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NSW LM Housing Policy Changes: Risk to National Accord

27 Jun 2024
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Residential
27 Jun 2024

The proposed ‘refinements’ to the Low- and Mid-rise Housing Policy could severely compromise the locational advantages of local centres for additional housing, potentially jeopardising the achievement of the NSW Government’s commitment to the National Housing Accord.

In December 2023, the NSW Department of Planning, Housing and Infrastructure (DPHI) announced the Low-and Mid-rise Housing Policy (LMH Policy) as a crucial part of a suite of housing policies. These were introduced to increase the supply of diverse and well-located homes. The NSW Government touted the LMH Policy as a means to encourage more low-rise and mid-rise housing, bridging the gap between detached homes and high-rise apartments. This was in response to the housing crisis, aiming to provide well-located housing options that suit people’s changing needs.

On 15 December 2023, the Explanation of Intended Effect: Changes to create more low and mid-rise housing (EIE) was placed on public exhibition. The changes in the EIE sought to:

  • Expand land use permissibility to allow dual occupancies in the R2 Low Density Residential zone.
  • Expand land use permissibility to allow manor houses and multi-dwelling housing in the R2 Low Density Residential zone, in station and town centre precincts.
  • Implement non-refusal standards for height and floor space ratio (FSR).
  • Introduce other planning provisions such as changes to the Apartment Design Guide (ADG), landscaping provisions, and Torrens subdivision of dual occupancies.

Following the exhibition of the LMH Policy EIE and consultation with Local Councils EIE, the DPHI produced a LMH Policy Refinement Paper (Refinement Paper). This paper outlines key policy issues, makes recommendations for policy refinements, and presents an approach for engaging with Local Councils.

The Refinement Paper suggests that the estimate of 112,000 dwellings that will result from the policy by mid-2029 (the Accord Period) is conservative and “factors-in” policy refinements.

While we agree that some of the refinements make good sense and align with the policy for providing diverse and well-located homes, some key refinements could undermine this policy objective, putting at risk the achievement of the National Housing Accord.

Refinements 5-7 propose to exclude high-risk flooding, bushfire, and hazard areas, which account for a small proportion of LMH Policy land. We agree that including these areas would not satisfy the policy objective to ensure housing is in well-located station and town centre precincts.

No specific refinements are proposed in relation to concerns raised by Councils about the application of the LMH Policy to Heritage Conservation Area (HCAs), except where they relate to areas affected by Refinements 1, 2, and 3.

The recalibration of FSR and height standards for mid-rise housing under Refinement 8 is unsurprising, following a similar “correction” when the new planning controls were introduced in the TOD SEPP that commenced on 13 May 2024.

Proposed recalibration of FSR and height standards for mid-rise housing.

We recommend that any special arrangements proposed for Councils that have R1 General Residential zoned land to provide a more compatible level of density for the local context, such as City of Sydney and Inner West Council, should reflect the intended purpose of the zone. This includes providing a mix of housing, including residential flat buildings, and adopting greater density and height standards, in recognition of the accessibility advantages of these zones for mid-rise housing.

City of Sydney has extensive areas of land zoned R1 General Residential and MU1 that current permit residential flat buildings and/or shop top housing in station and town centre precincts where the maximum heights of buildings are less than 24 metres. 

Note: The map represents areas within 800 metres “as the crow flies” of stations or EL, E2, and MU1 zones, whereas the LMH Policy applies to an 800 metres walkable catchment. Click to enlarge.

Refinement 1 suggests the DPHI is seeking input from Councils on the selection of stations and town centre precincts where the LMH Policy will apply. The DPHI has confirmed that the 66 E2 Commercial Centres will be retained. The DPHI is working with Councils to determine which E1 and MU1 precincts are to be retained. The DPHI has provided a list of E1 and MU1 town centre precincts to each Council for inclusion, with a request to provide analysis and justification for excluding any of the station and town centre precincts. The number of E1 and MU1 town centre precincts should be maximised to deliver more well-located housing, providing the best chance of achieving the NSW Government’s commitment to the National Housing Accord.

The recommendation to exclude land zoned E1 Local Centre, E2 Commercial Centre, and MU1 Mixed Use under Refinement 2 will undermine the NSW Government’s commitment to the National Housing Accord. This recommendation has been made to appease the concerns and assertions of Councils and will undermine the logical policy settings in the LMH Policy EIE that support housing at the core of eligible station and town centre precincts.

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Master Planning of town centres should occur despite the application of the LMH Policy.

The concerns and assertions of Councils reported by the DPHI in the Refinement Paper are about:

  1. Undermining the employment status of town centres.
  2. Undermining master planning of town centres.
  3. Town centres have controls in place to permit 3 to 6 storey development and are already delivering

These concerns and assertions do not apply to many of the station and town centre locations where the LMH Policy was proposed to apply in the EIE. Specifically, removing E1, E2, and MU1 zoned land will remove land where shop top housing and residential flat buildings are already permitted, and therefore the LMH Policy cannot be said to undermine the employment status of town centres. Applying the LMH Policy to E1, E2, and MU1 zoned land, as originally intended in the EIE, does not change the permissibility of non-residential uses in those employment zones.

Furthermore, the application of the LMH Policy to E1, E2, and MU1 zoned land will not undermine master planning of town centres. On the contrary, by excluding E1, E2, and MU1 zoned land, there will be less imperative to undertake master planning where there is no additional development potential. Master Planning of town centres should occur despite the application of the LMH Policy, to achieve at least the density and height standards under the LMH Policy.

The assertion in the Refinement Paper that the average height of 20.4 metres and 2.16:1 FSR within these zones, facilitating 5-6 storey built form, is consistent with the intent of the Policy for 4-6 storey built form. These zones only represent 5.5% of the lots where the policy standards in the EIE were to apply is an overly simplistic representation.

An analysis of town centre precincts across Metropolitan Sydney that include full-line supermarkets (retail floor area >2000sqm) with maximum height standards <6 storeys demonstrates that excluding E1, E2, and MU1 zoned land from the LMH Policy will forego a significant opportunity for additional housing diversity, especially where there are no other opportunities for applying the policy when these zones are only surrounded by R2 Low Density Residential Zone land, where the mid-rise housing provisions are also excluded.

Case Study – 28 Lockwood Avenue, Belrose (Belrose – Glenrose Shopping Centre)

This site in Belrose, within the Northern Beaches LGA, exemplifies how excluding land zoned E1 Local Centre from the LMH Policy can result in no additional apartments in mid-rise housing within a town centre precinct that meets the eligibility criteria under the LMH Policy. This is due to the surrounding land being zoned R2 Low Density only.

The E1 Local Centre zoning of 28 Lockwood Avenue, Belrose, permits shop top housing. With a maximum height of building standard of 8.5 metres (2 storeys), the LMH Policy could have potentially allowed for a 3-4 storey uplift for additional housing above ground floor retail and business premises.

This site is located adjacent to the Glenrose Shopping Centre, which boasts a total retail floor space of 10,000sqm, including a full-line supermarket (>2000 sqm) and 38 specialty shops. This qualifies it as a town centre precinct under the DPHI criteria. Please refer to the map below.

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This site illustrates the impact of the refinements recommended by the DPHI to remove employment zoned land.

This site illustrates the impact of the refinements recommended by the DPHI to remove employment zoned land. This relies on residential zones surrounding the E1 Local Centre zoning to increase the consumer base to support the economic growth of the retail centre. In this instance, the E1 Local Centre zoned land is surrounded by R2 Low Density Residential only, which will not support sustainable employment and economic growth in the employment zone. As surrounding residential lots are zoned R2 Low Density and are exempt from any height and density increases for apartments, this demonstrates a contradiction. This refinement offers very little additional housing to support the economic growth of local centres.

The recommended solution in this case is for DHPI to maintain the application of the mid-rise housing provisions in the LMH Policy EIE for E1 Local Centre zoned land that are surrounded by R2 Low Density only and where there is no land zoned for higher densities (R3 or R4 zones) in the eligible station and town centre precincts.

The submission from Northern Beaches Council on the LMH Policy EIE agrees that Belrose (Glenrose Shopping Centre) meets the town centre criteria, yet this town centre is delivering very little housing.

Despite this, Northern Beaches Council has not undertaken any strategic planning or master planning for the centre. Council’s draft consolidated LEP only proposes a very minor increase in the maximum height from 8.5m to 9.3m to enable achievement of the NCC requirements in the floor-to-floor heights of buildings.

Northern Beaches Council has made reasonable suggestions that the criteria for identifying town centre centres for growth should include:

  • Employment and business opportunities.
  • Access to high-frequency public transport infrastructure.
  • A comprehensive walking and cycling network.
  • Essential services such as being co-located with health, education, social, and community facilities

The Glenrose Shopping Centre satisfies all of the above criteria suggested by Council, as demonstrated with:

  • Opportunities for retail and business premises in shop top housing developments.
  • High frequency bus services are available.
  • A comprehensive walking and cycling network exists.
  • Health, education, social and community facilities all present within the centre or in close proximity.

Glenrose Local Centre, Belrose: Excluding E1 Local Centre zoned land means no additional apartments will be permitted within the walkable catchment, as there are no higher density zoned land within the Town Centre precinct (R3 Medium Density Residential to R4 High Density Residential).

Click to enlarge.

The Belrose Town Centre (Glenrose Shopping Centre) is not an isolated case. A spatial analysis of all land in Sydney zoned E1, E2 and MU1 where shop top housing is permitted with consent, that have max. height of building standards of <6 storeys and where a full line supermarket (> 2000sqm) exists with no other land zoned that permits residential flat buildings or shop top housing, demonstrates there are many other locations that have potential to deliver a significant amount of additional housing that have been recommended to be removed from the LMH Policy, including:

  1. Forestville
  2. Belrose
  3. Berowra Heights
  4. Chatswood East
  5. Cherrybrook
  6. Carmel Village
  7. Box Bill
  8. Emerton
  9. Marsden Park
  10. Doonside
  11. Marayong
  12. Glenwood
  13. Winston Hills
  14. Prospect
  15. Eastern Creek Quarter
  16. St Clair
  17. Fairfield West
  18. Edensor Park

Boosting Economic Growth: Optimising Housing Near Local Centres to Encourage Local Consumption

The COVID-19 pandemic highlighted the importance of walkable neighbourhoods and renewed appreciation for living and working in our local communities and supporting local businesses in local centres. Living within walking distance of retail amenities is appealing for many Sydneysiders.

During the pandemic lockdowns, with people working from home and remaining in their local neighbourhoods, the need for local centres to offer a range of goods and services close to where people live became critical. This period demonstrated that walkable neighbourhoods with more people living in local centres reduce our reliance on cars to travel outside of their locality.

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The proposed refinements to the LMH Policy need to be carefully considered to ensure they do not compromise the potential for well-located, diverse housing options.

To support our local centres, planning policy should direct the delivery of housing in well-located town centres to assist supporting retail businesses and encourage local consumption, with fewer people routinely travelling to central business districts. This saves on commuting time, which has been shown to have positive impacts on household and financial wellbeing in growth areas.

In conclusion, the exclusion of E1, E2, and MU1 zoned land from the LMH Policy will undermine logical and good planning policy for locating housing in town centres and reduces the potential customer base to support business and employment growth. The unintended consequences of the refinements recommended by DPHI that must be considered before finalising the LMH Policy include:

  1. Not optimising the locational advantages of town centres for housing to live, work, and play locally.
  2. Reducing the potential customer base within walking distance, risking undermining the economic and employment growth of local centres.
  3. Removing the impetus to plan for and realise the renewal of local centres.
  4. Undermining the core objective of the LMH Policy to fill the gap between detached homes and high-rise apartments as there will be significantly fewer opportunities for 3-6 storey mid-rise housing.
  5. Risking the achievement of the NSW Government’s commitment under the National Housing Accord to deliver 377,000 new well-located homes across the state by 2029.

The proposed refinements to the LMH Policy need to be carefully considered to ensure they do not compromise the potential for well-located, diverse housing options that support local economies and align with the NSW Government’s commitment to the National Housing Accord.

The proposed changes to NSW’s Low- and Mid-rise Housing Policy are important and could significantly influence the future of our cities and communities. Navigating these changes with care is crucial to uphold the objectives of the National Housing Accord. We invite you to connect with Urbis experts. Your insights are invaluable in shaping the future of our cities. Together, we can work towards a sustainable and inclusive urban future for all Australians.

Contact us today to learn more.

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