It’s a renovation boom – State housing policies being renovated with the new State Environmental Planning Policy (Housing) 2021

16 August 2021

Collation of multiple SEPPs

The provision and location of increased housing supply in NSW and particularly Sydney, has been the subject of  a number of initiatives of the NSW Government. In its latest initiative, the NSW Government is seeking to increase housing supply by introducing a new State Environmental Planning Policy that consolidates and amends existing policies as well as introducing new categories of development that deal with diversity and affordability in housing forms.

The Housing SEPP primarily combines key State Environmental Planning Policies (SEPPs) that relate to housing. The SEPPs being combined are State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARH SEPP), State Environmental Planning Policy (Housing for Seniors and People with a Disability) 2004 (Seniors SEPP), State Environmental Planning Policy No 70 – Affordable Housing (Revised Schemes), State Environmental Planning Policy No 21 – Caravan Parks and State Environmental Planning Policy No 36 – Manufactured Home Estates.

Amendments to SEPPs

As part of the new Housing SEPP, substantial amendments are proposed  to the previous SEPPs, most significantly the ARH SEPP and Seniors SEPP.

Notable changes include:

  • requirement that a consent authority must not grant development consent to a boarding house unless satisfied that it will remain affordable housing and be managed by a registered community housing provider in perpetuity;
  • change to the location of boarding houses in R2 low density zones to require they only be located within and accessible area for the Greater Sydney Region or within 400m of a B2 or B4 or an equivalent land use zone for areas outside Greater Sydney;
  • amendment to what is considered affordable housing by reference to percentages of median household income;
  • increase in the time period for which an affordable housing component must be used as affordable housing from 10 years to 15 years;
  • amendment to the ‘must not refuse’ development standards for affordable housing in residential flat buildings including increasing the bonus available floor space from 20% to 25%;
  • expansion of the ‘must not refuse’ development standards for boarding houses including requirements for communal living room, minimum lot sizes and minimum setback requirements as well as requiring compliance with the Apartment Design Guide for boarding houses exceeding 3 storeys. If this results in the need for a cl4.6 variation request where those standards are sought to be breached then there is likely to be significant potential for dispute;
  • removal of secondary dwellings as complying development from Affordable Housing into a separate housing category within the new Housing SEPP;
  • introduction of new development categories into the Standard Instrument LEP of:
    • co-living housing – a building or place with at least 6 private rooms, occupied for at least 3 months and having shared facilities maintained by a managing agent; and
    • independent living units – a dwelling or part of a building that is housing seniors or people with a disability, containing private facilities for cooking, sleeping and bathing, where clothes washing facilities or other facilities for use in connection with the dwelling or part of a building may be provided on a shared basis;
  • provisions for co-living housing including applicable development standards and available 10% density bonus until August 2024. Co-living is differentiated from boarding houses in that it is subject to a smaller FSR bonus but will not have to be used as affordable housing in perpetuity;
  • insertion of prescribed zones where seniors housing will be permissible with consent rather than the broader ‘land zoned primarily for urban purposes’ or adjoining which was previously relied upon;
  • removal of the Site Compatibility Certificate process for seniors housing (noting prescriptive zoning tables likely replace necessity for the compatibility assessment process);
  • amendment of the definition of “seniors” from people aged 55 or more to aged 60 or more;
  • amendment to prevent transport access requirements in the Seniors SEPP from being addressed by passenger services (such as ride share services or hire cars);
  • amendment to height standards for independent living units and residential care facilities allowing for additional heights;
  • amendment to development standards for seniors housing including reduction in landscaped area requirements, introductions of communal open space requirements and reduction in minimum parking spaces for residential care facilities from 1 space per 10 beds to 1 space per 15 beds; and
  • provision of FSR bonuses for vertical villages.

What’s left out

Some provisions which were anticipated in the previously exhibited Explanation of Intended Effects including provisions relating to build-to-rent and student housing as part of the Affordable Housing regime do not appear to have been implemented in the draft Housing SEPP. Student housing will supposedly be addressed separately through amendment to the State Environmental Planning Policy (Educational Establishments and Child Care Facilities) 2017.

The Department of Planning has indicated that provisions relating to caravan park and manufactured home estates including social and affordable housing provision and build-to-rent will be introduced as part of a broader review 24 months after the Housing SEPP is made. Short-term rental accommodation provisions are also not yet included but are supposed to take effect from 1 November 2021 and will be included when the Housing SEPP is finalised in October 2021.

The previously proposed 20% cap on clause 4.6 variations has not been incorporated into the new Housing SEPP however it has been indicated by the Department of Planning that this will be part of a broader review of clause 4.6 variations generally.

There is therefore clearly a lot more to come out of this suite of changes.

Amendment to other instruments

As part of the new Housing SEPP, multiple Local Environmental Plans will be automatically amended to include boarding houses into land use tables for Zone R2 Low Density Residential as well as to introduce controls relating to secondary dwellings on land in a rural zone for some Councils. The new secondary dwelling provision (clause 5.5) allows councils greater discretion in setting maximum sizes for secondary dwellings in rural zones and maximum distance from principal dwellings.

There is also a proposed amendment to the Standard Instrument (Local Environmental Plans) to chiefly introduce new definitions including updating the definition of boarding houses, introduce co-living housing (being a building or place with at least 6 private rooms, occupied for at least 3 months and having shared facilities maintained by a managing agent) and introduce independent living unit as a new type of seniors housing to replace self-contained dwellings (just as an update to more commonly used terminology).

Going forward

It is unclear what savings and transitional provisions will be put in place and therefore there is some uncertainty for anyone with a current application applying one of the previous SEPPs.

The Housing SEPP is on exhibition for public submission until the end of August and we anticipate that many of the issues identified in this article (and no doubt many others) will be raised in this consultation phase.  Whether these issues will be addressed through the Housing SEPP such that the  overall strategy, to revise how housing supply and quality is dealt with, will be effective is yet to be seen.

This article was written by John Paul Merlino, Partner and Alex Epstein, Associate.

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