Wellington Mayor Justin Lester vents his frustration at the monopoly practice of landbanking in the city fringes.

Undeveloped land with the potential for 2750 new houses is in the sights of Wellington's mayor to address the city's housing crisis.

At his State of the City breakfast meeting on Monday, Justin Lester targeted two major 'landbankers' who owned 90 per cent of 490 hectares of land on the city's fringes.

The land was enough to meet 14 years of demand for greenfield sections.

ROBERT KITCHIN/STUFF Wellington Mayor Justin Lester said average rates would increase by 3.3 per cent, rather than the 5.1 per cent originally forecast. He also wants to tackle landbanking to address the city’s housing issues.

Lester said he had Government support to take action.

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"But I want to signal ... we will look at every available option – including financial incentives or penalties – to ensure our city has the pipeline of new homes it needs," Lester said.

At the breakfast meeting, he discussed how tackling landbanking was critical to addressing the city's housing issues.

He vented his frustration at the owners of land on the city's fringes, who he said were not looking at development.



The landbanked areas identified by Wellington City Council. Image: WELLINGTON CITY COUNCIL

"The land is only released to the market as the owners want. But the problem is, it's too slow.

A rates moratorium had been successful at seeing more sections consented in Wellington, but owners were not putting any dwellings on them, Lester said.

There was no motivation to require them to put houses on the sections and there was strong public interest in increasing competition for development of that land.

During the coming months, Wellington City Council will look at specific measures, using the Long-Term Plan, to encourage the development of thousands of new homes on the market during the next 10 years.

These could included targeted rates and levies for holding land over a certain period of time, making it more expensive for the owner to do so, Lester said.

Despite spending more than $5m on unavoidable emergency costs after the November earthquake, the council's books were in good shape, he said.

Wellington had low levels of debt and the strongest credit rating of any government entity in the country.

CAPITAL RATES TO INCREASE

Lester also said the projected rates increase for Wellingtonian this year would be an average of 3.3 per cent, down from a forecast of 5.1 per cent.

It was possible that residential rates could drop further before being finalised in the middle of the year, but that would depend on a revaluation of buildings and homes in late May or early June.

The lower rates rise was the result of the council saving $11 million, by re-prioritising and re-phasing capital expenditure, better use of council office space, building consent processing in-sourcing from Auckland, increases in energy efficiency, and improved procurement processes, Lester said.

Wellington Chamber of Commerce chief executive John Milford said the project increase was a positive outcome considering the cost of the November earthquake threatened to push it higher.

But Taxpayer's Union executive director Jordan Williams said the rate hike was as a "slap in the face" to Wellington ratepayers, given it was two-and-a-half times the rate of inflation.

Trying to sell a 3.3 per cent rate hike by saying "at least it's not 5.1 per cent" was "a sneaky bait and switch" that will fool no one," he said.