Preparing for what's to come - what the Housing SEPP means for councils

The public exhibition of the NSW Government’s Draft State Environmental Planning Policy (Housing) 2021 (Housing SEPP) concluded at the end of August with the expectation that the reforms would come into effect on 1 November 2021.

The Housing SEPP was published and came into effect on 26 November 2021. 

The changes and their intentions

The Housing SEPP is designed to encourage more affordable and diverse housing.

The Housing SEPP consolidates and repeals the following five existing State Environmental Planning Policies:

• State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARH SEPP)

• State Environmental Planning Policy (Housing for Seniors and People with a Disability) 2004

• State Environmental Planning Policy No 70 – Affordable Housing (Revised Schemes)

• State Environmental Planning Policy No 21 – Caravan Parks

• State Environmental Planning Policy No 36 – Manufactured Home Estates.

The reforms incorporate previous changes regarding build-to-rent housing, short-term rental accommodation, and social and affordable housing. They also include new provisions including changes to boarding houses and seniors housing and the introduction of co-living housing.

Despite the good intentions of the proposed changes, we believe they may have the effect of steering developers away.

Boarding Houses

Despite them having been traditionally considered affordable housing, the ARH SEPP does not restrict or means test boarding house occupants.

Under the reforms, this has changed. Boarding houses are required to remain ‘affordable’ in perpetuity and be managed by a registered community housing provider.

In addition, they are no longer be mandated in R2 zones and, in fact, may only be permitted in these zones if they are located within an accessible area.

We expect these changes will see a decline in the development of boarding houses as developers pursue more viable options. This is despite provisions such as the bonus floor space ratio of 25% for boarding houses in zones in which residential flat buildings are also permitted.

Many NSW councils will have experienced community backlash from proposed boarding houses in the past, particularly in residential zones. Accordingly, councils should already consider whether to amend planning controls to prohibit boarding houses in R2 zones.

Seniors Housing

The Housing SEPP aims to create certainty for councils, industry and the community about where seniors housing development is permitted.

The most significant changes include:

• raising the age to 60 (previously 55) to align with relevant superannuation regulations

• prescribing zones in which seniors housing development is allowed and the imposition of planning controls with respect to such things as building heights, landscaped areas and car parking

• abolishing the requirement for site compatibility certificates.

Co-Living Housing

The Housing SEPP introduces a new form of development called co-living housing. Co-living housing:

• has at least six private rooms (which may have private kitchen or bathroom facilities)

• provides occupants with a principal place of residence for at least three months

• has shared facilities, such as a communal living room, bathroom, kitchen or laundry, maintained by a managing agent, who provides management services 24 hours a day.

This form of development does not include backpackers’ accommodation, boarding houses, group homes, hotel or motel accommodation, seniors housing or serviced apartments, and is only permitted in zones where residential flats or shop top housing are permitted.

Co-living housing is subject to similar controls as boarding houses. However, given they do not need to be affordable in perpetuity or managed by a community housing provider, we anticipate this form of development will be preferred over boarding houses.

Part of a long term vision

The NSW Government has set a 20-year vision for delivering better housing outcomes by 2041. Its aspirations include affordable, secure, enduring and resilient housing in the right locations and suiting
diverse needs.

To achieve these ambitions, the NSW Government has created a two-year action plan which requires the involvement and assistance of local councils (among other stakeholders). Consequently, councils should be prepared to:

• assess existing and establish new local housing strategies

• develop social and affordable housing on Land and Housing Corporation land

• explore the potential use of under-utilised operational land

• develop affordable, innovative housing projects on NSW Government, council and privately owned land

• develop affordable housing contribution schemes

• update planning controls to improve environmental performance, including compliance with code and contribution to community net-zero targets.

The NSW Government is ambitious in its targets, particularly those of the next two years. However, it
is part of a plan to ensure the home building sector assists the economic recovery of NSW following the COVID-19 pandemic.

Now is the time to consider the provisions

Pursuant to section 4.15(1)(a) (ii) of the Environmental Planning and Assessment Act 1979, councils should already have regard to the Housing SEPP when assessing development applications.

The Housing SEPP provisions only apply and are binding on applications lodged after 26 November 2021. However, for those applications lodged but not yet determined prior to the commencement of the Housing SEPP, a consent authority is still able to consider whether it is appropriate to adopt or apply a provision (having been a draft instrument at the time of lodgement and/or assessment) to ensure decisions are consistent with the policy’s intended effect. 

We will continue to watch the implications of development as a result of the enactment of the Housing SEPP and provide an update in due course.

Author: Laura Raffaele

Contributing partner: Dennis Loether

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