Planning for Sydney's future: the draft Sydney Plan and the next phase of planning reform

Overview

The Draft Sydney Plan and the next phase of planning reform mark a fundamental reset in how strategic planning is done in NSW.

Rather than relying on a hierarchy of static metropolitan and district plans, the new framework introduces a single, integrated State Land Use Plan (expected by Q2 2026) that will guide the preparation of new regional and local plans through clearly defined priorities and actions.

Under this approach, district plans are removed and replaced with a more streamlined system in which strategic direction flows from the State level and is then tailored through region-based plans and place-focused delivery programs. This is intended to improve alignment between land use, infrastructure, housing and economic planning, while also allowing government to respond more quickly to changing market, demographic and environmental conditions.

Critically, the Draft Sydney Plan is no longer conceived as a fixed 20-year blueprint. Instead, it establishes a dynamic, action-based planning framework that is designed to evolve over time. 

The new Draft Sydney Plan is less prescriptive and more flexible than the previous Greater Sydney Region Plan. This flexibility is welcomed to better respond to changing circumstances and calls on Councils to deliver an enabling planning framework through alignment and implementation of State policy. This creates some risk if Council’s don’t deliver. Although there is strong language that the State government will intervene if housing targets and certain benchmarks are not met. 

Housing is front and centre of the Draft Sydney Plan, coordinating future growth with infrastructure and transit-oriented development. The Plan raises a flexible land use approach to housing with additional opportunities to deliver housing in certain centres outside of the commercial core, and local industrial land. This is well supported. 

Strategic priorities, targets and place-based initiatives will be updated through future policy changes, reflecting the delivery of infrastructure, housing and services, as well as emerging challenges and opportunities. In this way, the Plan operates less as an end-state map and more as a “live” program of coordinated government action.

We have reviewed the Draft Sydney Plan and the next phase of planning reform to identify what this new model means in practice. Set out below are the key changes, risks and opportunities that councils, landowners, developers and infrastructure agencies should be watching as this new strategic planning system takes shape.

The action program behind the Draft Sydney Plan

Rather than setting a single end-state for Sydney in 2040 or 2050, the Draft Sydney Plan establishes a sequenced program of reform and delivery.

What emerges is a clear pattern:

• 2026-27 is about resetting the rules.
• 2027-29 is about delivering growth in the right places.
• Beyond 2029 is about scaling-up what works

Below is how the actions line up (NB: action numbers are labelled (#.#) with respect to each item.

Phase 1 (2026-27)

This phase resets aspects of the planning system from sector settings, data, and controls that govern growth.
 
Housing system reset
▪    Introduce a revised housing supply and diversity monitoring framework (1.1)
▪    Continue to create fast-track assessment pathways for council-led housing proposals (1.2)
▪    Lead planning intervention to increase housing supply if Councils miss housing targets (1.3)
▪    Councils must update LEPs and LSPSs to align with the Sydney Plan and create enough feasible capacity to meet housing targets (1.4).

These changes will ensure housing delivery is tracked more accurately, allowing earlier intervention when supply falls short. Councils will be held to binding housing targets, creating stronger accountability and a clear requirement to align local planning instruments with State priorities.

Where local controls act as a barrier, the State will have the ability to step-in to unlock supply. The NSW Government is giving Councils a strong message that they are required to ensure planning controls don’t just enable capacity for housing but ensure delivery. Updating LEPs and strategic plans will need to become a priority for Councils, potentially requiring additional resources and a shift in planning focus.

A key question that remains is what happens beyond the 5-year Housing Accord period and how these targets may be reset to 6-10 years and beyond. Our view is that housing targets should continue to be set by the State government or through the next phase of the Housing Accord. 

Incentivising higher density housing options

▪   Standardise development standards for dual occupancy developments (2.1)
▪    Make sure the Apartment Design Guide (ADG) is implemented flexibly to achieve positive outcomes through merit assessment (2.4)
▪    Councils must revise:
          o    Low and mid-rise housing controls for identified LMR areas (2.6)
          o    Minimum lot size requirements for dual occupancies outside of LMR areas (2.8)
          o    Transit-oriented density settings and more ways to deliver high density development around stations (2.9)

By standardising development standards, the system will provide greater certainty for developers across the State. The flexible application of the ADG is intended to encourage more innovative and site‑responsive housing outcomes.

Bringing local controls into alignment with State policy is effective to encourage mid-rise and higher density housing, particularly near transit-hubs, supporting more efficient land use planning. These changes will likely lead to increased density in targeted areas, making community engagement and careful design essential. 
It’s a strong proposition being put to Councils that further change will occur in established areas with high growth potential. 

Infrastructure-driven planning

Infrastructure will be prioritised to support growth:

▪    The Sydney Infrastructure Opportunities Plan will be developed and updated annually (5.1)
▪    Councils must align infrastructure contributions, delivery programs and sequencing to State growth priorities (5.3–5.6)

This approach aims to put a framework around infrastructure investment so that it is closely aligned with areas of planned growth, improving service delivery and liveability. Annual updates to the Opportunities Plan will allow the system to respond to changing needs and priorities.

Councils will need to work more closely with State agencies to coordinate infrastructure delivery with housing and population growth. By creating a clear delivery pipeline, this model reduces the risk of housing being built without the necessary supporting infrastructure, ensuring growth is sustainable and well serviced.A key message of the Sydney Plan is the requirement for ongoing monitoring for the supply and sequencing of development aligned with infrastructure investment and delivery. Developers will have scope to deliver projects in the Infrastructure Opportunities Plan as works-in-kind. 

Jobs and centres reset

By 2026:

▪    Finalise a new centres policy with guidance on mixed-use or residential zoned land in and around commercial cores (4.1)
▪    Update employment zone planning policy for centres (4.2)
▪    Revised statutory provisions to enable new jobs in and out of centres, including responding to infrastructure availability (4.4)

The new centres policy aims to ensure employment growth keeps pace with housing delivery, providing clearer direction on where and how jobs should be located. New provisions will offer greater flexibility to support employment in a wider range of locations, helping to maintain a balanced urban structure and strong local economies.

Re-categorisation of centre typologies has been earmarked in the draft Plan, with new centres being designated as CBD, Commercial Centre, Retail Centre, and Residential Centres. It’s a shift from the previous ‘strategic centres’ categorisation. This will see different ratios of employment/residential land use ranges from 80/20 to 50/50 and below. A centre boundary model will be used to determine commercial core and surrounding residential and mixed-use land use opportunities. 

We see a primary challenge being the contention of these ratios and how new residential and mixed-use land uses are delivered within a wider commercial core catchment. On balance, with the evolution of commercial office following the pandemic and the way people are using centres, this will be a welcomed approach for some centres. It will need to be balanced with the need to ensure centres remain hubs for jobs and economic growth. 

Industrial land protection and intensification 

A revised Statewide Industrial Lands Policy, including:

▪    Alignment of the Employment Lands Development Monitor with industrial lands categorisation (8.2)
▪    Sydney’s priority employment areas and investment program published (8.5)
▪    Intensification interventions tested (8.1)
▪    Councils must review locally significant industrial lands and update zoning to be consistent with statewide policy (8.7-8.8)

The introduction of a revised Statewide Industrial Lands Policy is a positive step toward securing Sydney’s long-term freight, logistics and industrial capacity. The use of clearer metrics to categorise state, regionally and locally significant industrial land, together with the identification of priority employment areas, provides a more transparent and consistent framework for managing these assets. Stronger protection of state and regionally significant industrial land from incompatible and sensitive uses is supported, as it will provide greater certainty for investment and ongoing operations.

Clarified pathways for industrial intensification and land use diversification represent a welcome move away from a blanket retain-and-manage approach. However, the limited transparency around how metrics have been applied at a precinct level raises concerns about the consistency of outcomes. This is evident where some smaller precincts are categorised as regionally significant while larger, functionally similar areas are identified as locally significant. The inclusion of real-world examples demonstrating the rationale for retention, transition or rezoning would strengthen the framework.

Mandatory rezoning by councils to align LEPs with the statewide policy is broadly supported and should reduce fragmentation across the industrial land base. On balance, considering alternative land uses, including employment and residential uses is supported, especially for edge industrial land that does not contribute to key services. However, the policy does not adequately recognise opportunities to remove restrictive built-form controls or design excellence provisions that may unnecessarily limit industrial intensification where impacts could be managed through alternative mitigation measures. Ongoing two-yearly reviews of land categorisation, particularly for locally significant industrial land, will be critical to monitoring demand and identifying emerging risks early.

Climate and hazard baselines

By 2026–27:

▪    New hazard, flood and resilience frameworks are released (9.1–9.4)
▪    Councils must update hazard mapping and embed it in planning to inform land use and infrastructure planning decisions (9.5–9.7)

The draft Plan introduces climate and hazard baselines for a strengthened, risk-based approach to land use planning, requiring councils to embed hazard mapping into planning controls to guide land use and infrastructure decisions. This is supported in principle, as it will restrict development in high-risk locations and direct growth toward safer, more resilient areas. However, the application of new flood and bushfire frameworks is likely to limit land release in parts of the existing urban footprint, particularly where overland flooding is prevalent.

The Plan’s focus on heat vulnerability and urban cooling measures, including increased tree canopy and early adoption of ‘Cooler Places’ resources, is appropriate but raises concerns about deliverability. The continued reliance on a 40 per cent tree canopy target lacks clarity on how locally appropriate targets will be achieved, particularly where councils are already struggling to increase canopy cover and industry faces inconsistent benchmarks.

Councils will have the responsibility to undertake hazard risk assessments, prepare Disaster Adaption Plans and develop new planning tools. The risk is that limited resourcing in this space will slow local strategic planning and rezoning outcomes. Additional support to Councils may be required to meet these objectives. 

Phase 2 (2027-29)

This phase shifts to a geographical rollout of policy implementation.

Transit-led growth

The NSW Government will deliver:

▪    Master plans and State-led rezoning precinct studies for priority Metro West, Sydney Metro – Western Sydney Airport, Stage 2 light rail and rapid bus networks (2.2)

This aligns with current planning priorities to encourage housing around existing and future transport hubs. 

Affordable housing expansion

▪    Affordable Housing Contribution Scheme toolkit introduced (3.1)
▪    Councils must prepare and adopt an affordable housing contribution scheme and identify surplus land for affordable housing (3.3-3.4)
▪    By 2029, Maximise TOD and infill outcomes by creating more flexible arrangements for contributions (3.2)

Councils have individual schemes for affordable housing which meet local requirements including focusing on specific precincts where growth can be accommodated and LGA wide provisions. The challenge ahead is whether a more consistent, state-wide framework could gain support from councils that value their existing autonomy. How HDA projects deliver affordable housing will be particularly interesting to watch, as expressions of interest set their own project-specific affordable housing targets.

By 2029, changes to flexible housing arrangements are expected to come into effect. It remains to be seen whether Transit-Oriented Development (TOD) housing will gain significant traction before then, or whether these changes will serve as the catalyst needed to drive growth in line with current policy objectives.

Greenfield sequencing

▪    Introduction of a medium-term sequencing plan for greenfield precincts (10.1) 

The introduction of a medium-term sequencing plan for greenfield precincts is supported, as it provides greater clarity around the timing and staging of development in areas already identified through previous strategic planning. However, the effectiveness of this approach will be heavily dependent on the timely delivery of enabling infrastructure and clear communication of priorities to industry. Without early alignment from servicing authorities, particularly water and utilities providers, identified precincts may remain constrained and unable to deliver housing when required.

Rural land and urban footprint

By 2027:
▪    Finalisation of the urban footprint mapping and associated strategic policy (11.3)
▪    Rural land productivity reforms are detailed, including study into mapping productive uses, critical infrastructure and important supply chains beyond the urban footprint (11.1-11.2).

Finalisation of the urban footprint will replace the current Metropolitan Rural Area with the intent of safe-guarding rural land from fragmentation and urban encroachment and managing land use conflicts. Completion by 2027 allows for consideration of greenfield sequencing, the proposed rural lands study and resilience planning.

While the draft Plan still provides guidelines for rezoning land outside the urban footprint, the finalisation of the urban footprint will essentially ‘lock in’ development providing a clear direction that rural land should be retained for rural uses. 

While the draft Plan emphasises orderly, infrastructure-led growth and making full use of capacity within the six nominated greenfield growth areas, the assertion that existing zoning provides substantial capacity does not fully align with current market delivery constraints. Restricting urban expansion may limit future flexibility if population growth exceeds projections or if land within the footprint becomes constrained by hazards, servicing or environmental factors.

The extent to which the urban footprint mapping can be updated post-2027, and how readily new precincts can be added, will be critical to avoiding the mapping becoming quickly outdated and overly reliant on council-led planning responses. Ongoing review of the urban–rural interface and clearly defined contingency pathways will be necessary to ensure the framework remains responsive to changing conditions.

Liveability and public footprint

Between 2026–29:

▪    Refine the identified network of high priority blue-green grid corridors (7.1)
▪    Expand metropolitan public open space (7.2)
▪    Review Council’s open space provision and identify opportunities to align with NSW Government open space outcomes (7.4)

The draft Plan identifies 26 high-priority corridors and commits the State to setting open space targets for each LGA. Funding for the blue-green grid can be sourced through local and state land use planning mechanisms, as well as programs such as the Metropolitan Greenspace Program and the Greening our City Program.

Local councils typically lead the work to identify, plan, and deliver blue-green grid connections, with support from State agencies. The Greenway linking the Cooks River to the Bay Run is a recent example of successful corridor development, noting that the development required extensive community consultation and over 10 years of planning.

Identifying key corridors early will help support sustainable growth and strengthen alignment with resilience planning objectives.

Culture and nighttime economy

▪    Activate key arts and entertainment precincts and establish special entertainment precincts in State and council area rezonings including flexible zoning, encouraging active frontages and expedited planning pathways (6.1-6.3)

The continued activation of arts and entertainment precincts and the expansion of Special Entertainment Precincts is supported, particularly where flexible zoning, active frontages and expedited pathways provide greater certainty for cultural and night-time uses. The work of the Office of the 24-Hour Economy Commissioner has established a strong policy and funding foundation, and ongoing State support will be critical to protecting cultural venues and strengthening the creative economy.

However, the success of Special Entertainment Precincts will depend on consistent application by Councils and effective integration with centres policy, transport planning and residential growth. There remains a risk that rezonings introducing new residential uses near established entertainment precincts may undermine night-time activity if land-use conflict is not carefully managed. Clearer performance-based controls and a coordinated approach to precinct management will be essential to ensuring cultural and economic objectives are realised over the long term.

Phase 3 (Beyond 2029) 

From this point, Sydney moves into a rolling strategic management mode:

▪    Housing performance continues to be monitored and enforced (1.1–1.3)
▪    Infrastructure pipelines are updated annually (5.1)
▪    Industrial land categorisation is reviewed every two years (8.3)
▪    Affordable housing contribution settings are adjusted (3.2)
▪    Canopy, greening and environmental data is refreshed (12.1–12.3)
▪    Ongoing monitoring of housing delivery, regular updates to infrastructure pipelines, two-yearly reviews of industrial land categorisation, adjustments to affordable housing contribution settings, and refreshed canopy and environmental data are intended to ensure planning settings remain responsive to performance, growth patterns and emerging challenges. 
▪    The effectiveness of this phase will depend on the quality, transparency and timeliness of data, as well as clear governance arrangements to translate monitoring outcomes into timely policy and statutory change. Without defined triggers for intervention, resourcing commitments and accountability for implementation, there is a risk that monitoring becomes descriptive rather than corrective. Clear feedback loops between performance data, strategic planning and statutory controls will be critical to ensuring Phase 3 delivers adaptive, evidence-led outcomes rather than incremental policy drift.

What this means

The Draft Sydney Plan marks a clear shift away from a static, long-term masterplan toward a dynamic, performance-led planning system. Rather than setting a fixed end-state, the Plan establishes an ongoing cycle of monitoring, intervention and adjustment across housing, infrastructure, jobs, industrial land, climate resilience and liveability.

Sydney’s future will be shaped by annual decisions including how quickly councils update controls, how infrastructure is sequenced, and how effectively data is used to trigger action.

Strong guidance for Councils in reviewing LSPSs and updating planning controls will be necessary to ensure that local planning meets expectations of the plan.

The success of this approach will depend less on policy intent and more on execution. Clear governance, transparent data, adequate resourcing and a willingness to adjust settings when assumptions no longer hold. Without these, there is a risk the plan becomes complex and process-heavy, rather than genuinely adaptive.

What needs to happen next

To realise the plan’s intent as a living framework, several priorities stand out:

1.        Stronger delivery and accountability

Monitoring must be clearly linked to intervention, with defined triggers for policy change where housing, infrastructure or employment outcomes fall short.

2.       Resourcing councils to deliver

Councils are central to implementation, particularly for LEP updates, hazard planning and affordable housing. Targeted funding and technical support will be critical.

3.       Greater transparency and flexibility

Clear methodologies for targets, industrial land categorisation and hazard constraints, and pathways to adjust the urban footprint and sequencing over time will help keep the system responsive.

4.      Tighter integration of growth and infrastructure

Aligning rezonings, infrastructure investment and funding mechanisms will be essential to avoid growth outpacing services.

5.       Managing intensification and conflict

As density increases, consistent application of performance-based controls and principles such as Agent of Change will be key to protecting jobs, industry and the night-time economy.

Ultimately, the Draft Sydney Plan reframes strategic planning as an ongoing task rather than a one-off exercise. If well executed, it has the potential to deliver a more responsive, infrastructure-aligned and liveable city. One shaped by continuous adjustment rather than distant horizons.