Homeowners can now build granny flats up to 70 square metres in their backyard without a building consent.
The legislation, which will come into effect early in 2026, was a key commitment of the coalition government.
The Building Act changes were passed through their third and final readings with unanimous support from MPs.
Homeowners will still have to notify the council at the beginning and end of construction, and these builds will still need to be built by professionals and meet Building Code standards.
Building and Construction Minister Chris Penk says it’s a positive step for boosting industry productivity.
“The exemption is expected to deliver roughly 13,000 more granny flats over the next decade, meaning we’ll see more work for builders in the pipeline without local councils managing unnecessary consenting burdens for simple building work,” he says.
He adds that the legislator changes will free up local councils so they can focus on more complex building projects with greater inspection and consenting process needs.
“Even with the building consent exemption in place, it’s important Kiwis remember that they will only be eligible for the exemption if their granny flats are simple in design, meet the Building Code and building work is carried out by authorised building professionals.
“Homeowners will also need to notify their local council before they begin building, and once the granny flat is completed.
“I know that many homeowners have been following this work with interest over the past year and may be wondering what comes next.
“The new exemption will come into effect in Q1 2026, but New Zealanders can start planning now and over their summer breaks.
“A good place to start is having conversations with designers and builders to understand what’s possible on your property under the exemption.
“Meanwhile, the Government is working quickly to ensure that councils, homeowners and building professionals have access to the necessary forms, templates, and guidance before the exemption comes into effect early next year. We’ll have more to say on this soon.”
“It’s currently far too hard to build the homes New Zealanders need, with even the simplest dwellings requiring complicated and costly consent processes,” RMA Reform and Housing Minister Chris Bishop says.
“We know increasing housing availability directly translates to lower living costs for our communities. That’s why the coalition Government is making it faster and more affordable to build granny flats up to 70 square metres.
“These simple dwellings have the potential to be part of the solution for providing families with more housing options. This will be great for grandparents, people with disabilities, young adults, and workers in the rural sector.”
Indeed, this consent streamlining comes at a time when broader building costs remain historically high. National construction costs have surged around 61% since 2015—nearly twice the pace of general inflation—according to QV Cost Builder data.
The price of a standard 175m² home has risen far faster than consumer prices, driven by steep spikes in materials and labour during the pandemic years. Although inflation has cooled, the higher baseline means affordability remains a key challenge for aspiring homeowners and developers alike.
The past decade’s volatility saw dramatic increases in the cost of materials such as cedar weatherboards, radiata pine, and steel roofing, which in some cases more than doubled.
However, analysts say 2025 has brought welcome stability: annual construction cost increases have slowed to about 1%, reflecting steadier supply chains and softer demand following the post-pandemic boom.
This moderation could help ensure the new granny flat exemption delivers genuine affordability gains.
With the cost of building no longer rising at breakneck speed, homeowners may find it easier to budget and plan their smaller dwellings with confidence.
As the construction sector adjusts to more predictable conditions, industry experts say the outlook is cautiously optimistic: steady pricing, clearer rules, and simpler processes may finally combine to make small-scale homebuilding more achievable for ordinary New Zealanders
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