In Prosper Land St Georges Crescent Drummoyne Pty Limited v City of Canada Bay Council [2026]
NSWLEC 1628, the Land and Environment Court upheld an appeal for a nine-storey residential flat building in Drummoyne containing 55 apartments, including 12 affordable dwellings.

The decision provides practical guidance on the interaction between the affordable housing and low and mid-rise housing provisions in the State Environmental Planning Policy (Housing) 2021 (Housing SEPP).

Key findings

Apartment mix may respond to local demand

The proposal did not comply with the requirement in clause 6.11(3)(a) of the Canada Bay LEP for at least 20% of apartments to be studios or one-bedroom dwellings.

The Court upheld the applicant’s clause 4.6 request for 6 x 1-bedroom apartments (representing 11% of all apartments). The Court considered that responding to the changing demographics of the local area directly addressed the aspect of the development that contravened the standard and could properly be characterised as an environmental planning ground. It found that changing local demographics and demand for larger apartments constituted a sufficient environmental planning ground for the variation, and that the proposed mix met the relevant Apartment Design Guide objective.

Affordable housing means the dwellings themselves

The proposal sought the 30% FSR and height bonus under s 16 of the Housing SEPP by providing an affordable housing component equal to 15% of its gross floor area. The parties agreed this required 1,070.74m² of GFA to be allocated to affordable housing.

The applicant argued that this calculation could include shared circulation areas used by residents of the affordable dwellings. Council contended that only the internal areas of those dwellings should count.

The Court preferred Council’s strict interpretation. It found that GFA used ‘for affordable housing’ referred to the areas used exclusively for affordable housing, being the interiors of the nominated dwellings, rather than ancillary shared areas.

Desired future character

It was agreed that Drummoyne was a precinct undergoing transition due to the application of the low and mid-rise housing provisions. Council argued that the proposed 4.5–6.2 metre front setback was inadequate for a nine-storey building.

The Court nevertheless found that the proposal’s height and building envelope were consistent with the desired future character contemplated by the Housing SEPP. It was also satisfied that the setback provided sufficient space for landscaping, while moving the building further toward the rear boundary would have adversely affected the adjoining property.

The decision indicates that existing adjoining low-density development may not determine the prevailing street setback where the applicable planning controls contemplate substantial change.

The six-storey control did not apply

Council argued that the nine-storey proposal contravened the six-storey control in section 175 of the Housing SEPP and required a clause 4.6 variation request.

The Court rejected that argument. It found that the six-storey control applied to the 22 metre building envelope established by the low and mid-rise housing provisions without an affordable housing component. The Housing SEPP permits a proposal to be made under both Chapters 2 and 6, with the affordable housing provisions in Chapter 2 establishing a different standard for development that includes an affordable housing component. The 30% affordable housing bonus increased the applicable height limit to 28.6 metres, meaning the six-storey control did not apply and no clause 4.6 request was required as the proposal was not seeking an exception to section 175.

Swimming pools may be landscaped area

The proposal provided 30.6% of the site as landscaped area, including a swimming pool above the basement. The Housing SEPP’s definition of ‘landscaped area’ expressly includes swimming pools. By contrast, its definition of ‘deep soil zone’ excludes areas with structures above or below ground.

The Court found that the pool formed part of the landscaped area despite being above basement parking. Excluding it on that basis would have blurred the distinction between landscaped area and the narrower concept of a deep soil zone.

Implications

• The decision demonstrates the importance of reading the Housing SEPP’s affordable housing and low and mid-rise housing provisions together. It also shows that close attention must be paid to the language of the relevant definitions. In particular, affordable housing GFA must be confined to the internal areas used exclusively for affordable housing, while ‘landscaped area’ is broader than ‘deep soil zone’ and may include a swimming pool above a basement.
• Applicants seeking to vary dwelling-mix standards should provide location-specific demographic and market evidence demonstrating the need for the proposed mix.
• Assessments of built form and character compatibility should account for the degree of change contemplated by the applicable planning controls. Existing development remains relevant, but may not be determinative where the precinct is undergoing transition.

This article was written by John Paul Merlino, Partner, and Emma Goktas, Graduate.