The one covenant that invariably applies to any section within an hour’s drive of Christchurch is a prohibition against the relocation of old houses (no matter how nice), because neighbours fear that it might reduce the value of their own property.
I'd not heard of covenants either; I can't tell what proportion of covenants is demanded by neighbours as condition of a property's subdivision and what proportion is imposed by developers wanting to increase the overall value of the development.

He found an uncovenanted section through a bit of serendipity. But do read his whole article for the rather high costs that legal restrictions on subdivisions have had on his family.

Similar stories, with less happy endings, are surely playing out for lots of red zoned families.

The Productivity Commission rightly pointed to council plans and zoning as fuelling property price inflation, seconding very nice work by Arthur Grimes showing the effects of Auckland's restrictions.

Maybe Council was too busy in the earthquake's aftermath to think about redoing its zoning and subdivision regulations. All the more reason for other places to fix things now, so that property markets can adjust more quickly in case of emergency.


  1. We have them in Tumara Park and we are not allowed pit bulls, tin fencing, our plans had to be approved by the architect and no south Auckland garden features (caravans or abandoned cars). the only person who has defied the regulations with impunity is a council worker strangely enough and yes they do come round and check and give you threatening letters from the councils lawyers.

  2. Hmm. I'd happily agree to be bound against having pit bulls, tin fencing, or abandoned cars on my front yard if my South New Brighton neighbours were similarly restricted. I wouldn't find the constraint binding, but some of them would.

    Some covenants are in place because the developer expects them to be profit maximizing. I'm less sure about the ones where they're extracted by neighbours via RMA processes where the neighbours can more easily demand regulations than extract cash side-payments for abatement.

  3. I'm not sure why these means less supply and higher prices. Wouldn't it mean lower prices, since people would be willing to pay less for land with extensive covenants?

    It doesn't seem to be the same as a quota at all. Simply a quality standard, and in fact often a low one.