Identification and analysis of building consent, inspection and approval costs: Building consent fees
Building control costs are funded by councils from building consent fees and rates in proportions set by each council in its revenue and financing policy. The proportion of costs that councils sought to recover from fees ranged from 100% down to 30% in 2004/05, and 100% down to 45% in 2006/07. Table 1 shows the movement in funding percentages between 2004/05 and 2006/07 for the 48 councils that provided funding details for both years.
Table 1: Percentage of building control costs funded from fees and charges
| % funded from fees |
Number of councils |
| |
2004/05 |
2006/07 |
| 100% |
29 |
31 |
| 70-89% |
6 |
10 |
| 50-69% |
12 |
7 |
| 0-49% |
2 |
1 |
| Lowest |
30% |
45% |
Fifteen of these councils funded a higher proportion of building costs from fees and charges in 2006/07 than in 2004/05, while seven funded a lower proportion from fees and charges in 2006/07 than in 2004/05.
Having decided their theoretical funding split, councils then set their building consent fees at a level they believe will meet their funding objectives. In times of large fluctuations in building consent application numbers, the level of funding received from consent fees will greatly exceed or fall short of the desired level. This is evident in a number of responses to the council questionnaire, where a comparison of stated building consent revenue and building control costs fluctuates widely from the stated funding percentages.
Consent fees consist of a number of elements. These are:
- project information memorandum1 (PIM) fees, which cover processing and issuing a PIM in respect of the building work
- application fees, sometimes called lodgement fees, which may cover an initial vetting of the application to ensure all required documents are present, and lodging the application into the council’s system
- administration fees, which may cover activities such as scanning, photocopying etc.
- assessment fees, which cover the technical assessment of the application for compliance against the Building Code, and issuing the consent
- inspection fees, which cover the required inspections for the project to ensure it is built in accordance with the consented documents and the Building Code
- certification fees, which cover issuing a code compliance certificate (CCC) and, where necessary, a compliance schedule.
Within council fees there may be other costs such as peer review of designs, or referral to the Design Review Unit of the New Zealand Fire Service. These apply on a case-by-case basis. While some councils have set fees for these elements, usual practice is to recover actual costs from the consent applicant.
Councils use a variety of methods to set consent fees, some of which are described below.
1. Time based
- The actual time spent on administration and assessment is charged at set hourly rates.
- Charges are published as a dollar per hour figure ranging from $60 to $196 per hour (average $94, median $87), or as a formula. These are calculated by applying a multiplier (to cover overheads) to the salary of the staff member doing the work, and dividing that by a notional number of chargeable hours for the year.
2. Per consent
- A range of fees is set to cover various types or values of building work.
- Typically a fixed fee for minor works such as solid fuel heaters and proprietary garages.
- For larger projects, the fee scale may be based on:
- value bands, with a set fee for each band
- type of work (eg, new dwelling, commercial, industrial), with a set fee for each type
- a combination of the two.
- Value bands are usually set up to $500,000 or $1,000,000. Above those levels, the fee charged is usually the fee for the top band plus an extra amount per $50,000 or $100,000 of value.
- Fees may include all fees from PIM to CCC or may just cover application to assessment, with PIMs, inspections and CCCs charged separately.
- Councils reserve the right to charge additional fees where the actual costs incurred in processing the application exceed the fee, or if extra inspections not provided for in the fee are required.
3. Value of work
- Consent fees are based on the value of the building work, and are charged at a fixed rate per $1,000 of value.
- Fees are either set at a level to cover all charges (except for levies), or to cover application, administration and assessment stages only, with separate charges for PIMs, inspections and CCCs.
- Councils reserve the right to charge additional fees where the actual costs incurred in processing the application exceed the fee, or if extra inspections not provided for in the fee are required.
4. Case by case
- Fees are charged on the maximum building work value up to which the chosen method of charging applies.
- All consents above that value are considered on a case-by-case basis.
- This method is used by both smaller rural councils and larger councils such as Dunedin City.
There are also councils that use combinations of the above methods for setting fees. Regardless of the system used, typically a deposit is set, and collected, at the time of application. The deposit may be estimated at a level to cover all fees, or just those from PIM to assessment. Typically, councils will process the application, grant it, and invoice the applicant for any assessment fees, estimated inspection fees, and certification fees not covered by the deposit. The fees are usually required to be paid before the consent is issued. Some councils set a non-refundable deposit to cover assessment.
In most cases where there is not a single set charge to cover all fees, councils charge for inspections at a set rate per inspection. Inspection fees range from $75 to $155 per inspection, with an average of $101 and a median of $98. Some councils with large areas to cover also charge for travel, either on a time or distance basis. Others average the time taken for inspections, including travel, and charge a flat rate regardless of where the inspection takes place.
1 A project information memorandum is issued by the territorial authority, and provides information about the land on which building work is proposed and about the requirements of other Acts that might be relevant to proposed building work. A PIM must be issued before a building consent can be issued.