Identification and analysis of building consent, inspection and approval costs: Introduction

The Building Act 2004 provides a framework to support and promote safe, high quality developments that will satisfy the expectations of consumers, government and the building industry. Since the Act was passed in 2004, concerns have been raised by territorial authorities and consumers (eg, builders, property developers and building owners) about increased costs for building projects. Cost increases are often attributed, to a varying degree, to the implementation of the Act. The Department of Building and Housing (the Department) wishes to clarify, as far as practicable, whether and how implementation of the Act has led to increased costs and, if so, to identify the significance of the impact on the overall cost of building projects.

This report focuses on changes in building control costs and building costs in the period from 2000/01 to 2006/07, and the contribution of the Building Act to those changes. The report does not consider changes to land prices as they do not directly influence the total costs of construction. The effect of land prices on total project costs is dealt with in housing affordability studies such as the Final Report of the House Prices Unit: House Price Increases and Housing in New Zealand -March 2008 prepared for the Department of Prime Minister and Cabinet (DPMC).

Data for this report was sourced from:

• councils by way of questionnaire and by further direct information requests and discussions with council building control departments
• schedules of fees and charges published on council websites
• discussions with participants in the building industry
• construction cost tables developed by independent industry consultants
• Statistics New Zealand.

Fifty five councils (refer to Appendix 1 for the list of Councils) returned the questionnaire (refer to Appendix 2 for a copy of the questionnaire). All councils were also asked to provide fee schedules covering the period from 2000/01 to 2006/07, and 43 provided schedules covering at least some of this period. Of the ten largest cities, only Christchurch and Manukau Cities did not complete the questionnaire.

A selected group of councils were also provided with details of two sample non-residential buildings and asked to provide estimates of processing, inspection and approval costs under their fee structures for each of the years 2004/05 and 2006/07.

In undertaking the analysis of costs, we note that:

• there is a wide range of policies, charging methods and fee calculations across councils that limits the comparability of building consent fees and other fees and charges
• the lack of comparability prevents simple analysis and requires significant additional research to ensure valid comparison
• there is a lack of data for 2000/01
• judgement has been applied in many cases to interpret the application of costs obtained from council fee schedules.