Department and Developer Led Housing Increase
The Transported Oriented Development (TOD) Program and the Low and Mid-Rise Housing (LMR) Program (together Programs) are opening up opportunities for increased development in targeted areas and regions of NSW.
The Programs are initiatives not just to increase housing development to address the current and projected shortfall of housing in NSW, but also to address the needs of the community, such as being close to transport and community hubs.
The Programs will provide the means by which increased housing development is enabled through rezonings and smoother development approval pathways. The Programs will mean very little, just words, unless the development community takes advantage of the opportunities offered and find ways to implement commercially feasible projects within the targeted zones for the Programs to succeed.
For some time been developers as a group have been under pressure from increased and unstable interest rates, increased building costs, builder instability and supply chain issues. The elevation in prices for and limited availability of suitable sites further affects project feasibility. Foreign-owned developers are also faced with increased FIRB costs.
It is hoped for the industry overall and for the future of housing in NSW that the planning changes created by the Programs will enable further well designed and well located residential development.
TOD Program – Stage 1
The TOD comprises 2 parts or stages.
Stage 1 focuses on 8 Accelerated Precincts (see below) intended to deliver high and mid rise housing (and a proportion of affordable housing) within 1200m of priority transport hubs through State led master planning and rezoning. Our understanding is that the 1200m is not at this stage a hard boundary and may vary depending on the precinct.
Stage 1 will enable a State Significant Development (SSD) assessment pathway for residential development in the Accelerated Precincts for developments with a Capital Investment Value threshold of $60m. The SSD assessment pathway will have a target assessment timeframe of 90 days and will operate until November 2027 with development approvals to be time-limited to 2 years to promote faster construction. SSD applications may occur in parallel with the State led rezoning where master planning is advanced for that precinct.
Affordable housing is intended to comprise up to 15% (exact proportion will be based on feasibility) of homes in the 8 Accelerated Precincts with the benefits of increased height and floor space ratio.
The proposed diversity of housing within the Stage 1 precincts will comprise low-rise housing close to jobs, transport and amenities and high-rise development closer to stations.
The Department of Planning (Department) intends to work with Councils in the rezoning process, which is expected to commence on a staggered basis between September and November 2024.
Accelerated Precincts
The Department has identified the following areas for accelerated rezoning (Accelerated Precincts):
- Bankstown
- Bays West
- Bella Vista
- Crows Nest
- Homebush
- Hornsby
- Kellyville
- Macquarie Park
It is our understanding the number of precincts will increase beyond 8 over time.
TOD Program – Stage 2
Stage 2 of the TOD Program has more immediate effect. The State Environmental Planning Policy (Housing) Amendment (Transport Oriented Development) 2024 (TOD SEPP) commenced on 13 May 2024 effectively enabling the TOD Program by amending various sections of SEPP (Housing) 2021 and adding a Chapter 5 ‘Transport Oriented Development’.
The aims of Chapter 5 are:
- to increase housing density within 400m of existing and planned public transport;
- to deliver mid-rise residential flat buildings and shop top housing around rail and metro stations that are well designed, of appropriate bulk and scale and provide amenity and liveability; and
- to encourage the development of affordable housing to meet the needs of essential workers and vulnerable members of the community.
The TOD Program will apply to 37 (increased from an original 31) rail and metro stations. It may be staggered over a period, initially to 18 stations and then applying to other station precincts if Councils opting to prepare their own master plans do not meet agreed timetables and specified essential criteria in doing so.
The TOD Program focuses on good design, building separations, setbacks, vehicle access, visual privacy and communal open space. The Department is preparing a pattern book of endorsed housing designs for low-rise and mid-rise housing up to 6 storeys and developers who conform to those designs will have access to an accelerated approval pathway. Development in accordance with the pattern book designs is not compulsory.
The key elements of the TOD Program and the TOD SEPP are, very simply put:
- changed zoning and increased permissible residential development. For example, residential flat buildings will be allowed in all residential zones R1 to R4 within 400m of identified stations and residential apartment buildings and shop top housing in local and commercial centres (E1 and E2) within 400m of identified stations;
- maximum building heights of 22m (approximately 6 storeys) or 24m for shop top housing. Six storey residential flat buildings and shop top housing are viewed as the optimum type of development to erode the lack of housing in these key areas;
- floor space ratio of 2.5:1 (originally proposed to be 3:1 but reduced to reflect market);
- no minimum lot size;
- minimum width at front building line of 21m;
- minimum active street frontage in E1 and equivalent land use zones and B2 in Canterbury-Bankstown;
- maximum parking rates lower than may be prescribed in the Housing or any other SEPP;
- the Apartment Design Guide must be considered;
- Chapter 5 of the TOD SEPP prevails over any provision of the State Environmental Planning Policy (Housing) 2021 or any other planning instrument to the extent of any inconsistency (also see below);
- Residential flat building or shop-top housing developments with a gross floor area (GFA) with at least 2,000m2 must have at least 2% GFA used for affordable housing and managed by a registered community housing provider in perpetuity;
- the TOD Program will apply in heritage conservation areas but proposed development will be merit-based and it will not apply to override items of heritage;
- merit based assessment will continue to apply to development applications provided relevant environmental controls are not inconsistent with the TOD SEPP.
It is inevitable that the TOD SEPP (and the LMR Program) may have conflicts within themselves and with other planning controls, programs or legislation, but we understand the Department is working to resolve those conflicts.
Global Recognition
Planning for development around or based on transport hubs and in particular rail is not a concept unique to NSW. It has been used in New Zealand, Canada, Europe and Qatar, for example. It has been used in different ways but effectively to promote housing in transport-oriented sectors.
Challenge
The TOD and LMR Programs were always going to have their critics.
Often, the criticism is very formal at a local council level, arising out of a view that the increased housing density which would result from permitted development through the Programs will endanger the significant bushland and/or heritage nature of, or the character of, the local government area.
Other contrary opinions are raised concerning the lack of infrastructure available to support the increased housing density which would result from permitted development through the Programs.
The Programs may not be without critics, but at a time when NSW needs to increase housing, including affordable housing, in areas close to transport, jobs and community amenities, which is where people want to live, the Programs are a welcome uplift to development opportunity.
Key takeaways
- The Programs allow for greater development opportunities for developers.
- The reduction in the housing shortfall and the development to achieve that outcome can only come from the developers engaging.
- The availability of suitable development sites may increase.
- Faster approval pathways may be available in some circumstances.
- In any case approval pathways can be smoother.
- Affordable housing is addressed.
- In some instances development applications may be made to mirror and run in parallel master planning zoning changes being made and which are advanced.
If you would like to discuss this article with us, please contact Mike Ellis, Partner on (02) 9261 5900.