Granny Flat Reforms Expanded to Unlock Housing Supply and Boost Off-Site Construction

At the centre of the reforms is the Government’s commitment to cutting red tape while maintaining robust safety and quality standards.

The Coalition Government is accelerating housing reform by expanding its granny flat building consent exemptions, a move designed to streamline construction, reduce regulatory barriers, and significantly broaden housing options for New Zealand families.

The latest changes, announced by RMA and Housing Minister Chris Bishop alongside Building and Construction Minister Chris Penk and Associate Finance Minister Shane Jones, represent a major shift toward faster, more flexible housing delivery—particularly through modern off-site construction methods.

At the centre of the reforms is the Government's commitment to cutting red tape while maintaining robust safety and quality standards. The initiative builds on earlier changes introduced in January, which removed the requirement for both building and resource consents for most granny flats up to 70 square metres, provided they meet nationally defined criteria.

"These granny flat reforms are a clear example of how we are simplifying the system to make housing more accessible and affordable," Mr Bishop said. "We're giving homeowners the tools to better utilise their land while reducing compliance costs and delays that have historically slowed down small-scale housing projects."

Surging Demand Signals Strong Public Uptake

Early indicators suggest the policy is already resonating strongly with the public and industry stakeholders. Since the rules came into effect, more than 52,000 downloads of official guidance materials have been recorded from the Ministry of Business, Innovation and Employment (MBIE) website—highlighting widespread interest from homeowners, builders, and local councils.

Industry analysts note that granny flats—often referred to as minor dwellings—are increasingly seen as a practical solution to New Zealand's housing shortage, offering affordable, flexible living arrangements for extended families, elderly relatives, or rental income.

Off-Site Construction Gets Major Boost

A key innovation in the latest reforms is the enabling of off-site construction prior to Project Information Memorandum (PIM) approval, a change expected to significantly reduce build times and improve efficiency across the sector.

"This is a practical, forward-looking adjustment," Mr Penk said. "By allowing homes to be built off-site before a PIM is issued, we're enabling manufacturers to deliver ready-to-install homes faster, while also giving buyers the opportunity to inspect properties before committing."

Off-site construction—also known as modular or prefabricated building—has been gaining momentum globally due to its ability to cut construction timelines by up to 50% and reduce material waste by as much as 30%. The Government's move positions New Zealand to better leverage these efficiencies, particularly in addressing urgent housing needs.

Importantly, regulatory safeguards remain in place. A PIM will still be required before any on-site installation begins, ensuring that each structure is suitable for its intended location and complies with local planning requirements.

Expanding Material Innovation While Maintaining Standards

The reforms also extend the consent exemption framework to include Structural Insulated Panels (SIPs) that hold a CodeMark certification. This change reflects growing confidence in advanced building materials that offer superior insulation, energy efficiency, and structural performance.

By recognising SIPs and similar innovations, the Government is encouraging the adoption of modern construction techniques while ensuring compliance with New Zealand's Building Code.

"These updates strike the right balance between innovation and assurance," Mr Penk added. "We're opening the door to new building methods without compromising on safety or durability."

More Choice, Greater Flexibility for Homeowners

Under the updated framework, homeowners retain full flexibility in how they approach their projects. They can opt for:

• Consent-exempt builds using standardised designs

• Fully off-site manufactured homes

• Traditional on-site construction with full building consent

This multi-pathway approach is expected to cater to a wide range of budgets, timelines, and personal preferences.

Associate Finance Minister Shane Jones emphasised the practical benefits for families, particularly those needing immediate housing solutions.

"For whanau facing urgent housing needs, having ready-to-go granny flats available is simply common sense," Mr Jones said. "These reforms deliver real, tangible options and align with our commitment to practical housing solutions under the Coalition agreement."

Economic and Productivity Gains Expected

Beyond addressing housing supply, the reforms are also expected to deliver a productivity boost to the construction sector. By reducing administrative bottlenecks and enabling parallel construction processes, builders and manufacturers can operate more efficiently, potentially lowering overall project costs.

Experts suggest that streamlined consent pathways and increased use of prefabrication could help alleviate labour shortages and stabilise build timelines—two persistent challenges in New Zealand's construction industry.

Next Steps and Implementation Timeline

The Government has confirmed that the latest changes, including technical refinements to improve clarity and usability of the rules, are expected to be formalised through an Order in Council in the third quarter of 2026.

As the reforms continue to roll out, Kiwis are likely to see a growing range of pre-designed, ready-to-install granny flats entering the market—offering faster, more affordable housing solutions tailored to modern living needs.

With demand rising and innovation accelerating, the expanded granny flat exemption framework is shaping up to be a cornerstone of New Zealand's broader housing strategy—one that prioritises accessibility, efficiency, and practical outcomes for families across the country.