Development Levy Legislation: Impact for Developers
Late last year, the government released details of proposed reforms to replace development contributions (DCs) with development levies(DLs). Draft legislation is currently out for consultation.
Proposed timing and key changes
- Legislation is expected to come into force in early 2027.
- Councils would start charging development levies from July 2028.
- New levy policies would apply as soon as they are notified for feedback, not once they are adopted. This means applicants would no longer be able to rely on the old policy during consultation, as is currently possible with DCs.
- Transitional discounts would apply to increases in charges:
o July2028–July 2029: two‑thirds of any increase is discounted.
o July2029–July 2030: one‑third of any increase is discounted.
- The policy in force at the time an application is lodged determines the contribution or levy.
- If a levy or contribution is not paid within three years of resource consent approval, Council may reassess it under thecurrent levy policy. The new amount would apply 30 working days after notice, and could then increase again each time a new policy is released.
Impact on applications lodged in early 2025: Applications lodged under the 2022 Development Contributions Policy will only have that amount fixed for three years after resource consent approval. After that, if payment has not been made, Council may require payment under the development levy regime.
For example, if resource consent is approved in September 2026:
- Payment before September 2029: the 2022 DC amount applies.
- Payment after September 2029 but before 1 July2030: the 2028 development levy applies, with a one‑third discount on the increase from the 2022 DC amount.
- Payment after 1 July 2030: the 2028 development levy applies in full.
- Payment after the next levy policy (likely early2031): the levy amount under that policy applies immediately, with future policy updates applying as they are released.
Overall implications: For developments that assumed the2022 DC amount would be locked in indefinitely, and where payment is unlikely before 2029, these reforms could significantly increase costs. As development levy amounts are not yet known, it is unclear whether they will be higher or lower than current DC levels.
