Building levy
Last updated: 12 March 2024
The building levy supports investment in and development of the building sector. It is payable by building owners or developers on successful building consent applications for projects that are worth more than a prescribed threshold.
On 11 March 2024, the Government announced Cabinet’s approval of a change to the prescribed building levy threshold. From 1 July 2024, if the value of the building work you are completing is less than $65,000 including GST, it will be exempt from paying the levy. Further information will be uploaded to this page when the change is enacted.
What is the building levy?
The building levy is a charge calculated on the cost of building work. The building levy is paid by building owners or developers on successful building consent applications for projects that are worth more than the prescribed threshold of $20,444 (including GST). The building levy rate from 1 July 2020 is $1.75 (including GST) per $1,000 and part $1,000.
The revenue collected from the building levy is used to fund a range of MBIE functions and activities under the Building Act 2004 including:
- policy, technical rules and guidance, operational policy advice and service design
- information and education
- service delivery (compliance and enforcement) and
- monitoring and reporting.
People who pay the building levy benefit from these functions and activities as it helps protect people constructing, renovating or buying homes and other types of buildings.
The building levy is one part of the overall charges collected as part of the building consent application process, other charges include:
- a building research levy, which is paid to BRANZ and
- fees for building inspections and the issuing of a Code of Compliance certificate, which are retained by the building consent authority.
Read the relevant legislation:
- Building levy, section 53-66, Building Act 2004 - legislation.govt.nz
- Building (Levy) Regulations 2019 - legislation.govt.nz
How the building levy is calculated and paid
The building levy payment is collected from an applicant (usually the building owner or developer) by the building consent authority and paid to MBIE by the territorial authority.
If the estimated total value of the building work is less than the prescribed threshold of $20,444 (including GST), the applicant does not have to pay a building levy.
The building levy rate applies to every $1,000 (or part $1,000) of consented building work over the threshold, so if the value of building work is not for an even $1,000 amount, the value needs to be rounded up to the next $1,000 (see examples below).
If the building value decreases, the building consent lapses or the building work is no longer going ahead, the applicant can apply for a refund of the building levy. The building consent authority should refund the applicant and include details of the refund on their return to claim the levy back from MBIE.
Current building levy rates
| Levy rate excl GST | Levy rate incl GST | Prescribed threshold incl GST | |
|---|---|---|---|
| Building consent granted on or after 1 July 2020 | $1.52 | $1.75 | $20,444 |
Building consent authorities are liable to the territorial authority for the levy payable to MBIE. In practice, the building consent authority is usually also the territorial authority, with the exception of Consentium (Kāinga Ora's private building consent authority). Consentium will provide details of the building consents they grant each month, along with the building levy, to the local territorial authority for inclusion in their returns. The territorial authority is responsible for providing MBIE with the building levy return and payment each month.
Territorial authorities may deduct 3% of the total levy to MBIE each month. The territorial authority can only retain the 3% if they pay the building levy to MBIE by the 20th day of the month following the month in which the building consent was granted. In practice, this deduction is retained by territorial authorities and is commonly called an administration fee.
The below table provides an example of how territorial authorities calculate the building levy amount that is paid to MBIE at the end of the month. This includes amounts both above and below the prescribed threshold $20,444 (including GST).
| Calculation of final balance | |
|---|---|
| Total estimated value of building consent applications | $15,300,000 |
| Total of estimated values building consent applications of $20,444 or more | $15,000,000 |
| Total levies collected | $26,250 |
| Less administration fee (3%) * | $787.50 |
| Levy amount payable to MBIE | $25,462.50 |
* assuming the territorial authority pay the building levy to MBIE by the due date of the 20th of the month following the date the building consent was granted.
Calculating the building levy
The building levy payment is collected from the applicant (usually building owner or developer) by a building consent authority and paid to MBIE by the territorial authority.
The rate of the building levy is based on the minimum estimated value of the total building work for the building consent. The building levy rate applies to every $1,000 or part $1,000 (including GST) of consented building work. The total value of the building work (including any amendments) must be over the prescribed threshold for the levy to be charged. If the building value decreases, the building consent lapses or the building work is no longer going ahead, the applicant can apply to the building consent authority for a refund of the building levy.
Examples of building consent calculations
The examples below show how the new levy rate is calculated. The calculations show the building levy amount, per building consent.
Scenario 1: Below the building levy threshold
Pita has applied for a building consent to add a small shed to his property. As the estimated value of building work is under the threshold of $20,444 (including GST), he is not required to pay a building levy.
| Calculation | |
|---|---|
| Total estimated value of building work | $15,519 (a) |
| Total of every $1,000 of building work | 0 (b) |
| Rate of building levy | $1.75 (c) |
| Total amount of building levy paid by applicant | $0 (= b x c) |
Scenario 2: Building levy payable
Ron is planning on building commercial premises, for which the estimated value of building work is $3,200,000. The building levy calculated for this value of building work is $5,600.
| Calculation | |
|---|---|
| Total estimated value of a commercial development | $3,200,000 (a) |
| Total of every $1,000 of building work (or part of) | 3,200 (b) |
| Rate of building levy | $1.75 (c) |
| Total amount of building levy paid by applicant | $5,600 (= b x c) |
Scenario 3: Value of building work to be rounded to next $1,000
Kevin and Sue have applied for a building consent to add a granny flat on the back of their property for Sue's mother. As the building levy applies to every $1,000 (or part of $1,000), the estimated value of building work must be rounded up from $210,400 to $211,000, and the building levy will be calculated from that rounded value.
| Calculation | |
|---|---|
| Total cost of building work | $210,400 (a) |
| Total of every $1,000 of building work (or part of) | 211 (b) |
| Rate of building levy | $1.75 (c) |
| Total amount of building levy | $369.25 (= b x c) |
Scenario 4: Calculation of building levy on an amendment
Phillip and Lucy applied for a building consent for their new house. After the consent was granted they have decided to change the cladding of the house, increasing the value of building work by $20,000. Phillip and Lucy apply to the building consent authority for an amendment to their original consent. The building consent authority recalculates the amount of building levy payable, taking into account the original amount of the estimated building work.
| Calculation | |
|---|---|
| Total estimated original value of building work | $600,000 |
| Amendment to original building consent - increase | $20,000 (a) |
| Total of every $1000 of building work (or part of) | 20 (b) |
| Rate of building levy | $1.75 (c) |
| Total amount of building levy to be paid by applicant | $35.00 (= b x c) |
Scenario 5: Calculation of building levy on an additional amendment
Melissa and Robert were granted a building consent for their new house. However, they then changed the house plans. The original building consent was amended, and building levy paid on the increase of $50,000. Melissa and Robert have now decided to upgrade the fixtures and fittings, applied to the building consent authority to amend their consent again and increase the value of building work by another $10,000. As the building consent must be considered on the total value of building work, the building levy must be calculated on the additional building work of $10,000. The threshold does not apply to each amendment individually.
| Calculation | |
|---|---|
| Total estimated original value of building work | $600,000 |
| Amendment to original building consent in a previous month - increase | $50,000 |
| Additional amendment to original building consent in this return previous month - increase | $10,000 (a) |
| Total of every $1000 of building work (or part of) | 10 (b) |
| Rate of building levy | $1.75 (c) |
| Amount of building levy payable on the most recent amendment | $17.50 (= b x c) |
Scenario 6: Value of building work reduces below threshold
Vincent was granted a building consent for the construction of a garage, with an estimated value of building work of $30,000. The building levy payable was $52.50. Vincent has now decided that he will construct a carport instead of a garage, which will cost less to build. As the value of building work will now be below the threshold of $20,444, he is entitled to a refund of all the building levy previously paid.
| Calculation | |
|---|---|
| Total estimated original value of building work | $30,000 (a) |
| Building levy paid in month consent was granted | $52.50 |
| Amendment to original building consent - decrease | -$20,000 (b) |
| Net amount of building work after amendment | $10,000 (= a - b) |
| Total of every $1000 of building work (or part of) | 0 |
| Rate of building levy | $1.75 (c) |
| Amount of building levy refundable on the amendment | -$52.50 (b - as total amended value of building work is now under the threshold) |
Scenario 7 : Amendment to a consent granted prior to current building levy rate
Dean and Grace were granted a building consent for their new home in 2019. Dean is building the house himself; the house is still under construction in 2022. They have applied to the building consent authority for an amendment to their original consent to add an ensuite. As this is an amendment to a building consent calculated at a previous rate of building levy, the levy must be calculated using the same rate.
| Calculation | |
|---|---|
| Total estimated original value of building work | $550,000 |
| Amendment to original building consent - increase | $35,000(a) |
| Total of every $1,000 of building work (or part of) | 35(b) |
| Rate of building levy (using the building levy rate applicable from when original consent was granted between 1 October 2010 and 30 June 2020) | $2.01(c) |
| Amount of building levy payable on the most recent amendment | $70.35 (= b x c) |
Scenario 8: Amendment to a consent granted prior to current building levy rate - 2
Nikau and Mikaere were granted a building consent for a bach in 2017. They have been building the bach themselves in their spare time. They have decided to simplify their plans to reduce costs and speed up the build, so they apply for an amendment to their original consent. As the original consent was granted in 2017, the building levy rate at the time was $2.01 per $1,000 (rather than $1.75 per $1,000 which commenced on 1 July 2020), so the refund of building levy is calculated using the original rate.
| Calculation | |
|---|---|
| Total estimated original value of building work | $267,000 |
| Amendment to original building consent - decrease | $43,000(a) |
| Total of every $1,000 of building work (or part of) | 43(b) |
| Rate of building levy (using the building levy rate applicable from when original consent was granted between 1 October 2010 and 30 June 2020) | $2.01(c) |
| Amount of building levy refundable on the most recent amendment | $86.43 (= b x c) |
History of the building levy rate
The building levy rate was last changed on 1 July 2020 when it was reduced to $1.75 (including GST) per $1,000 (and part $1,000) of consented building work and the threshold was confirmed at $20,444 (including GST).
Building levy rate changes
| Time period | Building levy rate per $1,000 or part $1,000 | Prescribed threshold |
|---|---|---|
| On or after 1 July 2020 | $1.75 (including GST) | $20,444 (including GST) |
| Prior to 1 July 2020 | $2.01 (including GST) | $20,000 (including GST) |
| Prior to 1 October 2010 | $1.97 (including GST) | $20,000 (including GST) |
| Prior to 1 April 2005 | $0.65 (including GST) | $20,000 (including GST) |
| Prior to 1 December 1995 | $0.80 (including GST) | $20,000 (including GST) |
| Prior to 1 November 1994 | $1.00 (including GST) | $20,000 (including GST) |
Resources
A detailed guidance document for Councils, building consent authorities and regional or territorial authorities who calculate and collect building levy payments and submit returns to MBIE.
Further information
The building levy rate must be reviewed every three years.
You can keep up to date about the building law reforms or subscribe for updates.
If you any questions, email the Building Performance team building@mbie.govt.nz