Posted on November 29, 2023 by Liam Mulligan 10

New plans to make Sydney living more diverse, denser & a new SEPP

In an effort to tackle the current housing affordability issues facing the State, the NSW Government has announced a new plan to increase housing diversity and housing density across the State. The Government proposes to amend existing planning regulations to “fast-track” development for housing types such as residential flat buildings of 3-6 storeys, terraces, townhouses, duplexes and smaller 1-2 storey apartment blocks. The plan will also permit these types of developments in areas where they are not currently permitted by local planning controls.

The Government has announced that the reforms will be introduced by way of a State Environmental Planning Policy (‘SEPP‘), which will override local planning controls which would otherwise limit or prohibit low- to mid-density housing. The draft SEPP is not yet available although it appears that it will be released in the coming weeks – as always, the devil is in the detail with such reforms.

While the planning law reforms will apply across the State, it appears that there will be an emphasis on key areas, including the Greater Sydney, Hunter, Central Coast and Illawarra-Shoalhaven regions.

The need for planning law reforms

The NSW Government’s proposed planning law reforms respond to:

• the housing affordability crisis,
• a lack of diversity in housing, which is fostered by restrictive local government controls, and
• the target to build 377,000 new homes by 2029 under the Housing Accord.

Despite numerous attempts to reform the planning system to foster the delivery of housing, the Government has formed the view that local planning controls are not adequately facilitating the development of diverse housing to meet the needs of the community. A recent review of the planning system by the NSW Government has found that:

• only 32 local government areas allow terraces and 1-2 storey apartments in R2 Low Density Residential zones (only 6% of LEPs), and
• 60% of R3 Medium Density Residential zones across Sydney prohibit residential flat buildings on any scale.

In some ways the finding as to development in the R2 zone might be considered unsurprising given that the Standard Instrument – Principal Local Environmental Plan, on which all standard LEPs are based, only requires that dwelling houses be permissible in the R2 zone.

A new SEPP for the “missing middle”

In any case, the Government has concluded that there is a “missing middle” in housing diversity and density in NSW, which this change in policy is intended to address.  At this early stage, the details released about the proposed reform are:

• dual occupancies (e.g., duplexes) will be permissible in all R2 Low Density Residential zones across the State,
• terraces, townhouses and 2 storey apartment buildings located near transport hubs and town centres will be permissible in all R2 Low Density Residential zones across the Greater Sydney, Hunter, Central Coast and Illawarra-Shoalhaven regions, and
• mid-rise apartment buildings located near transport hubs and town centres will be permissible in all R3 Medium Density Residential zones and appropriate employment zones (e.g., E1 Local Centre and E2 Commercial Centre zones) across the State.

The media release also states that if local government controls, such as LEPs, match or go further than the controls in the new SEPP, then the new SEPP will not be applied.

However, it is not clear how the SEPP is intended to operate. The media release for the plan indicates that the intent is to “fast-track” development, which suggests that the proposal may be for such development to be a form of complying development. If the proposal is for a complying development regime, there is no detail as what the development standards are proposed to be, or whether the reform will be implemented by a new code, or the expansion of an existing code.

As more information is provided on the NSW Government’s plan and the new SEPP, we will publish more detail.

If you have any questions in relation to this decision, please leave a comment below or contact Liam Mulligan on 02 8235 9715 or Adrian Guy on 02 8235 9729.