New ‘low rise medium density housing’ planning regime a double-edged sword

July, 2018

By Aaron Gadiel, Partner

Today (6 July 2018) marks the first day of the new ‘low rise medium density housing’ planning regime in NSW.

The aim of the new regime is to allow one to two storey dual occupancies, ‘manor houses’ and terraces to be developed as complying development.  This (in theory) is intended to remove the need to go to a local council to obtain approval.

The new regime also expands the permissibility of small-scale residential flat buildings (two storeys comprising 3-4 dwellings) into some residential zones.  This would also allow development applications to be made for such buildings, in some areas, for the first time.

The state government says that the new regime provides more housing choice to:

A poor start

The new regime has had a very poor start.  It was originally announced (in April) that it would commence in all parts of Sydney and NSW today (6 July 2018).

However, yesterday the NSW Government formally excluded 47 local government areas from almost all aspects of the new regime until 1 July 2019.

This means that — in Sydney — the new regime now only applies (in full) in the following local government areas:

The decision to defer the new planning regime in so much of Sydney and NSW has been driven by local council push-back.

Many local councils have a long history of permitting terraces and townhouses in low density residential areas.  However, development applications for such development can be heavily resisted by councils.  This forces such development applications into the Land and Environment Court — delaying projects and increasing costs.

Local councils have feared that the introduction of a complying development regime for ‘low rise medium density housing’ will facilitate more housing of this kind.  As a result, many local councils have decided that they want to reduce the areas in which terraces and townhouses may be permitted.

The state government appears to be receptive to such initiatives. The deferral of the ‘low rise medium density housing’ planning regime is intended to give local councils time to:

In essence, in the ‘deferred’ local government areas, the local councils are likely to be proposing net reductions in land zoned for medium density housing.  They will be looking to progress these changes prior to 1 July 2019.  If the state government ultimately agrees to this, a greater proportion of Sydney’s future housing needs will need to be met by higher density housing.

Extended permissibility for residential flat buildings

‘Manor houses’ are a type of residential flat building, where:

In local government areas where the ‘low rise medium density housing’ planning regime applies manor houses are now permissible with consent — if ‘multi dwelling’ housing is already allowed — in certain zones.  These zones are:

This means, for example, that ‘manor houses’ are now permissible on:

New controls for the assessment of development applications

The NSW Government has today (6 July 2018) also published a Medium Density Guide for Development Applications.

The government says that the Medium Density Guide for Development Applications provides councils with ‘best practice controls’ and design standards for various forms of medium density housing, including dual occupancies, manor houses, terraces, townhouses and villas.

The government has also changed the regulations to require a consent authority to take into consideration the new Medium Density Guide for Development Applications when assessing development applications for ‘manor houses’ or ‘multi dwelling housing (terraces)’.

This applies in all parts of Sydney and NSW, including those that are not presently included in the new ‘low rise medium density housing’ complying development regime.

The new Medium Density Guide for Development Applications is only required to be taken into consideration where a consent authority is satisfied that there is no development control plan that adequately addresses the development.

This means, for example, that if the relevant development control plan does not presently address development that is ‘manor houses’ or  ‘multi dwelling housing (terraces)’, the consent authority may need to apply the new Medium Density Guide for Development Applications.

In some areas this may mean a more restrictive set of planning controls — even for development that has been permissible with consent for many years.

The guide says that it ‘provides consistent planning and design standards for low rise medium density residential dwellings across NSW’.  However, the legal status of the guide means that it is unlikely to deliver on this aim.  There are two reasons for this.

Firstly, local councils are free to adopt development control plans for ‘manor houses’ or ‘multi dwelling housing (terraces)’ with different (and possibly more restrictive) controls than in those in the new Medium Density Guide for Development Applications. (This would not affect complying development, where that option is available.)

Secondly, the Medium Density Guide for Development Applications does not have the status of a development control plan.  This means that there are no statutory provisions that prevent the application of more onerous standards.

Complexities of the ‘low rise medium density housing’ planning regime

Proponents may not find the ‘low rise medium density housing’ planning regime easy to deal with in the few local council areas where it fully applies,

Firstly, new townhouses/terraces typically require new vehicle crossovers to be created on the road reserve. This means that before the complying development certificate can be issued a developer will still need to obtain the local council’s consent — under section 138 of the Roads Act 1993 — for the construction of any kerb, crossover or driveway.  There is no direct right of appeal if the local council refuses to issue such a consent.  This may force a proponent to:

so that the Land and Environment Court will have jurisdiction to give the Roads Act consent on the local council’s behalf.

Secondly, the regime introduces a very detailed and extensive system of complying development rules — well beyond anything seen before for any type of complying development in NSW.

For example, in relation to ‘multi dwelling housing (terraces)’, the newly amended State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 directly sets out a series of development standards organised under 10 categories.

However, it also requires that the design of the terraces must be consistent with the relevant design criteria set out in the Medium Density Design Guide.  There are 70 separate design criteria which must then be applied to the design of the development.

(By the way, just to confuse things even more, ‘design criteria’ under the Medium Density Design Guide sets out binding rules for complying development.  This is contrast with ‘design criteria’ under the Apartment Design Guide which only sets out one way that an objective of the guide can be achieved.  This lack of consistency in terminology will only reinforce perceptions that the planning system is too complex for people to understand.)

Thirdly — as a consequence legal changes which took effect on 1 March 2018 — any complying development certificate may now be struck down by the Land and Environment Court as invalid if the Court decides that the development does not comply with the development standards (including the relevant design criteria set out in the Medium Density Design Guide).

The opinion that the certifier has — when issuing the certificate — is no longer decisive.

This may be a concern to some development proponents, given the sheer number of statutory requirements that must be satisfied for the issue of a complying development certificate for, say, ‘multi dwelling housing (terraces)’.

The bottom line

Again, it seems that every ‘reform’ of the planning system is a double-edged sword.  While the original idea of the ‘low rise medium density housing’ seemed like a good one, the implementation appears to have fallen well-short of what was intended.

There is a real risk that:

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Contact Mills Oakley

If you require further advice on the issues raised in this alert, please do not hesitate to contact:

Aaron Gadiel | Partner
T: +61 2 8035 7858

Anthony Whealy | Partner
T: +61 2 8035 7848

Matt Sonter | Partner
T: +61 2 8035 7850
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