Enabling Minor Residential Units: Changes to National Direction and the Building Act to allow 'granny flats'

The New Zealand government has announced significant reforms to national direction under the Resource Management Act 1991, and the Building Act 2004, to facilitate the construction of minor residential units (MRUs), also known as 'granny flats'. These changes aim to reduce regulatory barriers, streamline approval processes, and encourage housing growth.

 

National Direction Changes

The government has proposed new 'National Environmental Standards for Granny Flats', which will allow minor residential units to be built without requiring resource consent, provided they meet specified standards. Key permitted activity standards include:

• Size Limit: The MRU must be 70m²or less in floor area.
• Location: The unit must be situated on a site with an existing principal dwelling.
• Building Height: The maximum height is 5m, ensuring compatibility with surrounding properties.
• Setbacks: Minimum setbacks from boundaries must be 1.5m, unless otherwise specified by local council rules.
• Infrastructure Requirements: The unit must have adequate access to water supply, wastewater disposal, and stormwater management.
• Natural Hazards: The MRU must not be located in areas prone to flooding, coastal erosion, or other significant natural hazards.
• Papakāinga Considerations: The NES also includes provisions for papakāinga housing, allowing Māori landowners to build up to 10 homes on ancestral land without requiring resource consent.

The NES aligns with the 'Going for Housing Growth' programme, which is aimed at freeing up land for development by removing unnecessary planning barriers and providing incentives for communities and councils to encourage growth. This initiative is part of a broader effort to improve housing affordability and increase the supply of small dwellings.

Feedback on the proposal closes on 27 July 2025, with the intent of the new NES being in force by the end of 2025.

 

Building Act 2004 Amendments

The Building and Construction (Small Stand-alone Dwellings) Amendment Bill introduces exemptions for MRUs from the building consent process, provided they meet specific conditions. These conditions include:

• The MRU must be new, stand-alone, single-storey, and 70m²or less.
• Construction must follow simple design specifications, such as lightweight materials for the roof and frame.
• Only authorised professionals can carry out the building work.
• Councils must be notified before and after construction by applying for a project information memorandum (PIM).

The government proposes to ensure compliance through occupational licensing regimes and liability settings. This approach is expected to reduce costs and time delays, making it easier for homeowners to build small dwellings.

The Bill will also introduce changes to the Local Government Act 2002, which will allow a territorial authority to attach a development contribution notice for any charges owing in relation to the proposed work when issuing a PIM.

The Bill is currently before the Select Committee for Transport and Infrastructure and is to be reported back to the House by 23 September 2025.

 

Impact of the Reforms

These changes are aimed at:

• Increasing housing supply by making it easier to build minor residential units.
• Reducing costs for homeowners, with estimates suggesting that eliminating the building consent requirement could save around NZD4,431 per dwelling (not including resource consent costs).
• Supporting urban growth by providing more flexible housing options.

The reforms reflect the government’s intent to pave the way for more accessible and affordable housing solutions.