National Policy Statement on Urban Development Capacity 2016

A new National Policy Statement on Urban Development Capacity will come into effect on 1 December 2016. Intended to provide local authorities with direction on urban planning, the NPS comprises one of the Government’s responses to the Auckland ‘housing crisis’.

National Significance

The NPS recognises the national significance of urban environments (including their ability to develop and change), and of providing sufficient development capacity to meet the needs of communities and future generations. It envisages development both going ‘up’ (intensifying existing urban development) and ‘out’ (releasing new greenfields areas).

Housing Affordability

The Government has identified a lack of housing supply as one of the key drivers of the current housing crisis, and suggests that the NPS will help to secure the supply of housing needed to meet demand (thus minimising house prices and contributing to housing affordability overall). The NPS defines ‘demand’ broadly, including demand for urban dwellings in the short, medium and long term, and demand for different types of dwellings, in different locations, and at different price points. The NPS also applies to business land, recognising that commercial spaces form a crucial part of a well-functioning urban environment.

Objectives and Policies

The NPS applies differently across New Zealand, focussing on larger urban areas. Its objectives apply to all local authorities and decision-makers. Policies apply to any “urban environment”[1] expected to experience growth, with additional policies for “high growth areas”[2] (such as Auckland, Tauranga and Queenstown) and “medium growth areas”[3] (such as New Plymouth, Nelson and Wellington).

The objectives and policies of the NPS are broadly geared towards:

1) Planning decisions resulting in effective and efficient urban environments that have sufficient opportunities for the development of housing and business land.

2) Creating a robust, comprehensive and frequently updated evidence base to inform planning decisions in urban environments.

3) Responsive planning, in which local authorities adapt and respond to evidence about urban development, market activity, and the social, economic, cultural and cultural wellbeing of people and communities in a timely way.

4) Coordinated planning evidence and decision making across local authority boundaries. 

In practice, the NPS requires local authorities which have a high-growth or medium-growth area within their district or region to produce a Housing and Business Development Capacity Assessment on a 3-yearly basis. This assessment must consider (amongst other things) the demand for, and supply of, a range of housing and business land uses; market indicators; current planning provisions; and changes in demographics and population in order to estimate the development capacity feasibility for their area.

Such local authorities[4] will also be required to set a level of feasible development capacity, establish minimum targets (which must be incorporated into the relevant Regional Policy Statement and regional and district plans must in turn give effect to those RPS provisions), and produce a Future Development Strategy which demonstrates and identifies the potential location, timing and sequencing of feasible development opportunities.

The NPS’ Policies will become operative over a varied time period between 1 December 2016 and 31 December 2018.


Minister for the Environment Nick Smith recently stated that the NPS “sits alongside” the Auckland Unitary Plan and upcoming reforms to the Resource Management Act 1991 as part of the Government’s efforts to improve housing affordability.[5]

The NPS encourages favourable planning conditions for new urban development and makes councils assess and plan for demand in the short, medium and long term, including via a range of market and development-related assessments. This focus appears sensible. However, and importantly from our perspective, the NPS stops short of addressing the issue of development infrastructure (in particular, in terms of allocating funding). Funding, and timing and allocation of responsibility between local authorities, Council Controlled Organisations (in Auckland), network utilities, developers and home owners is in our view often a key issue in planning and consenting urban development.

Our view is that the NPS is unlikely to have a material impact on housing prices. However, it is part of a central government response on the issue and provides direction to local authorities. Short of establishing taxpayer funding to centralise control over provision of utilities for development, we are unsure of what else could be done.

How might the new NPS affect you?

From 1 December, local councils must give effect to the NPS in their regional and district plans, and must have regard to it when determining an application for resource consent. This means that applicants should address the new NPS in their applications for resource consent.

Please contact one of our team should you wish to discuss the National Policy Statement for Urban Development Capacity.


[1] Defined as an area of land containing or intended to contain, a concentrated settlement of 10,000 people or more and any associated business land, irrespective of local authority or statistical boundaries.

[2] Defined as those with a resident or visitor population of over 30,000, and a projected growth of 10% or more between 2013-2023.

[3] Defined as those with a resident population of over 30,000 and projected population growth of 5-10% between 2013-2023.

[4] That is, those which have all or part of a high-growth or medium-growth area within their district or region.

[5] Press Release by Minister for the Environment Nick Smith, “NPS on Urban Development agreed as building boom continues”,

Posted on November 21, 2016 .