Major Housing SEPP reversal

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By Aaron Gadiel, Partner

The NSW Government has changed the rules for developing seniors housing, infill ‘affordable housing’ and co-living housing.  The changes include a major about-face by government.  The government has reversed its new rule that prevented the development of seniors’ independent living units on ‘R2’ zoned land.

The changes took effect on Friday (1 July 2022).

The changes are set out in the State Environmental Planning Policy (Housing) Amendment 2022 and the State Environmental Planning Policy (Housing) Amendment (Seniors Housing) 2022.  These two documents amended the State Environmental Planning Policy (Housing) 2021 (the Housing SEPP).


A state environmental planning policy (SEPP) is a legal document that has the capacity to override or replace local environmental plans (LEPs).

This means that SEPPs can:

  • establish that certain types of development are permissible; and
  • set development standards,

even when these measures are not supported by local councils.

The Housing SEPP lays down state-wide rules for (among other things) the development of:

  • seniors housing (residential care facilities, hostels and/or a group of independent living units);
  • co-living housing (studio apartments that must be rented, not subdivided and not owner-occupied); and
  • in-fill ‘affordable housing’ (rent-controlled housing managed by a community housing organisation for at least 15 years).

Seniors housing

Repeal of development standard preventing independent living units on R2 zoned land

When the Housing SEPP was introduced in November last year, it came with a development standard that requires a consent authority to be satisfied that any seniors housing development in the ‘R2 Low Density Residential’ must be operated as a retirement village.

While this standard could potentially be varied under ‘clause 4.6’ in appropriate circumstances, it made it less likely that independent living units could be developed on ‘R2’ land.

The government has now reversed this decision.  The new development standard has now been repealed.

Heritage conservation areas

In February 2019, the NSW Government excluded almost all land within heritage conservation areas in Greater Sydney from special seniors housing provisions.  This exclusion was only supposed to be temporary — lasting until 1 July 2020.  It was later extended to 1 July 2022.

The Government has now further extended this exclusion until 31 December 2023.  Cynics may speculate that this exclusion is here to stay.

Co-living housing

Car and motorcycle parking

For co-living housing, a consent authority will no longer be required to consider whether:

  • at least one bicycle parking space will be provided for each private room; and
  • at least one motorcycle parking space will be provided for every five private rooms.

A new ‘standard’ has been introduced for co-living housing and boarding houses.  A consent authority must now (among other things) be satisfied that the development will include ‘adequate’ bicycle and motorcycle parking spaces.

The existing ‘do not refuse’ standard for co-living housing for parking are retained; that is:

  • for development on land in an accessible area — 0.2 parking spaces for each private room; or
  • otherwise — 0.5 parking spaces for each private room.

(This ‘do not refuse’ standard only applies when an environmental planning instrument or a development control plan does not specify a lower number.)

This means that developers can choose to provide car parking (in an accessible area) at 0.2 parking spaces per private room and (in other areas) at 0.5 spaces per room (as long as a lower number is not specified in a local planning control).  If a developer makes this choice, the development application cannot be refused on the basis of car parking provision.

However, if a developer chooses not to avail itself of this option, the developer only needs to satisfy the consent authority that the development will include adequate bicycle and motorcycle parking spaces.  This allows for a purely merit case to be made, without any binding numerical benchmark.

Minimum lot sizes

The minimum lot sizes for co-living housing have been tweaked.  Previously lots were not to be less than:

  • for development in zone ‘R2 Low Density Residential’ — the lesser of the minimum lot size requirements for manor houses or 600 square metres;
  • for development in zone ‘R3 Medium Density Residential’ — the minimum lot size requirements for multi dwelling housing; and
  • for development on other land — the minimum lot size requirements for residential flat buildings.

Now, new rules require lots to be not less than:

  • for development on land in zone ‘R2 Low Density Residential’ — 600 square metres;
  • for development on other land — 800 square metres.

The local planning controls are no longer relevant to establishing minimum lot sizes for co-living housing.

Infill affordable housing

The infill ‘affordable housing’ development incentive provisions now have an extended application outside of the Greater Sydney and the Newcastle Wollongong regions.

Previously, outside of these regions, these rules applied within 400 metres walking distance of land within zone ‘B1 Neighbourhood Centre’, zone ‘B2 Local Centre’ or zone ‘B4 Mixed Use’ (or within a land use zone that is equivalent to those zones).  This distance has now been increased to 800 metres.

Bottom line

Overall these changes appear to offer modest improvements to the process of developing land for seniors housing, co-living housing and infill ‘affordable housing’.

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

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