Blink and you’ll miss it: Upzoning reversed after only seven days

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By Aaron Gadiel, Partner

On 6 July 2018 the NSW Government made small residential apartment buildings permissible with consent in some parts of the Liverpool and Penrith local government areas.  The decision has now been reversed — just seven days after it was made.

The reversal has echoes of two other decisions made  earlier this year.  The three decisions — taken together — suggest a greater willingness by the NSW government to make changes to reduce development potential.

The latest decision:  New ‘low rise medium density housing’ planning regime wound back further

The most recent decision related to the upzoning of land zoned ‘R3 Medium Density Residential’ (R3) under both the Penrith Local Environmental Plan 2010 and the Liverpool Local Environmental Plan 2008.

The upzoning would have allowed a type of residential flat building — called a ‘manor house’ — to be developed on this land.  Until 6 July 2018 all residential flat buildings, including manor houses, were prohibited on this R3 land.

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

  • the building contains three or four dwellings;
  • each dwelling is attached to another;
  • at least one dwelling is located above another dwelling; and
  • the building is no more than two storeys (excluding any basement).

The upzoning came as part of the new ‘low rise medium density housing’ planning regime in NSW.  The regime commenced (in full) in seven Sydney local government areas (and some non-Sydney areas) on 6 July 2018.  Along with the upzoning came an ability to access a new complying development code for one to two storey dual occupancies, ‘manor houses’ and terraces.

From the first day of the new regime, 47 local government areas across NSW were excluded from the expanded permissibility for manor houses and the new complying development code.  (Noting that these local government areas were made immediately subject to the Medium Density Guide for Development Applications — triggered when a consent authority is satisfied that there is no development control plan that adequately addresses manor houses or terraces.)

In Sydney, this just left the following seven local government areas covered by all aspects of the new regime:

  • Waverley;
  • Ku-ring-gai;
  • North Sydney;
  • Blacktown;
  • Fairfield;
  • Liverpool; and
  • Penrith.

Our full article on the subject is available here.

However, last Friday (13 July 2018), the State Environmental Planning Policy (Exempt and Complying Development Codes) Amendment (Low Rise Medium Density Housing Exemptions) 2018 was published.

It added Liverpool, Penrith and Bathurst to the list of local government areas excluded from the main parts of the new ‘low rise medium density housing’ planning regime.  This means that the full regime does not now apply in 50 local government areas.

As the law stands today, the regime will apply from in these 50 areas from 1 July 2019.

Of course, as the exclusion of Liverpool and Penrith shows — this law can be changed with the flick of a pen.  For example, in this case, the Department did not publish the usual ‘explanation of intended effects’ and did not invite submissions prior to excluding these areas.  (These things only happen as a result of non-binding policy, they are not strict legal requirements.)

In short, in Liverpool and Penrith, the upzoning for manor houses and access to the new complying development code for ‘low rise medium density housing’ lasted only seven days.  Only five local government areas within Sydney will be subject to these aspects of the new regime (for now).

The saving grace is that the period of upzoning was so short that — in all likelihood — most landowners would not have had enough time to spend any serious money in reliance on the new controls.

Although others have not (recently) been so lucky — as the next two case studies of other 2018 NSW government decisions show.

Boarding house rules changed with no protection for existing applications

On 1 June 2018 the NSW government published the State Environmental Planning Policy (Affordable Rental Housing) Amendment (Parking for Boarding Houses) 2018.

This document reduced the protection that proposed boarding houses received from local council car parking controls.  Until 1 June 2018 a consent authority was not able to refuse consent to boarding house (under the State Environmental Planning Policy (Affordable Rental Housing) 2009) on the grounds of car parking, so long as:

  • in an area with good public transport — one parking space was provided for every five boarding rooms; and
  • in other areas — two parking spaces were provided for every five boarding rooms.

From 1 June 2018 this changed.  A proposed private sector boarding house could only receive the statutory protection from local council car parking controls if it included one car parking space for every two boarding rooms.

Adverse changes in development standards are not uncommon in NSW.  What was unusual — in this case — was the NSW government decision to make this change without any ‘savings’ provision protecting pending development applications from the new rules.

We are aware of development proponents who were caught short by the change —having spent tens of thousands of dollars pursing development applications based on the rules as they stood prior to 1 June 2018.

Use of a new explicit revocation power to cancel a site compatibility certificate

On 20 April 2018, the Department of Planning and Environment announced that it had withdrawn a site compatibility certificate issued in March 2018 for an aged care development application in Dural.

This had the effect of depriving the proponent of the ability to rely on the certificate to establish permissibility for the aged care development on the relevant land.  It effectively killed-off the hopes of the proponent to obtain development consent.

The explicit revocation power (used in this case) was only inserted into the Environmental Planning and Assessment Act 1979 on 1 March 2018 as part of the NSW Government recent package of planning changes (the provision is section 1.4(8)).

It only took less than two months for the Department to put this new power to use.

In short

The recent pattern of decisions is not encouraging for proponents thinking about investing large sums pursuing a project (on the basis of existing planning controls or site compatibility certificates).

It seems that participants in the NSW planning system are being exposed to increasing levels of regulatory uncertainty.  Recent legislative changes have, in total, added to that risk.

While many local councils have never shown a great interest in fostering investment certainty, the NSW Government has traditionally sought to:

  • telegraph its intentions well in advance;
  • avoid, when practicable, tampering with existing development potential; and
  • provide for transitional arrangements to ensure that proponents (who have already taken certain concrete steps on the basis of existing decisions) are not adversely affected.

There have always been isolated departures from these norms.  However the recent spate of such departures is beginning to look like a pattern.

Planning authorities are plainly more willing use their powers to make the decisions they consider necessary — even when those decisions may damage investment confidence.

For further information, please do not hesitate to contact us.

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