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The Housing SEPP has commenced! Phase three of the New South Wales housing reform package

By Blake Dyer & David Le

• 14 December 2021 • 7 min read
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State Environmental Planning Policy (Housing) 2021 (Housing SEPP) commenced on 26 November 2021. The Housing SEPP aims to deliver more affordable and diverse forms of housing, including co-living housing and independent living units. It marks the completion of phase three of the NSW Government’s housing reforms.

In our previous article, ‘Proposed Housing SEPP: Delivering more diverse and affordable housing types in NSW?’, we considered the Public Consultation Draft of the Housing SEPP as part of the wider package of proposed housing reforms.

Here, we provide a summary of the main changes to the policy since the Public Consultation Draft was published in August 2021, and revisit the main features of the Housing SEPP. We also discuss what the commencement of the Housing SEPP means for existing development applications.

Phases of housing reform package

The NSW Government committed to the delivery of housing reforms in four phases:

  • Phase one – December 2020: Changes were made to housing policies to allow for the delivery of social and affordable housing by the Land and Housing Corporation, and changes were made to the size of secondary dwellings in rural zones and the State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARHSEPP)
  • Phase two – February 2021: Amendments were made to various State Environment Planning Policies (SEPPs) and the Environmental Planning and Assessment Regulation 2000 to introduce the concept of “build-to-rent” housing into the NSW planning framework
  • Phase three – November 2021: The Housing SEPP was finalised
  • Phase four – TBC: Further provisions to be made for caravan parks and manufactured home estates.

In line with Phase three, the Housing SEPP has now been finalised and published on the NSW legislation website. It can be viewed here.

Changes to the Housing SEPP since public consultation

After extensive consultation with the public and various stakeholders, some notable amendments were made to the Public Consultation Draft of the Housing SEPP (draft SEPP), including:

Changes since public consultationProposed prior to public notification

Co-living housing (being small private rooms, complemented by shared indoor and outdoor spaces which encourage residents to come together to relax and socialise.

Private and shared spaces that are fully furnished and ready-to-occupy) is now permitted with consent on land in any zone that co-living housing, residential flat buildings or shop top housing are permitted under another environmental planning instrument, including R2 (Low Density Residential) zones.
Co-living was not permitted in R2 (Low Density Residential Zones).

An application for build-to-rent housing in a B3 (Commercial Core) zone must now be able to satisfy a consent authority that it could be readily converted to any other land-use permitted with consent in that zone.

This was previously not a requirement under Div 6A of the ARH SEPP.

Active uses will only be required at street level in business zones for any part of a build-to-rent housing development that faces a road

Previously in all zones the ground floor had to be an active use with the street frontage.
Seniors housing developments allowed in the SP2 (Infrastructure) and RE2 (Private Recreation) zones if it adjoins any prescribed zone under the Housing SEPP.Draft SEPP required at least 50% of the land to be adjoining a residential zone.
The State Significant Development pathway for seniors housing has changed to a capital investment value of at least $30 million (or $20 million outside Greater Sydney) and must include a residential care facility.Draft SEPP only applied to residential care and required that the residential care facility component of the proposed development has a value of at least 60% of the capital investment value of the proposed development.

Recap: Key aspects of the Housing SEPP

Consolidation of existing SEPPs

The Housing SEPP consolidates the following existing State Environment Planning Policies into one SEPP:

  • State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARHSEPP)
  • State Environmental Planning Policy (Housing for Seniors and People with a Disability) 2004 (Seniors SEPP)
  • State Environmental Planning Policy No 70 – Affordable Housing (Revised Schemes) (SEPP 70)
  • State Environmental Planning Policy No 21—Caravan Parks
  • State Environmental Planning Policy No 36—Manufactured Home Estates.

(Existing Housing SEPPs).

This means that from 26 November 2021, the Existing Housing SEPPs will be repealed and replaced by the Housing SEPP.

New affordable housing provisions

The affordable housing provisions in Chapter 2 of the Housing SEPP are targeted at addressing housing inequality among the following sub-categories:

  • in-fill affordable housing
  • boarding houses
  • boarding houses – Land and Housing Corporation
  • supportive accommodation
  • residential flat buildings – social housing providers, public authorities and joint ventures.

For affordable housing, the Housing SEPP provides that:

  • affordable housing component for in-fill housing must be used for affordable housing for 15 years
  • no boarding houses are permitted within R2 zoning except where they are located in an accessible area of Greater Sydney or within 400 metres walking distance of land with B2 or B4 zoning elsewhere.

New diverse housing provisions

Meanwhile, the diverse housing provisions in Chapter 3 of the Housing SEPP are targeted at encouraging the development of a greater diversity of housing types, categorised as follows:

  • secondary dwellings
  • group homes
  • co-living housing
  • seniors housing.

Of note, the Housing SEPP provides for:

  • The introduction of new provisions for co-living houses. These are known as ‘new generation’ boarding houses which share features with traditional boarding houses, but are self-contained. Development consent is required for co-living houses, other than for land zoned R2. The Housing SEPP has set standards for this housing type such as a minimum private room area of 12m2 for single occupants or otherwise 16m2.
  • Maximum floor area of 60m2 for secondary dwellings, excluding an attached ancillary structure, unless another environmental planning instrument allows otherwise.

What’s next?

The Housing SEPP will support the NSW Government’s plan to meet the State’s housing needs over the next two decades under the NSW Housing Strategy: Housing 2041.

The Department of Planning, Industry and Environment will also be reviewing the framework for caravan parks and manufactured home estates as part of the final phase of the reforms. A review of the Housing SEPP is expected to occur within three years.

What does this mean for existing DAs?

The former provisions of a repealed instrument continue to apply to:

  • development application made, but not yet determined, on or before 26 November 2021
  • concept development application made, but not yet determined, on or before 26 November 2021
  • a staged development application made subsequent to a concept development application approval granted on or before 26 November 2021
  • a development consent granted on or before 26 November 2021
  • an environmental impact statement prepared in compliance with an environmental assessment requirement that is:
    • issued by the Planning Secretary on or before the 26 November 2021, and
    • in force when the statement is prepared.

What does this mean for existing site compatibility certificates?

State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004, is in force immediately before its repeal (the repealed SEPP), continues to apply to a development application made after 26 November 2021 if:

  • the development application relies on a site compatibility certificate, within the meaning of the repealed SEPP, and
  • the application for the certificate was made on or before 26 November 2021.

The repealed SEPP, clause 4A continues to apply to a development application made after 26 November 2021.

This savings provision ceases to apply from 1 July 2022.

Looking for more information on the Housing SEPP?

Contact our NSW Planning & Environment Team

By Blake Dyer & David Le

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