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NSW housing: Comprehensive reform but it’s complicated

21 Feb 2024
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Government Residential
21 Feb 2024

After decades of limited planning reform success, the Albanese Government’s housing reform agenda may break the trend. How? With a range of attractive financial incentive measures to support the aspired delivery of 1.2 million well-located homes across Australia.

As part of the National Housing Accord and backed by Federal Government funding, the NSW Government has committed to delivering 75,000 dwellings per annum over 5 years. This is a 36% increase from the 48,000 dwellings delivered in 2022 and a target which NSW is already failing to deliver.

To help achieve this lofty – and necessary – goal, the NSW Government is moving away from a single policy solution. In a once in a generation policy movement, all levers are being pulled and a suite of changes are being implemented in the hope that something will work.

We applaud the NSW Government for making every effort to deliver a diverse range of housing types. We are seeing a greater focus on implementation, different assessment pathways, reduced assessment timeframes and a commitment to delivery, with a shared obligation between Government and developers.

But is this multi-layered reform just creating a tangled web of housing policy?

Since December 2023, four distinct policies have been announced, exhibited or enacted. Everyone from the community, developers, planners and assessing officers appear to be scrambling to decipher what this means and how it applies.

Policy timelines and highlights

Housing Policy Timeline (dates we know)NSW Housing Policy Timeline

In-fill affordable housing

Applies to all NSW, subject to location criteria. 

Height and floor space incentive bonuses are available for certain housing developments that deliver more than 10% floor space as affordable housing managed by a Community Housing Provider (CHP) for a minimum of 15 years (up to 30% with 15% affordable housing).

This includes a new State Significant Development Application (SSDA) pathway and ‘Faster Assessment Program’ for development with a capital investment value over $75 million.

In-fill Affordable Housing Incentive Bonuses
In-fill Affordable Housing Incentive Bonuses. Click to enlarge.

Low and mid-rise housing

Applies to Six Cities Regions.

Introduction of broad permissibility for low and mid-rise housing in residential zones within station and town centre precincts. Non-refusal standards apply to multi-dwelling housing (low-rise) and residential flat buildings/shop-top housing (mid-rise).

The Government Architect NSW is also working on a ‘Pattern Book’ of pre-approved building designs that can be used by developers to reduce Development Approval (DA) assessment timeframes.

Station and town centre precincts are:

  • Within the Six Cities Region; and
  • 800m walking distance of a heavy rail, metro or light rail station; or
  • 800m walking distance of land zoned Commercial Centre or Metropolitan Centre’ or
  • 800m walking distance of land zoned E1 Local Centre or MU1 Mixed Use but only if the zone contains a wide range of frequently needed goods and services such as full line supermarkets, shops and restaurants.

Low-rise housing
Low-rise housing. Click to enlarge.
Mid-rise Housing
Mid-rise housing. Click to enlarge.

 

Transport Oriented Development (TOD) program

Applies to specific TOD precincts.

Part 1: 8 Accelerated Precincts

Land within 1,200m of these precincts will be rezoned by the NSW Government, with the intent to deliver 47,800 new dwellings across the 8 precincts (Bankstown, Bays West, Bella Vista, Crows Nest, Homebush, Hornsby, Kellyville and Macquarie Park) by 2039. Affordable housing held in perpetuity will make up to 15% of the new dwellings, subject to feasibility testing undertaken as part of the master planning process.

This includes a new SSDA pathway within these precincts for development with a capital investment value over $60 million. Referred to as the “use it or lose it” provisions, this pathway is temporary and will remain in place until November 2027, plus these SSDAs will only have a 2-year timeframe for works to start. 

Transport Oriented Development - Accelerated Precincts
Transport Oriented Development – Accelerated Precincts. Click to enlarge.

Part 2: TOD State Environmental Planning Policy (SEPP)

Not to be confused with the low to mid-rise housing, the TOD SEPP will apply to land within 400m of 31 identified stations, with land rezoned to allow residential flat buildings in all residential zones (R1, R2, R3 and R4) and residential flat buildings/shop-top housing in local and commercial centre zones (E1 and E2). A minimum 2% affordable housing for all new developments will apply.

Changes to planning controls and new design criteria will be implemented to ensure the delivery of mid-rise residential flat buildings.

Transport Oriented Development - SEPP Precincts
Transport Oriented Development – SEPP Precincts. Click to enlarge.

Our interpretation and insight

  • A multi-faceted approach that involves all levels of Government is critical to achieve the dwelling targets. A single approach simply won’t get us there.
  • The Department of Planning, Housing and Infrastructure (DPHI) have established teams to deliver each of these policies and, so far, they are on track.
  • There is policy overlap and questions as to whether geographic focused initiatives such as TOD precincts will supersede state-based initiatives such as in-fill housing incentives. In some circumstances developers may have a choice of which policy pathway would apply.
  • Assessments are underway, with Scoping Proposals already lodged for in-fill affordable housing. The appetite in developer uptake is exceeding DPHI expectations. Can they keep up?
  • The in-fill affordable housing policy doesn’t cancel out existing Local Environmental Plan (LEP) clauses.
  • The TOD SEPP will introduce its own set of design criteria, overriding local controls. How will local character be balanced with increased density?
  • Community push-back and the political overlay of Local Government elections may impact implementation of these policies. In-depth community consultation and onboarding will be key.
  • With the policy pushed out so quickly, policy refinement is inevitable to address any practical implementation issues.
  • Whilst the DPHI has strong policy aspirations, in assessment reality, the degree of uplift and extent of change will continue to be based on a merit assessment.

Missed opportunities

Incentives do not correspond to the policy aspirations: The incentive aspects of policy have not matched the implementation; this is a missed opportunity for genuine acceleration of the assessment process.

Reduced assessment timeframes: We are in a housing crisis. If we are serious about delivering housing, a 6-month maximum SSDA faster assessment timeframe should be the target.

Streamlining the process: The multi-staged SSD approach and expected deliverables is delaying approvals and in turn delaying the ability to deliver housing. The DPHI should seek to make further reductions to streamline this process.

Flexibility with existing consents: Existing development consents are being revisited to capitalise on incentives and delivery of affordable housing. There needs to be clear guidance and flexibility from Government to avoid duplicating the assessment of approved matters.

Remove the 30% cap on building height for in-fill housing: Whilst the objective is appreciated, tying the percentage of Floor Space Ratio (FSR) uplift to the percentage of height uplift results in yet another layer of rigour as building heights can’t be on a sliding scale, the same way FSR is applied. This will result on the reliance of clause 4.6.

Independent Planning Commission (IPC) Referral: Currently, where a council objects to an SSDA, this instantly triggers the requirement for referral to the IPC. There needs to be firm and clear guidance as to the reasonableness of when an application should be referred.

Financial Incentives: The State Government should implement financial incentives which would encourage local governments to update their strategic plans and LEP to increase the supply of housing. In turn, local governments would then receive funding for local infrastructure upgrades to support the growing population, resulting in a better partnership.

Connect with our experts

While the initial policy steps are commendable, there’s room for further refinement to ensure effective planning and delivery. Together, all aspects of industry can secure a brighter future for housing in NSW, and Australia.

Get in touch with our team to learn more. 

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