Another planning change: Auckland may introduce a new low-density residential zone concept

On 18 August 2022, the Medium Density Residential Standard (MDRS), jointly announced by the two parties in October last year, took legal effect. This means that building up to three homes of up to three storeys on most residential land in cities including Auckland, Wellington and Christchurch no longer requires resource consent. Buildings can cover up to 50% of the site. Previously, district plans allowed only one two-storey home.

As the MDRS took effect, Auckland Council released its intensification changes, developed to meet the central government’s National Policy Statement on Urban Development (NPS-UD) and the new MDRS requirements while also reflecting Aucklanders’ needs. These included the map for amendment 78 to the Auckland Unitary Plan (Plan Change 78 Map), along with instructions for using it. The introduction of Plan Change 78 means the council must unlock more development potential in central Auckland, allowing high-density buildings of 6 storeys or more within walking distance of the city centre, major business centres and transport hubs. Other residential areas within Auckland’s urban boundaries must generally enable 3-storey development. Auckland Council’s general manager of plans and places, John Duguid, said the original Auckland Unitary Plan had already provided enormous impetus for housing and economic development, and these rule changes would significantly affect Auckland’s development in the coming years. The council’s general manager of resource consents, Ian Smallburn, emphasised that homeowners and developers must still comply with all other rules and standards under the Resource Management Act, avoiding potential adverse effects on the environment and other people during development.

YIJU: What effects will the nationwide MDRS and Plan Change 78 to the Auckland Unitary Plan have on the property market?

Kai Deng：On the positive side, developments of 3 homes or fewer on sites in many areas can already be designed and submitted for approval under the new MDRS provisions. This has been very positive for unlocking land in Auckland. The effects are particularly evident in new-build projects: relaxed recession plane and floor area ratio requirements give designers more scope to create more practical layouts and attractive exteriors. On the negative side, from a developer’s perspective, although Plan Change 78 considerably relaxes recession plane and floor area ratio requirements, it also introduces new design requirements. For example, new safety and privacy buffers require an additional 1-metre-wide strip alongside the driveway, potentially reducing internal floor areas further. There are also new requirements for exterior space design. For developments of more than 4 homes, each main living room must measure 6 metres by 4 metres, whereas developments of 3 homes or fewer require only 4 metres by 4 metres. In other words, although Plan Change 78 increases density, the number of homes may be lower than under the previous policy.

Many owner-occupier buyers also worry that Plan Change 78 will make their existing neighbourhoods more densely developed. In fact, unlocking land supply at its source and increasing density within urban areas with limited infrastructure resources is a fundamental national policy direction for New Zealand over the next 20 to 30 years, and an inevitable stage of urbanisation. In terms of living environments, buyers still have plenty of choice in low-density residential and lifestyle areas.

YIJU: What investment advice would you offer buyers in the current challenging market and under the MDRS policy?

Kai Deng：The MDRS is an ‘upgraded version’ of the Auckland Unitary Plan, with relatively stricter standards and additional design requirements. Before buying land, developer buyers need to research it, understand its characteristics in greater detail, and maintain good communication with designers and frontline salespeople so that subsequent design and development suit the site. Research is equally important for owner-occupier buyers. Planning information, particularly policies relating to the MDRS, is available on Auckland Council’s official website. Of course, asking a trusted property professional to explain and analyse market changes can also save time. A competent real estate salesperson keeps building their professional knowledge as policies are updated, becoming familiar with properties and the planning provisions applying to their areas. This enables them to provide more professional service and help buyers and sellers assess the value of prospective or existing properties more accurately.

Gavin Han：Looking back, Auckland has changed enormously. Before making decisions, we must keep up with information arising from the MDRS, Plan Change 78 and other policies. These changes affect not only an individual property but also neighbouring homes and surrounding streets. Buyers first need to clarify their purpose: is the purchase for their own home or an investment? This helps real estate salespeople identify suitable properties more precisely. Second, in unfamiliar areas, buyers should ask detailed questions and understand all aspects of a prospective property to avoid losses from buying or investing blindly. For example, could a future neighbour subdivide and develop their land? If so, what kind of development could occur? How would it affect your property: would it increase or reduce your investment returns? If you intend to live there, you should also consider whether such potential development could affect your privacy, safety and peace and quiet.