What is changing

The current system, called development contributions, will be replaced by a new development levy system as part of the “Going for Housing Growth” programme. This change is intended to make it easier for councils to charge developers for the cost of growth‑related infrastructure and ensure that those creating demand for new services help pay for them, rather than those costs falling on the wider community. The preliminary draft legislation includes regulatory oversight, likely through an independent regulator such as the Commerce Commission, to make sure levies are set fairly.

Difference between the old and new systems

Currently, councils can only charge developers a fee based on the specific infrastructure projects identified to support new development. This means councils have to pinpoint exact projects and costs before they can charge. The proposed development levy system instead sets charges across a wider levy area, such as an entire town or district, based on the overall cost of providing capacity for growth. This is intended to give councils more flexibility and make funding more predictable for both developers and councils. However, this requires accurate forecasting of growth and this could also great risk.

How levy areas work

In the new system, each infrastructure service (such as drinking water, wastewater, stormwater, transport, reserves and community facilities) would have a levy area that typically covers a whole district or urban community. Councils could create more than one levy area if there are distinct communities that use different infrastructure. Developers building in that area would pay a share of the cost of infrastructure needed for growth across the zone. If a developer plans to build outside of the areas council has planned for growth to occur, higher development levies may apply to reflect the extra costs to council of servicing such locations.

Impact for councils

For councils, the levy system is designed to improve their ability to fund the infrastructure needed to support growth, even when that growth happens in places that were not part of an earlier plan. It should reduce the financial risk councils face when development is more dispersed, and allow them to allocate funds more flexibly across projects if priorities change. Councils will also need to adopt new levy policies and work within a defined methodology for calculating charges. The preliminary draft legislation includes regulatory oversight, likely through an independent regulator such as the Commerce Commission, to make sure levies are set fairly.

When this could happen

Consultation on the draft legislation is running through early 2026, with a Bill expected to be introduced mid‑year and enacted by early 2027. Councils would be able to begin charging development levies, after adopting levy policies, from around 2028.

Have your say

You can find more detail, have your say and make a submission via the Department of Internal Affairs | Te Tari Taiwhenua website. Closing date for submissions was February 20, 2026.

Our submission

Click here to read our submission.

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