Building levy
Last updated: 8 July 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.
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 $65,000 (including GST). The building levy rate is $1.75 (including GST) per $1,000 and part $1,000, effective from 1 July 2020.
The revenue collected from the building levy is used to fund a range of Ministry of Business, Innovation and Employment (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)
- 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 the Building Research Association of New Zealand (BRANZ)
- fees for building inspections and the issuing of a code compliance certificate, which are retained by the building consent authority.
The Building Act 2004 allows for the building levy collected to be used to fund MBIE functions and activities related to the building sector in other Acts. The functions must be related to monitoring, overseeing or improving the performance of the building sector or regulatory systems under that Act. For example, building levy funding can be used for retention money functions and activities under the Construction Contracts Act 2002.
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 (BCA) and paid to MBIE by the territorial authority.
For new building consent applications, if the estimated total value of the building work is less than the prescribed threshold of $65,000 (including GST), the applicant does not have to pay a building levy. If a building consent granted before 1 July 2024 is amended, the threshold in effect at the date of the building consent grant applies. The building levy rate used for an amendment is the rate that was in effect at the original grant date of the building consent application.
For consented building work with a minimum estimated value of $65,000 (including GST), the building levy rate is applied to every $1,000 (or part $1,000) of the value of building work. If the value of the 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).
The estimated value of building work for a Certificate of Acceptance (CoA) is to be included in building levy returns.
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.
Building levy rates and thresholds
| Date building consent granted | Levy rate excl GST | Levy rate incl GST | Levy threshold excl GST | Levy threshold incl GST |
|---|---|---|---|---|
| On or after 1 July 2024 | $1.52 | $1.75 | $56,521.74 | $65,000 |
| On or after 1 July 2020, up to 30 June 2024 | $1.52 | $1.75 | $17,777.39 | $20,444 |
| Prior to 1 July 2020 | $1.75 | $2.01 | $17,777.39 | $20,444 |
Changes in building levy threshold
On 1 July 2024, the prescribed building levy threshold increased from $20,444 to $65,000 (including GST).
The table below shows how the threshold change affects building work which previously would have incurred a building levy charge.
If the estimated value of building work is not shown below, you can calculate this yourself by multiplying the thousands value by $1.75. For example, if the estimated value of building work is $32,000, multiply 32 x $1.75 = building levy $56).
Note that the building levy is payable on every $1,000 and part $1,000. If the value of building work was $32,300, the calculation would be 33 x $1.75 = building levy $57.75.
| Estimated value of building work (including GST) | Levy payable before 1 July 2024 | Levy payable on or after 1 July 2024 |
|---|---|---|
| $20,000 | Nil | Nil |
| $20,500 | $36.75 | Nil |
| $30,000 | $52.50 | Nil |
| $40,000 | $70.00 | Nil |
| $50,000 | $87.50 | Nil |
| $60,000 | $105.00 | Nil |
| $65,000 | $113.75 | $113.75 |
Implementing the building levy threshold
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.
Building levy returns must include all building consents granted or amended in the previous month. Returns are not based on when building consents are issued.
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 or on 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 $65,000 (including GST).
| Calculation of final balance | |
|---|---|
| Total estimated value of building consent applications | $15,300,000 |
| Total of estimated values building consent applications of $65,000 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 or on the due date of the 20th of the month following the date the building consent was granted.
Checking the estimated value of building work
Building consent authorities should assess the value of the estimated building work stated on the building consent application, to ensure the value estimated represents current market value. The estimated value should accurately reflect all building costs associated with the project, including labour costs, even if the applicant is undertaking the work themselves (or someone they know is doing the work for free). The estimated value of building work needs to be accurate to calculate the levies payable, as well as for valuations, insurance purposes etc.
If the value of the building work does not seem correct, the building consent authority should request further information from the applicant to agree or update the value.
Building consent authorities should consider market value based on their expertise and knowledge of similar building work, and data and information from reputable sources which are reflective of their local areas. For commercial builds they are able to use construction cost calculators to help them determine the accuracy of the estimated building work.
Calculating the building levy
The building levy payment is collected from the applicant (usually the 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.
Certificates of Acceptance
The building levy is payable for a CoA (under section 97e of the Building Act 2004). The estimated value of building work for a CoA is to be included in building levy returns.
Refunds
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. In these instances, the building consent authority can decide if they wish to retain the 3% administration fee from when the building levy was originally paid to MBIE (assuming the levy was paid to MBIE by or on the 20th of the month) and refund the applicant 97% of the building levy as the BCA has already done the administrative work. Alternatively, the BCA may choose to refund the applicant 100% of the building levy.
Sufficient information must be provided to MBIE to show the date and value of building work of the original consent, any subsequent changes to the value of building work and the refund calculation.
Note that the way in which the refund is deducted from the next return to MBIE has not changed.
Examples of building consent calculations
The examples below show how the levy rate is calculated. The calculations show the building levy amount, per building consent.
Scenario 1: 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 calculated on 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 2: 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 decided to increase the size the house, increasing the value of building work by $50,000. 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 | $590,000 |
| Amendment to original building consent - increase | $50,000 (a) |
| Total of every $1000 of building work (or part of) | 50 (b) |
| Rate of building levy | $1.75 (c) |
| Total amount of building levy to be paid by applicant | $87.50 (= b x c) |
Scenario 3: Calculation of building levy on an additional amendment
Melissa and Robert were granted a building consent for their new house. However, they subsequently change 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 make further changes, applying to the building consent authority to amend their consent again, increasing 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 4: The original value of building work was under the threshold, so the building levy was not charged for the original consent.
Roimata is planning an alteration to her house and a building consent has been granted, based on the building work value of $60,000. As the value of the building work was under the threshold of $65,000 (including GST), building levy was not payable. Roimata has now decided to change the materials being used for the alteration, increasing the value of the building work by $7,000.
| Calculation | |
|---|---|
| Total estimated original value of building work | $60,000 |
| Amendment to original building consent in a previous month - increase | $7,000 |
| Building levy paid in month consent was granted - nil as original consent was under threshold | $0.00 |
| Amended value of building work | $67,000 (a) |
| Total of every $1000 of building work (or part of) | 67 (b) |
| Rate of building levy | $1.75 (c) |
| Amount of building levy payable on the most recent amendment | $117.25 (= b x c) |
Scenario 5: Value of building work reduces below threshold where the original consent was granted before 1 July 2024
On 31 May 2024 Sione was granted a building consent for the construction of a large shed with an estimated value of building work of $82,500. Sione has now decided to reduce the size of the shed and the new estimated value of building work is $60,000. As the consent was originally granted before the new threshold of $65,000 came into effect, the threshold of $20,444 that was in force at the time applies. He is entitled to a refund on the difference in the value of building work.
| Calculation | |
|---|---|
| Total estimated original value of building work | $82,500 |
| Amended value of building work - decrease | $22,500 (a) |
| Total of every $1000 of building work (or part of) | 23 (b) |
| Rate of building levy | $1.75 (c) |
| Amount of building levy refundable on the amendment | $40.25 (= b x c) |
| Amount of building levy able to be retained by the building consent authority (assuming the original building levy was paid to MBIE by or on the 20th of the month) | $1.21 |
| Refund to applicant | $39.04 |
Scenario 6: Value of building work reduces below threshold where the original consent is granted on or after 1 July 2024
Aakash was granted a building consent for the construction of an office at his commercial premises, with an estimated value of building work of $75,000. The building levy payable was $131.25. Aakash has now decided that he will construct a smaller office for $50,000. As the value of building work will now be below the threshold of $65,000, he is entitled to a refund of the building levy previously paid. The building consent authority is able to retain 3% of the building levy refund (assuming the building levy was paid to MBIE by the 20th of the month).
| Calculation | |
|---|---|
| Total estimated original value of building work | $75,000 (a) |
| Building levy paid in month consent was granted | $131.25 |
| Amendment to original building consent - decrease | -$25,000 (b) |
| Net amount of building work after amendment | $50,000 (= 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 | $131.25 (b - as total amended value of building work is now under the threshold) |
| Amount of building levy able to be retained by the building consent authority (assuming the original building levy was paid to MBIE by or on the 20th of the month) | $3.94 |
| Refund to applicant | $127.31 |
Scenario 7 : Amendment to a consent granted prior to current building levy rate
Nikau and Mikaere were granted a building consent for their new home in 2019. Nikau is building the house himself; the house is still under construction in 2024. 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 rate applicable as at the date the original consent was granted..
| 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: A building consent that has been amended several times
Tama and Jolene were granted a building consent in 2018 for an extension to their house. They paid the building levy calculated at the applicable rate as at the date the consent was granted. Tama and Jolene subsequently added an additional toilet and updated the layout of the plans, resulting in an increase of $26,000 to the estimated value of building work.
In September 2020 Tama changed some of the building materials being used for the extension, resulting in an increase to the value of the building work. In January 2022 Tama and Jolene decided to reduce the size of their extension, reducing the overall value of building work. For each amendment, the building consent authority calculated the building levy using the applicable building levy rate and threshold at the date the original consent was granted.
| Calculation | |
|---|---|
| Total estimated original value of building work | $150,000 (a) |
| Building levy paid in month consent was granted (150 x $2.01) | $301.50 |
| Amendment 1 - increase | $26,000 (b) |
| Amendment 2 - increase | $10,000 (c) |
| Amendment 3 - decrease | $15,500 (d) |
| Net amount of building work after amendment | $170,500 (= a+b+c-d) |
| Rate of building levy | $2.01 (e) |
| Total of every $1000 of building work (or part of) ($170,500 is rounded to 171 x $2.01) | $343.71 (f) |
| Levy previously paid ($301.50 + $52.26 + $20.10 = $373.86) | $373.86 (g) |
| Amount of building levy refund on the amendment (this is the amount claimed back from MBIE) | -$30.15 (= f – g) |
| 3% retention of administration fee by TA | $0.90 |
| Building levy refund to applicant | $29.25 |
History of the building levy rate
The building levy rate remains at $1.75 (including GST) per $1,000 (and part $1,000) of consented building work. The threshold increases to $65,000 (including GST), effective from 1 July 2024.
Building levy rate changes
| Time period | Building levy rate per $1,000 or part $1,000 | Prescribed threshold |
|---|---|---|
| On or after 1 July 2024 | $1.75 (including GST) | $65,000 (including GST) |
| 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) |
Building levy guidance
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 buildinglevyreturns@mbie.govt.nz