NSW Midrise Housing Policy Sparks Development Debate

A landmark planning reform in New South Wales will allow development of up to six storeys near transport hubs in the hope it will deliver 112,000 new homes over five years. The Low and Mid-Rise Housing Policy, effective from February 28, 2025, enables development of dual-occupancies, terraces, townhouses and residential flat buildings within 800m of 171 town centres and stations across metropolitan Sydney, the Central Coast, Illawarra-Shoalhaven and Hunter regions. State planning minister Paul Scully said the 171 areas were chosen based on access to services, public transport frequency and infrastructure capacity. The policy permits apartment buildings up to six storeys within 400m of designated sites and residential buildings up to three storeys within 800 metres. Developments preserving 15 per cent of floor space for affordable housing can exceed height limits by 30 per cent, enabling construction up to eight storeys. The policy excludes flood and bushfire-prone land, employment zones, and areas with heritage items. While the policy aims to deliver new homes in line with the state’s National Housing Accord commitments, industry leaders say it falls short of its potential. Urban Taskforce chief executive Tom Forrest said the reforms were a missed opportunity in driving housing supply near transport nodes. “The policy has the right intent but since its initial exhibition 15 months ago, the ambition has been wound back,” Forrest said. “The allowable density has been reduced from a floor space ratio of 3:1 to only 2.2:1 in medium-density areas, and from 2:1 to only 1.5:1 in lowrise areas. “In most cases, it will not be possible to build dwellings at the permissible height within these FSR controls.” Forrest questioned the policy’s approach to strategic locations. “The treatment of many key strategic sites that should have been included in the Government’s more ambitious Accelerated Precinct reforms is disappointing,” he said. “Sites like Chatswood, Edgecliff, Five Dock, Bondi Junction, and St Leonards are ripe for considerable extra height and density. “Five Dock town centre, for example, will soon get a world-class Metro station. This reflects a lack of vision for a site which should be being transformed by the multibillion-dollar investment into this game-changing infrastructure project.” ▲ Yellow areas show LMR opportunities; the grey areas are excluded, and red areas in in Heritage Conservation Areas. Image: Buy Airspace/PropCode However, according to Scully, the reforms do present significant opportunities. He said the policy enabled a range of housing types previously prohibited in many areas, with residential flat buildings currently banned in 60 per cent of medium-density zones. And traditional development pathways are complemented by new options for existing property owners. Buy Airspace founder Warren Livesey sees potential in the reforms’ flexibility, though he admits the reforms may have created competing development pathways. While traditional developers face reduced density limits, the policy enables strata owners to pursue rooftop development “so they can benefit without selling out”. “Strata buildings can now build up to new height limits by redeveloping or adding rooftop homes. This funds repairs, preserves character buildings, and lets owners stay instead of selling to developers,” Livesey told The Urban Developer . Livesey said owners could enter joint ventures with airspace developers while retaining ownership until sale, potentially saving 10-20 per cent on project costs through reduced stamp duty and land costs. ▲ “We now have a chance to utilise unused airspace, create much-needed housing, and fund building repairs—without adding urban sprawl,” Livesey said. Property Council NSW executive director Katie Stevenson welcomed the reforms. “These long-awaited reforms will enable delivery of up to a third of our National Housing Accord target—more than 100,000 new homes,” she said. However, Stevenson highlighted viability concerns in premium areas. “In eastern Sydney, land values are really expensive, so it’s hard for those projects to get under way,” she said, adding that changes to height or floor-space ratios might be needed “so that development is able to proceed”. The impact on local councils could be significant. Willoughby Council, which has already rezoned land for 6500 additional homes near public transport, parks, schools and shops, will see potential for 2380 to 4760 additional homes across five areas, including Chatswood, Roseville, Artarmon, St Leonards and Northbridge. The council’s Mayor Tanya Taylor expressed concern about infrastructure capacity and the need for additional investment in roads, schools, hospitals and community facilities to support growing populations in the designated areas. The Housing Industry Association projects NSW will fall 120,000 homes short of its 2029 target, with construction expected to begin on just 252,060 homes between 2024-25, against a National Housing Accord commitment of 377,000 homes. There has been, however, strong developer interest in the NSW housing initiatives , with the state’s Housing Development Authority receiving expressions of interest to build 40,000 homes in just three weeks after the process opened. The Urban Developer Property and Economic Outlook | For property development professionals in the Greater Sydney region. Click here

NSW Midrise Housing Policy Sparks Development Debate

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