Low and Mid-Rise Housing Policy – Stage 2 is here!

The NSW Government’s highly debated Stage 2 amendments to the State Environmental Planning Policy (Housing) 2021 (Housing SEPP) as part of its 'Low and Mid-Rise Housing Policy' are confirmed to commence on 28 February 2025.

The Policy, introduced in 2023, is aimed at facilitating and encouraging development of low- and mid-rise housing, labelled the ‘missing middle’ of housing, to provide a greater diversity of housing and increase housing supply across NSW.

In simple terms, the Stage 2 amendments will see the introduction of new non-discretionary development standards which override Local Environmental Plan (LEP) or Development Control Plan (DCP) standards (except where the LEP or DCP provisions are more generous than the Housing SEPP standards).

The Stage 1 amendments commenced on 1 July 2024 and permitted the development of dual occupancies and semi-detached homes in R2 low density residential zones.

The Stage 2 amendments will permit the development of dual occupancies, terraces, townhouses and low- and mid-rise apartments in selected areas being residential zones within 800m walking distance from town centres and train/light rail stations across Sydney, Central Coast, Illawarra and Hunter regions.

The Policy will also be supported by the NSW Housing Pattern Book (expected to be released by mid-2025) which will provide selected architectural guidelines for low- and mid-rise developments. More information about the NSW Housing Pattern Book and low- and mid-rise housing patterns is available on the NSW Government website.

Where do the Stage 2 amendments apply?

171 selected areas have been identified to be affected by the Stage 2 amendments. The selected areas are identified as 'Indicative LMR Housing Area' on the NSW Government interactive map.

The areas were selected based on: 

• Access to goods and services

• Public transport services and travel times

• Critical infrastructure capacity

Certain sites have been excluded, such as bushfire-prone land, coastal wetlands, land in close proximity to dangerous goods pipelines, and land subject to high aircraft noise, due to the risks associated with increasing housing and population density in these areas.

The amended planning controls will apply in heritage conservation areas, however, will not apply to land that comprises or contains a heritage item as listed in a local environmental plan or on the State Heritage Register.

To avoid overlap, these Policy amendments do not apply to land within a Transport Oriented Development (TOD) Program area, as identified by Chapter 5 of the Housing SEPP. As these Policy amendments and the TOD Program are based on similar principles of delivering housing in well-located areas, it is important to check which Housing SEPP provisions and amendments apply to certain land.

What are the amendments?

A summary of the key amendments to the Housing SEPP by the Policy is set out below:

Dual Occupancies

Dual occupancy developments on Lots in R1, R2, R3 and R4 zones with a minimum lot size of 450m2 and a minimum lot width of 12m are permitted. The dwellings must have a maximum FSR of 0.65:1 and a maximum building height of 9.5m.

Lots in R1, R2 and R3 zones may be subdivided if the proposed lots have a minimum of 225m2 per lot and a minimum lot width of 6m.

Multi-Dwelling Housing

Development of 3 or more dwellings on Lots in R1, R2, R3 and R4 zones with a minimum lot size of 600m2 and a minimum lot width of 12m are permitted. The dwellings must have a maximum FSR of 0.7:1 and a maximum building height of 9.5m.

Multi-Dwelling Housing (Terraces)

Development of 3 or more terrace dwellings on Lots in R1, R2, R3 and R4 zones with a minimum lot size of 500m2 and a minimum lot width of 18m are permitted. The terrace dwellings must have a maximum FSR of 0.7:1 and a maximum building height of 9.5m.

Lots in R1, R2 and R3 zones may be subdivided if the proposed lots have a minimum of 165m2 per lot and a minimum lot width of 6m.

Residential Flat Buildings

Residential Flat Buildings (RFB), being developments with 3 or more apartments in a 2 or more-storey building, on Lots in R1 and R2 zones with a minimum lot size of 500m2 and a minimum lot width of 12m are permitted. The RFB must have a maximum FSR of 0.8:1 and a maximum building height of 9.5m.

RFB on Lots in R3 and R4 zones that are located within 0-400m from a train/light rail station or town centre are permitted. The RFB must have a maximum FSR of 2.2:1, a maximum building height of 22m and a maximum of 6 storeys. No minimum lot size or lot width provisions apply to these lots.

RFB on Lots in R3 and R4 zones that are located within 400-800m from a train/light rail station or town centre are permitted. The RFB must have a maximum FSR of 1.5:1, a maximum building height of 17.5m and a maximum of 4 storeys. No minimum lot size or lot width provisions apply to these lots.

Shop-Top Housing

Shop-top housing, being 1 or more apartments above ground floor shops, on Lots in R1 and R2 zones with a minimum lot size of 500m2 and a minimum lot width of 12m are permitted. The shop-top housing must have a maximum FSR of 0.8:1 and a maximum building height of 9.5m.

Shop-top housing on Lots in R3 and R4 zones that are located within 0-400m from a train/light rail station or town centre are permitted. The shop-top housing must have a maximum FSR of 2.2:1, a maximum building height of 24m and a maximum of 6 storeys. No minimum lot size or lot width provisions apply to these lots.

Shop-top housing on Lots in R3 and R4 zones that are located within 400-800m from a train/light rail station or town centre are permitted. The shop-top housing must have a maximum FSR of 1.5:1, a maximum building height of 17.5m and a maximum of 4 storeys. No minimum lot size or lot width provisions apply to these lots.

In-Fill bonus provisions

The Housing SEPP also contains bonus provisions which allow for additional floor space and building height for in-fill residential development that provides affordable housing. Those provisions will continue to apply to land that is affected by these Policy amendments. The bonus provisions will apply on top of the non-discretionary standards, encouraging affordable housing to be delivered in low- and mid-rise housing areas. For more information about these bonus provisions see our article 'New In-fill Affordable Housing Scheme - what you need to know'.

Summary

The amendments to the Housing SEPP will result in consent authorities not being able to refuse development applications which comply with the non-discretionary standards on the basis of LEP or DCP non-compliance.

Consent authorities and developers alike will need to familiarise themselves with the new non-discretionary standards and be aware of which standards will apply, noting that whichever non-discretionary standard is more generous will be the applicable standard.

Notwithstanding the new non-discretionary standards, consent authorities will still be permitted to consider all other existing provisions in SEPPs, LEPs and DCPs (such as parking, landscaping, amenity, etc.) in their merit assessment of development applications.

We will provide further commentary on the implementation of the stage 2 amendments over the coming months.

Authors: Dennis Loether and Monique Lewis