Posted on April 26, 2015 by Stuart Simington

Minimum Apartment Size Rules – More Than Some People Thought

A recent decision delivered by Justice Sheahan of the Land and Environment Court held that the standards that apply in relation to the assessment of minimum unit sizes are greater than what a many people thought with potential implications for housing affordability.

Justice Sheahan’s ruled that under the State Environmental Planning Policy No 65 (Design Quality of Residential Flat Development) (SEPP 65), the minimum unit sizes which apply are those which are set out in the Table on page 69 of Part 3 of the Residential Flat Design Code (RFD Code) rather than the smaller minimum unit sizes which appear in the “Rules of Thumb” on page 69 of the RFD Code which are accordingly not required to be taken into consideration by consent authorities.

The decision in Botany Bay City Council v Botany Development Pty (No 2) [2015] NSWLEC 55 has sparked concern within the property development industry, with the Urban Taskforce reporting that the ruling ‘has created confusion’ in relation to minimum unit sizes. Commentators have voiced concern over the implications of the decision for housing affordability, with a recent report in the Financial Review claiming that the decision ‘casts a cloud over the affordability of apartments in NSW’. Further, the interdisciplinary consultancy firm Urbis suggests that the purported rise in minimum unit sizes creates significant flow-on effects in relation to ‘unit mix and apartment types; project feasibility; general layout and design of apartment development, and general housing affordability’. The Urban Taskforce has warned that the practical effect of the higher minimum unit sizes is to ‘increase the cost of apartments by up to $200,000 in some areas’.

In accordance with the above concerns, the Urban Taskforce has called on the Minister for Planning to clarify ‘the legal interpretation of minimum apartment sizes’ through the passage of the mooted SEPP65 amendment, so as to clearly set out the ‘Government’s intent’ relating to minimum unit sizes. For analysis of the proposed amendment to SEPP65, please refer to the earlier post: Proposed Amendments to SEPP 65 – Well Designed and Affordable Apartments?

Background

The case involved an appeal from a decision made by Commissioner Brown to grant development consent to a proposed 3-6 storey residential flat building containing 158 units (‘Proposed Development’).

The commissioner determined that the Proposed Development satisfied the minimum unit sizes set out in the “Rules of Thumb” of the RFD Code, and thus the size of the units could not constitute a ground for refusing development consent in accordance with clause 30A(1)(b) of SEPP 65.

By contrast, the Council had refused the Proposed Development in part due to the inadequate size of units. The Council relied upon minimum unit sizes required by clause 4C.5.1 of The City of Botany Bay Development Control Plan 2013 (‘DCP’) which were greater than those contained in the “Rules of Thumb”.

Clause 30A(1)(b) of SEPP 65 provides that:

(1)   A consent authority must not refuse consent to a development application for the carrying out of a residential flat development on any of the following grounds:

…

(b)   apartment area: if the proposed area for each apartment is equal to, or greater than, the recommended internal area and external area for the relevant apartment type set out in Part 3 of the [RFD Code].

Commissioner Brown determined that, where inconsistency arose, the minimum unit sizes referred to (in his view, those set out in the “Rules of Thumb”) prevailed over the minimum unit sizes contained in the DCP.

Ruling

However, Justice Sheahan held that Commissioner Brown had applied the incorrect standards by referring to the “Rules of Thumb” as the relevant minimum unit sizes in the RFD Code.

Rather, clause 30A(1)(b) of SEPP 65 requires that the relevant standards must be those that include calculations for both ‘internal’ and ‘external’ areas. On this basis, only the standards contained in the Table on page 69 of Part 3 of the RFD Code can apply for the purposes of clause 30A(1)(b) of SEPP 65 as the “Rules of Thumb” only relate to a minimum total apartment area.

Implications

The inconsistent nature of the size requirements of apartments in the RFD Code has been identified as a source of confusion since its introduction in 2002.  The disparities between the respective calculations in the Table and “Rules of Thumb” on page 69 of the RFD Code are as much as 30% for a one bedroom maisonette/loft and 35% for a three bedroom apartment.

The case indicates the dissatisfaction of some local councils with such ambiguities, and their attempt at a solution through incorporating higher minimum unit standards than those contained in the “Rules of Thumb” within DCPs. A survey by JBA Urban Planning indicates that the incorporation of higher minimum unit sizes in DCPs has been adopted by the Hills Shire Council, Strathfield Council, Botany Bay Council, Waverley Council, Rockdale Council and Campbelltown Regional Council.

Whether the decision will produce unfavourable outcomes for housing affordability, as well as other project and design aspects of residential flat developments is yet to be seen.

More likely, the matter will be resolved and clarified by the Government. The Minister has recently stated in response to the issue that an amendment to SEPP 65 will be released shortly and that it will provide certainty about minimum apartment sizes.