‘The Machinery Underneath is Broken’: Inside NSW’s Housing Divide

It was designed to break NSW’s housing gridlock but, several months in, the rollout of the state’s Low and Mid-Rise Housing Policy (LMR) is exposing how deep the cracks run. The sweeping reform aims to cut through local red tape and unlock more homes near transport and jobs. It allows dual occupancies, terraces, manor houses and apartment buildings up to six storeys within 800m of town centres—a large shift for suburbs long dominated by single-home zoning. NSW planning minister Paul Scully says the policy is about “restoring housing choice and addressing the missing middle”. He says it could help deliver 112,000 homes under the Housing Accord and has already “stimulated property transactions and lot consolidations worth more than $1 billion”. ▲ NSW planning minister Paul Scully says the Government “had not anticipated councils standing in the way of this logical housing solution”. But as councils, planners, residents and developers clash over how the rules should be interpreted, the policy’s promise of simplicity is being swallowed by confusion, resistance and delay. ‘The machinery underneath is broken’ Sky Planning founder Melissa Neighbour says the problem isn’t the policy’s ambition but the system beneath it. “Right now, each council is interpreting the Low and Mid-Rise Housing Policy in its own way, and the lack of clear guidance from the department is creating confusion and delay across the system,” she tells The Urban Developer . “Every delay and every inconsistency has a human impact. It means a family waiting longer for a home, or a small developer shelving a project because the numbers no longer stack up. In a housing crisis, those moments add up.” ▲ Sky Planning founder Melissa Neighbour: Until we align the layers of government and planning, we’ll keep spinning our wheels. Neighbour says people are spending tens of thousands just to get a development application lodged—and many are not big developers but “everyday families trying to get ahead”. “While the rules remain unclear, housing delivery stalls and the crisis only deepens,” she says. “We’ve got a government that’s setting the right intent—but policy intent alone doesn’t deliver homes. “It’s the machinery underneath that either enables or blocks delivery. Until we align those layers, we’ll keep spinning our wheels.” The great subdivision standoff Analysis by the Astrolabe Group for the Housing Now Alliance finds several councils—particularly in Sydney—are using local definitions and lot-size rules to block smaller-scale housing, a pattern now spilling into the LMR rollout. The report names Hills, Lane Cove and Woollahra among those refusing to allow subdivision of duplex sites, describing it as a pattern of overriding state policy. Housing Now director David Borger calls it “a red-tape ruse” undermining the Government’s reform agenda. “Duplexes are the new Australian dream,” he says. “Councils that still hold out are denying families the chance to get into the market.” Scully concedes the Government “had not anticipated councils standing in the way of this logical housing solution” and says subdivision rules “will be clarified so the policy is delivered as intended”. But Hills Mayor Michelle Byrne defends her council’s stance, warning allowing subdivisions would mean “no more backyards left to raise a family”. While critics accuse councils of using technicalities to slow reform, planners say many local officers are responding to deep-seated community expectations and to decades of policy culture built around risk avoidance rather than delivery. The tension is echoed by Local Government NSW, the peak body representing councils across the state. In an earlier statement, president Phyllis Miller said the Government’s planning overhaul “fails to adequately address community infrastructure needs and is a missed opportunity to provide urgently needed affordable housing, particularly for essential workers in key locations”. Neighbour says this disconnect sits at the heart of the problem. “There’s a deep disconnect between the policy ambition coming from the state and the way it filters through the local planning system,” she says. “That inertia doesn’t unwind overnight.” Mosman: ground zero for the housing wars Nowhere is the tension more tangible than in Mosman, where opposition to the reforms has escalated into a legal and political showdown. ▲ Mosman Bay, where tensions are high after the state’s housing reforms. Resident Judith Pearson is suing the state in the Land and Environment Court, arguing the Government exceeded its powers and failed to consult before imposing the policy. The Mosman Council debated joining the case but instead voted to act as a “friend of the court”—from the Latin term amicus curiae , meaning an impartial adviser to a court in a case. The case remains before the court and no findings have been made. Mayor Ann Marie Kimber says the council must “accept increased housing and the low and midrise framework are here to stay” and focus on “minimising impacts as much as possible”. The council has gone further, hosting a webpage listing every LMR development in the area—complete with maps, FAQs and application links. Asked whether this represents transparency or obstruction, Scully tells The Urban Developer : “Transparency and consultation are central planks of the planning system. But given Mosman Council has opposed the policy from day one, including voting to become a ‘friend’ of legal action against the NSW Government, it’s fair to assume this isn’t aimed at supporting additional housing.” Premier Chris Minns, speaking in August, named Mosman, North Sydney and Hunters Hill as “the three most intransigent and difficult councils”. “We have the legislative power to override their decisions—and we are doing it,” he says. “The Housing Delivery Authority was deliberately established to knock over a decision of a local council.” ▲ A rendering of the eight-storey proposal for 48-50 Almora Street, Mosman. One of Mosman’s first major LMR applications—a $50.4-million, eight-storey project at 48-50 Almora Street—would deliver 14 homes, including three affordable. Another, at 93-101A Awaba Street, proposes 29 luxury apartments across six storeys. Both comply with the policy but have drawn dozens of objections. Mosman resident Adam Curran calls the Almora Street project “a violent usurpation of community, a desecration of place and a catastrophic failure of moral and political imagination”. In his submission, he calls the policy “a grotesque perversion” of an idea meant to make housing more affordable, saying “the youth of today deserve to inherit the Mosman we all love”. His lament for “the young” contrasts with Minns’ earlier warning Sydney risks becoming “a city without young people”, a nod to the affordability crisis pushing renters and first-home buyers out of reach. His submission captures the wider mood—a determination to defend local character even as the housing crisis deepens. ▲ A rendering of the six-storey development proposed for 93-101A Awaba Street, Mosman. The Urban Developer sought detailed comment from the Mosman Council about its interpretation of the policy, housing targets and engagement approach. A spokesperson acknowledged the request but no response was received. Families trapped in the gridlock For Vahid Afaghi, the policy breakdown is personal. He and his ageing parents bought a North Sydney property last year hoping to build two small homes—one for them, one for him. “The idea was simple,” he says. “We just wanted to be close.” During a pre-DA meeting, Afaghi says council planners told him the policy didn’t apply. “They said once you subdivide, it becomes semi-detached and the LMR doesn’t apply,” he says. The site is in a heritage conservation area yet despite redesigning repeatedly to meet heritage preferences, he hit the same wall. “We’re not trying to build something ugly,” he says. “We want it to match the area. I told them we’ll make it look like one house if that’s what they want, but they still said no.” Afaghi estimates he’s spent $70,000 on consultants and revisions but still hasn’t lodged a DA. “An average Australian mum and dad can’t navigate this,” he says. “It’s too complicated.” The Urban Developer contacted the North Sydney Council seeking to clarify its interpretation of the policy and how it was being applied. After several follow-ups, a spokesperson replied: “We’re not able to comment on this.” Caught between policy and politics Scully maintains the reforms were designed to remove barriers without upending local context. “The Low and Mid-Rise Housing Policy removed planning controls that were constraining housing delivery while not changing the underlying zoning,” he says. The minister says the department is tracking LMR applications and rewarding high-performing councils through the $200-million Faster Assessment Incentive Program, naming Burwood, Inner West, Wollongong and Lake Macquarie as those “proactively supporting housing delivery”. ▲ Wollongong is among the councils praised by planning minister Paul Scully for proactively supporting housing delivery under the state’s LMR policy. Neighbour says the problem isn’t policy—it’s culture. “Local representatives are caught in a tough spot,” she says. “They’re balancing decades of status-quo expectations from their communities with a State Government that’s now driving density harder than ever before. That tension is where much of the gridlock sits. “This isn’t about blame—it’s about evolution. Our planning culture was built for control, not creation. If we want more homes, we have to shift from restricting development to enabling it. “Developers have been unfairly vilified in this debate. Yes, there are bad actors—there are bad actors in every industry—but demonising the entire development sector ignores reality. “You can’t fix a housing shortage without the people who actually build housing.”

‘The Machinery Underneath is Broken’: Inside NSW’s Housing Divide

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