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Independent report examines councils' costs

The costs of councils' building, consent, inspection and approval functions have been examined in a report commissioned by the Department of Building and Housing.

The report, Identification and analysis of building consent, inspection and approval costs, was commissioned last year to identify the costs around the consent, inspection and approval process. It provides a good starting point to assess some topical industry issues. Its key findings include the following.

  • Consent fees have doubled over the past seven years, but have remained static as a proportion of total overall building costs, running at less than one percent. The largest cost components are building materials, project management, and overhead costs and labour.
  • Councils operate different cost recovery models, with some councils fully recovering all their consent fees and others subsidising the fees to varying levels, with a clear trend to cost recovery over recent years.
  • Builders and developers report that their biggest costs in the consent, inspection and approval process are not the actual level of the fees, but the holding and down time costs caused by delays in getting consent approvals and inspections.

The Building Act 2004 aims to promote safe, healthy, fit-for-purpose developments that will satisfy the expectations of consumers, government and the building industry. However, since it was passed, sector stakeholders including builders, property developers and building owners, as well as building consent and territorial authorities that deliver regulatory services, have been raising concerns about cost increases for building projects. These increases have often been attributed, to varying degrees, to the implementation of the Building Act.

The Department commissioned the report to assess the different costs involved in building and construction, and to identify, as far as practicable, how the Act has impacted on overall building costs. Particular focus was given to costs around the building consent, inspection and approval functions of local councils under the Act.

Changes in building control costs and wider building construction costs from 2000 to around 2007, and across different types of buildings, are examined. Data was selected from a range of sources including surveys of councils, discussions with building industry participants, indicative building cost data from industry consultants, and Statistics New Zealand. In gaining an accurate picture, the report highlights the importance of considering the councils' costs in the wider context of the cost dynamics of the building sector and the broad economy.

People are encouraged to read the report - hard copies are available from the Department by phoning 0800 242 243, and it is also freely available on the Department's website: http://www.dbh.govt.nz/pub-bca-accreditation