Nearly a year after low and midrise policy changes were announced by the NSW Government, the biggest reforms are yet to come.  Described as a key component of the NSW Government’s planning response to the National Housing Accord, it proposes amendments to the State Environmental Planning Policy (Housing) 2021 to adjust height and floor space ratios (FSR) and to increase the permissibility of housing types on low-rise residential land in town centres and transport precincts. The state predicts the changes will deliver 112,000 more homes over  five years. However, the industry is yet to see the complete amendment. While it is the latest in a long line of welcome planning reforms, Urbis director of planning Andrew Harvey says, “There are a lot of questions being asked about what the reforms will look like and how they will be implemented in an already strained planning system”. When asked for an update on the status of the latest stage of the reforms, a spokesperson for the Department of Planning, Housing and Infrastructure said it was “still being finalised” Property Council of Australia NSW executive director Katie Stevenson says her organisation is keen to see progress on what will be the second stage of the reforms, enabling townhouses and apartments near transport hubs.  “[These are] higher-density solutions in areas where demand is highest, and many councils are ready to embrace smart infill developments around transport and town centres,” she says. “These reforms will allow the industry to make better use of prime land that’s currently underutilised.” Potential for the reforms  While developers are already looking at sites to amalgamate and acquire in likely centres where the height and FSR permissibilities will be changed, uncertainty is holding them back.  “Clients are optioning and buying sites on the basis that these areas will have some uplift, and there has been especially strong interest from the smaller to medium-sized developers operating on that scale of up to six storeys maximum,” Harvey says. “But they haven’t seen the final policy and things can change.”  ▲ Urbis director of planning Andrew Harvey. While it is likely to cover areas such as the Lower North Shore and other Sydney inner-ring areas, it is more uncertain for regional areas, or where councils such as Ku-ring-gai have fought against previous reforms.  But, says Willowtree Planning managing director Chris Wilson, developers are taking a punt.  “We’re seeing a lot of enquiries in Mosman for example, with people syndicating and stitching up sites they believe will have an upside, and might have two or three times the current FSR and heights they’re getting,” Wilson tells The Urban Developer . Less than ideal start The low and midrise policy reforms did not get off to a great start.  The introduction of the first stage in July, 2024, which permitted dual occupancies and semi-detached homes in the R2 low-density zone across all of NSW, has been met with lacklustre interest, according to Housing Industry Association deputy executive director for NSW Brad Armitage.  “In theory those changes sounded good, but in practice, it hasn’t helped and has not had a significant, or really any, impact,” he says. Stevenson says that the announcement was “a positive step but anecdotally take up has been slow”. ▲ NSW’s share of the National Housing Accord’s 1.2 million-home target is 377,000 so-called well-located homes. This is partially, according to Armitage, because the new SEPP provisions do not override existing minimum lot size provisions in local environmental plans, which can range between 450sq m and 800sq m for dual occupancies. A lot big enough to subdivide into size would have been permitted for just that before the reforms anyway, Armitage says. He says the NSW government had says it is working to reset those lot sizes to improve feasibility, with hopes of an amendment by July of next year. Policy refinement, amendments A policy refinement paper released in April this year was designed to shed light on the issues raised by consultations with the industry, public and councils.  As a result, amendments have already been made to the policy, including working with councils to remove “unsuitable” station and town centre precincts due to limited service frequency, lack of amenity and distance from major hubs; removing employment zones; and amending the initially proposed height and floor space ratio standards.  “That refinement paper also talked about that initial FSRs of 3:1 coming down to 2.2:1 following that engagement, and heights went up and down in response to feedback as well,” Harvey says. ▲ Low and midrise housing up to six storeys fills the gap between detached homes and high-rise apartment buildings, the NSW Government says. However, there are still questions being asked by the industry.  “One of the other things we’ve been discussing with people is that these are big changes for local areas and there will be a lot of a strong public interest, so who is your approver going to be? The policy doesn’t talk about the different approval pathways,” Harvey says. The Housing Delivery Authority  announced this month considers only projects with an estimated development cost of $60 million in Greater Sydney or $30 million and above in regional NSW, which cuts many mid and low-rise projects out. Developers using the newly-launched Pattern Book designs might have a faster go of it, but many applications, unless they trigger a State Significant Development pathway, will presumably be decided by local government. ▲ Willowtree Planning managing director Chris Wilson: If the government does it right it will be worth it. How already strained councils deal with a potential influx of applications and interpret issues relating to the heritage and local character remains to be seen. While the delays have not been ideal, if the government does it right it will be worth it, according to Wilson. “They’re having to give thought to urban design and principles because you are effectively changing the built form environment in key centres, shopping centres, and density has to be done well, otherwise you’ll create a lot of social and bad design outcomes,” he says. “Density has to be done well, otherwise you’ll create a lot of social and bad design outcomes.” But the “clock is ticking” to deliver Stage 2 by the end of the year, Stevenson says.   “Any delays could undermine confidence just as the industry prepares to meet the housing challenge head-on.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals.  Click here to learn more.
