To build or not to build?

Posted July 19, 2022

If you are involved in a building project, whether it be as homeowners building your dream house or as a developer taking on a larger scale plans, chances are you have experienced increased costs and time delays with your build than you expected at the start of your project.

The construction industry is currently facing a perfect storm of issues, including:

•             Ongoing problems with product shipping delays and a shortage of skilled workers and contractor illness as a result of COVID-19;

•             Substantial increases in construction costs, particularly building materials;

•             The ability to complete projects with the ongoing shortage of Gib Board and timber; and

•             Annual inflation reaching a 30-year high, with OCR hikes and interest rate increases as a result.

All of these mean that we are now looking at substantial increases in the overall construction costs than would have been the case even as recently as last year.  For example, the average cost of building a standard three-bedroom home in New Zealand's main centres has risen 21% since this time last year, according to QV CostBuilder.

Understandably, this has made many nervous about starting new projects, and we are now starting to see development plans paused while people look for ways to manage, or avoid, the increase in build costs.  While there is uncertainty about how long the industry will be affected, if your project is also reliant on a resource consent you can take comfort knowing that your resource consent is most likely subject to standard lapse period of five years.  This means that you have five years from the date it was issued before you have to implement your resource consent to prevent it lapsing.  So if you’re worried about build costs but keen to keep your project moving as much as you can, now is a good time to get your resource management planning sorted as you can still apply for your resource consent knowing that you will have five years to give effect to it.  If you’ve already had your resource consent issued and you’re concerned that you are running out of time to give effect to it (which has been common during the uncertainty of the pandemic) you can apply to extend the lapse date of resource consent.  There are certain tests to meet to receive an extension – get in touch if you want further advice about what this entails.

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