Guidance on implementing the National Policy Statement on Urban Development Capacity

This page has guidance for local authorities on implementing the National Policy Statement on Urban Development Capacity 2016. It includes technical guidance on specific policies. The guidance has been developed by the Ministry for the Environment and Ministry of Business, Innovation and Employment (MBIE).

Introductory guide

This guide provides a general overview of the requirements of the National Policy Statement on Urban Development Capacity 2016 (NPS-UDC) and clarification of selected terms and concepts.

Guidance on evidence and monitoring requirements

This guidance supports local authorities to give effect to evidence and monitoring requirements in the NPS-UDC (see policies PB1 – PB7 and PD1).

What the guide contains

Section of guide

Description

Part one: Introduction

Introduces the evidence and monitoring requirements of the NPS-UDC. It:

  • outlines the intent of the evidence and monitoring requirements, and links with other NPS-UDC policies
  • identifies affected local authorities and timeframes for implementation
  • discusses the content and quality of the evidence and monitoring that local authorities must undertake
  • makes recommendations about process, including how to determine a geographic area of focus for evidence and monitoring.

Part two: Housing demand and development capacity

Recommends methods for assessing the demand and capacity for housing (focusing on the feasibility and take-up of development capacity) to meet the requirements of policies PB1 – PB5.

 

This part of the guide should be read alongside the development feasibility model available on the MBIE website.

Part three: Business demand and development capacity

Includes recommended methods for assessing the demand and capacity for business land and floor area to meet the requirements of policies PB1 – PB5.

Part four: Business and housing interactions

Includes recommended methods for assessing the interactions between housing and business activities and their impacts on each other to meet the requirements of policies PB1 – PB5.

 

It covers three related topics:

  1. the reconciliation of housing and business capacity assessments
  2. the spatial allocation of development capacity
  3. how to measure development and change over time and identify cases where land uses may be shifting.

Part five: Monitoring market indicators

Focuses on policy PB6 in the NPS-UDC. This requires local authorities to monitor a range of market indicators on a quarterly basis. 

 

Explains those indicators which are available on the urban development capacity dashboard on the MBIE website including:

  • prices and rents for homes, building consents relative to household growth
  • housing affordability measures.

Part six: Using price efficiency Indicators

Focuses on policy PB7 in the NPS-UDC. This requires councils to use indicators of price efficiency to understand how well the market is functioning and how planning may affect this, and when additional development capacity might be needed.

 

It explains how to use the price efficiency indicators on the urban development capacity dashboard on the MBIE website including:

  • price-cost ratios
  • rural-urban differentials
  • industrial zone differentials
  • land ownership indicators

Guidance on producing a housing and business development capacity assessment

This report evaluates HBAs from high growth urban areas and suggests how future HBAs can be improved.

It aims to:

  • assist those who are also producing an HBA, such as medium growth councils
  • indicate to high growth councils where improvements to future HBAs can be made.

Tools for analysis of local markets

Development feasibility tool

This tool can help local authorities determine how much of the development capacity for housing allowed in plans would be commercially feasible to develop in the current market.  It takes into account the costs and revenue associated with developing land or homes of different types, size and locations. The tool can be used on a standalone basis to understand the development feasibility of representative sites in specific greenfield or brownfield areas. Alternatively it can help councils to build their own development feasibility model. Analysing development feasibility is an essential part of the housing and business development capacity assessment and basis for ensuring that plans provide sufficient feasible capacity.

Urban development capacity dashboard

This interactive dashboard of market indicators and accompanying guide and technical reports are to help local authorities monitor trends over time and better understand the impact of land use planning on land and development markets.  It will help councils to give effect to policy PB6 (which requires them to monitor market indicators) and PB7 (which requires them to use price efficiency indicators).

The dashboard includes maps, charts and tables and underlying data on:

  • prices, values and rents for housing and residential land over time
  • the number of residential building consents granted relative to the growth in population
  • MBIE’s new experimental statistical series – the housing affordability measure
  • the ratio between house prices and land costs
  • rural-urban differentials
  • industrial zone differentials
  • land concentration of control index.

Indicators are available for each extended urban area and in some cases for territorial authorities, wards and area unit. The dashboard information will be updated quarterly (with price efficiency indicators being updated less frequently as new data is made available).

Guidance on responsive planning requirements

These guidance documents developed in conjunction with MBIE, support local authorities to give effect to the responsive planning policies in the NPS-UDC (see policies PC1 – PC14).

Guide on producing a future development strategy

This guide provides recommendations on how to give effect to the requirements of the NPS-UDC to produce the future development strategy (policies PC12 - PC14).

What the guide contains

Section of the guide

Description

Part One: Introduction

Provides an introductory explanation of the relevant policies, putting future development strategies in context of existing requirements and strategies, and more general process considerations for councils.

Part Two: Giving effect to the future development strategy policies

 

This section provides more detailed guidance on how councils can give effect to specific policies under the NPS-UDC.

Part three: Implementation and review of the future development strategy

 

This section provides guidance on how a future development strategy directs or informs other planning documents and decision making, and comments on monitoring and review.

Guide on setting minimum targets for sufficient feasible development capacity for housing

This guide relates to the requirements in the NPS-UDC for local authorities to set minimum targets for sufficient, feasible development capacity for housing in their regional policy statements and district plans (policies PC5 – PC 11).

The guide clarifies the information sources, form and timing of the minimum targets that are required to meet the NPS- UDC policies.

Background research and technical reports

The following research was undertaken to inform the NPS-UDC, and/or guidance above.

Report

Description

Signals of Under-Capacity: the practicalities of monitoring signals under the National Policy Statement of Urban Development Capacity.

This report informed evidence and monitoring policies in the NPS-UDC, Parts 6 and 7 in the Guide on Evidence and Monitoring, and the urban development capacity dashboard. It has assisted in determining which indicators best signal the need for greater development capacity in resource management plans.

How councils estimate demand and supply of development capacity for housing and business This report informed the evidence and monitoring policies in the NPS-UDC and related guide.  It provides a stock take  on the way nine councils in New Zealand estimated demand for housing and business land, and measure the development capacity available to meet that demand, prior to the release of the NPS-UDC. It also provides a broad evaluation of how this information was used in resource management decision-making.

International approaches to providing for business and housing needs

This report informed the NPS-UDC.  It outlines practice in the United Kingdom and Australia.

Business land: problems and causes Research to support a proposed NPS on urban planning

This report informed the NPS-UDC and Evidence and Monitoring Guide.  It identifies that local authorities have relatively poor information about demand for business land, that zoning may be slow to respond to economic and spatial change in cities, and that “reverse sensitivities” may be creating costs for businesses.

Price efficiency indicators technical report: Price-cost ratios [PDF] [MBIE website]

This technical report describes the methodology and data used to construct price-cost ratios for housing in urban places, for the National Policy Statement on Urban Development Capacity (NPS-UDC).  Price-cost ratios show the extent to which house prices are driven by construction costs versus the cost of land (infrastructure-serviced sections).

Price efficiency indicators technical report: Rural-urban differentials [PDF] [MBIE website]

This technical report sets out the approach to calculating land value differentials across rural-urban zoning boundaries for urban areas in New Zealand. 

Price efficiency indicators technical report: Industrial zone differentials [PDF] [MBIE website]

This technical report sets out the approach to calculating land value differentials across industrial zone boundaries for urban areas in New Zealand, and presents the results of this analysis for five high-growth urban areas: Auckland, Christchurch, Hamilton, Tauranga, and Queenstown.

Price efficiency indicators technical report: Land concentration control indicators [PDF] [MBIE website]

This technical report sets out the approach to developing an experimental set of indicators of land concentration for urban places in New Zealand.
Research on existing urban growth strategies to support guidance on Future Development Strategies This research assesses urban growth management strategies in New Zealand and internationally. It helps inform guidance on the preparation of Future Development Strategies required under Policies PC12 – PC14 of the NPS-UDC.

Advisory groups

Advisory groups were set up to contribute to the development of guidance products. Members were local authority  members, private sector representatives and technical experts. They were selected based on their expertise and their ability to help ensure that guidance material will be relevant to, and used by, local authorities.

The three groups were:

  1. Advisory group on the development of the capacity assessments
  2. Monitoring market indicators advisory group
  3. Planning advisory group

 The role of the advisory groups was to:

  • provide input into the development of guidance to help ensure they are useful and used by local authorities as intended 
  • participate in discussions and provide feedback on proposals and drafts
  • make recommendations to the NPS-UDC project team.
Reviewed:
02/07/18