Chutzpah really should be part of New Zealand's vernacular. I don't think I've heard it since moving to New Zealand almost 16 long years ago, but we do see a bit of it here.

The Hebrew-derived term meaning a brazen and cheeky audacity fits the goings-on at Whenuapai Air Base – and elsewhere. And it will take a bit of regulatory chutzpah to undo the potential damage.

Neil Construction bought land next to the Whenuapai Air Base and had it rezoned for residential use – a laudable action when the country faces a substantial housing shortage. 

The next move was less laudable. The construction company went to the Environment Court to complain about the airport's noise. That airports tend to be noisy should not have been a surprise to anyone, and especially not to someone buying land next door.

But the Environment Court went along and upheld the complaint – aircraft engine testing late at night will now be subject to noise restrictions.

It was an audacious legal move — chutzpah! Through two legal steps — a rezoning followed by a court decision — the construction company will have substantially increased the value of its land holding. Land that previously could only be used for commercial activity can now be used for housing, but without the substantial price penalty that would have applied to housing next to loud late-night airplane engines. 

Such chutzpah is hardly unprecedented in New Zealand. 

On the West Coast in Barrytown, a person who moved into a house next door to the Barrytown Settlers Hall started complaining about the noise – and the hall risked being shut down. For a while, the hall put up a notice up stating, "When leaving the premises, please remind our neighbours that drunk people have been loudly leaving this establishment long before they decided to buy houses next door to it."

In Christchurch shortly after the earthquakes, the Cassels built an excellent brewpub and retail venue across the road from a very smelly gelatine plant. A placard in the outdoor seating area provided patrons with the council number to call for any complaints about the truly noxious aroma. 

Chutzpah!

The problem in all these cases is that it's hard to tell, from an external perspective, whether it makes sense for a military airport to cease late-night engine testing, for the hall to stop late-night events, or for the gelatine plant to invest in fixing their plant. These costs might be less than the benefits — or much higher. 

If the legal path did not exist for residents moving next to the nuisance, they would have to come up with other remedies. Neil Construction could have weighed the costs of installing extreme soundproofing on its houses against what it would have had to pay the airport to stop doing late-night tests. If it were cheaper to install soundproofing than to shut down part of the airport's operations, then that is what would have happened. 

But it can be even cheaper still to use the courts, regardless of whether closing the airbase or installing soundproofing makes more sense. 

And that leads to a bigger problem.

Imagine you owned a bar, a late-night restaurant, or a similar establishment, and someone proposed building apartments next door. It is almost certain someone moving into one of those apartments will complain about the noise from your venue, and that they will use the courts to force you out of business. You see the notification of the resource consent application. Will you object to the new apartments? Any sane business would, rather than risk being put out of business.

This 'reverse sensitivity' phenomenon can hinder our ability to build our way out of the housing crisis. Nimbyism is not always about stopping the neighbourhood from ever changing; it can also be about stopping a changing neighbourhood from litigating you out of existence. 

We may need a bit of regulatory chutzpah to avoid the problem. 

Councils should be able to place a "no complaints" restriction on new consents. Consent for a new apartment block next to nightlife venues, or new subdivisions beside airfields, could have a "no complaints" warning on the Land Information Memorandum. Those buying the houses or apartments would be warned that council will ignore any complaints about the noise. 

Developers would then have a choice: install enough noise-proofing, accept a lower selling price for the property, pay the noisemakers to be quieter, or a mix of all three. 

That would lead to far smaller returns for the kind of chutzpah that might have a developer build housing next to a pig barn and sue the farmer for the smell. 

Dr Eric Crampton is chief economist with The New Zealand Initiative