Sydney Locks in Apartment Retention Rule

Developers face new density limits in the City of Sydney as planning rules cap how many apartments can be lost in a redevelopment. The NSW Government has sided with the city council, approving an amendment to the Sydney Local Environmental Plan 2012 that rejects industry calls for more flexibility. The change locks in a long-running council push to stop smaller, affordable units being replaced by fewer, larger homes—particularly in high-value areas. Under the new rule, developers must retain at least 85 per cent of existing apartments, or all but one—whichever keeps more. It applies to all residential and mixed-use redevelopments across the LGA, targeting suburbs such as Potts Point, Elizabeth Bay and Rushcutters Bay, where older blocks have often made way for high-end, low-density projects. “This is a huge win for Sydney,” Lord Mayor Clover Moore said. “We’ve just scored a major victory, with the State Government approving an amendment to the Sydney Local Environmental Plan 2012 to include controls to prevent our housing numbers sliding backwards. “In the city we have seen apartment blocks housing lots of people in relatively small and more affordable apartments being converted into larger luxury apartments for only a few. In a housing crisis … we desperately needed ‘net dwelling retention and increase’.” Council figures show more than 90 homes have been lost since 2018, and another 132 under threat. ▲ Lord Mayor Clover Moore led the push for new planning controls to curb the loss of affordable apartments across the city. Apartments as small as 32sq m have been replaced with units up to 192sq m, according to the planning proposal. Exhibited in mid-2024, the proposal drew 390 submissions. About 64 per cent supported it while 23 per cent—mostly from the development and property sector—opposed. Thirdi Group objected to the “blanket” approach, arguing it would limit the flexibility needed to renew ageing building stock. Time &amp; Place called for density incentives such as height or FSR to allow retention without killing feasibility. Renato D’Ettore Architects flagged concerns about site-specific design outcomes. Keyton, a seniors housing developer, pushed for an exemption, given its projects often involve fewer, larger homes. One submission suggested switching the cap from homes to bedroom count—also rejected. ▲ Classic Potts Point apartment block, where redevelopment pressures have led to smaller units being replaced by fewer, high-end homes. The city noted the concerns but held the line. “The planning proposal provides adequate flexibility … [but] limits the loss of smaller, lower-cost apartments in favour of larger, higher-value apartments,” the post-exhibition report said. “It does not mean redevelopment is unfeasible.” Not everyone in the industry sees the rule as a constraint. NSW Chapter President of the Australian Institute of Architects Elizabeth Carpenter said the change would push the sector towards more thoughtful and efficient design. “These controls will create a clear incentive to design more efficient, well-considered residential typologies,” she said. “Developers will increasingly recognise the viability for modestly sized, intelligently designed apartments that offer strong liveability outcomes.” ▲ Elizabeth Carpenter says the new controls create opportunities for smarter, more efficient apartment design. She said the changes would place greater value on working within existing structures. “These controls encourage adaptive reuse and inventive spatial planning—areas where architecture can lead,” she said. Rather than limiting creativity, Carpenter said the policy could improve design standards. “Constraints of this nature often catalyse innovation … This policy shift invites architects to lead with design ingenuity, delivering outcomes that respect the past while addressing present and future housing needs. “It reflects a nuanced understanding of the relationship between planning controls, market behaviour, and community needs—resulting in a more balanced and resilient urban fabric.” The amendment supports the city’s broader housing targets—156,000 homes by 2036, with 18,900 due by mid-2029 under state mandates. The rule won’t apply to projects already lodged or tied to approved concepts and doesn’t restrict conversions of residential to non-residential use. Moore said she hoped the reform would “provide a model for other councils to follow”.

Sydney Locks in Apartment Retention Rule

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