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NSW's new Housing Diversity SEPP to facilitate integrated social housing redevelopment

By Claire Smith and Lauren Smith
18 Aug 2020
The proposed changes will benefit not only the Land and Housing Corporation but its development partners, leading to a growth in opportunities for new or accelerated projects, especially in light of COVID-19.

The Department of Planning, Industry and Environment (DPIE) has released an Explanation of Intended Effect (EIE) for its new Housing Diversity SEPP which includes reforms intended to facilitate growth in social housing projects. It will expand the self-assessment planning pathway for Land and Housing Corporation (LAHC) projects and some of the development concessions or bonuses that apply. These beneficial provisions will apply not only to traditional social housing estates but to the new integrated community models which incorporate social, affordable and private dwelling types.

The push for integrated development types coincides with the NSW Government’s aim to involve the private sector and community housing providers in the delivery of social housing redevelopments. The Housing Diversity SEPP provisions will benefit not only the LAHC but its development partners. DPIE is calling for submissions on its EIE by 9 September 2020.

Summary of changes for social housing

At a state level, social housing developments are facilitated by the State Environmental Planning Policy (Affordable Rental Housing) 2009 (ARH SEPP) and State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004 (Seniors Living SEPP). The ARH SEPP makes permissible residential developments carried out by public authorities or social housing providers or developers in partnership with the Land and Housing Corporation (LAHC) and attaches medium term obligations for these developments to provide affordable housing to tenants. The Seniors SEPP regulates where seniors housing is permissible, and the form of that development. Social housing providers are exempted from some of the specific design requirements which would otherwise apply to seniors housing developments.

The Housing Diversity SEPP will consolidate the ARH SEPP, Seniors Living SEPP and the State Environmental Planning Policy No 70 – Affordable Housing (Revised Schemes) (SEPP 70) and will introduce changes to social housing developments.

Changes to the self-assessment pathway

Changes are proposed which will expand the power of the LAHC to self-assess certain developments and carry these out without obtaining development consent:

  • LAHC will be able to assess residential developments containing up to 60 dwellings with a maximum building height of 8.5m (2 storeys), up from the current 20 dwelling maximum.
  • The self-assessment pathway will apply to any form of residential accommodation on land where it is ordinarily permitted with consent under another environmental planning instrument. This includes new manor houses and terrace type developments.
  • The self-assessment pathway will also apply to boarding house developments, with a height limit of 8.5 metres, on land where these developments are permissible with consent. Whilst the Housing Diversity SEPP will remove "boarding house" developments as being permissible forms of development with consent in the Low Density Residential R2 zone, boarding house developments with a maximum 12 rooms will remain permissible in the R2 zone if they are developed by or on behalf of the LAHC, on government owned land.
  • LAHC will be able to self-assess all residential components of developments with 60 dwellings or less if that development is undertaken by or on behalf of the LAHC, on any land owned by the State Government. The self-assessment pathway is not limited just to the social housing component of a development but applies to social, affordable or private dwellings within the development.
  • The Guidelines used by LAHC for self-assessment will be updated to reflect best practice.

Development Standards, Concessions and Bonuses:

Certain development standards, concessions and bonuses will be changed:

  • Under the ARH SEPP provisions a minimum car parking rate of 0.5 spaces per dwelling will apply to all dwellings (social, affordable, private) in a development undertaken by or on behalf of the LAHC on government owned land. An option will remain available for a developer to lodge a development application if a lower car parking rate is proposed.
  • For seniors housing, the provisions will make clear that the existing reduced parking rates apply to private dwelling components of a seniors housing development if the development is carried out by or on behalf of the LAHC on government owned land.
  • The FSR bonus for infill affordable housing developments under the ARH SEPP provisions currently applying to dual occupancies, multi-dwelling housing and residential flat buildings will also now apply to manor house and terrace development types.
  • Density bonuses for infill affordable housing developments will also be expanded in areas outside the Sydney Region by amending the criteria so that the bonus applies to all "accessible areas" as defined.
  • Lift exemptions will apply to all seniors housing delivered by or on behalf of the LAHC, including those developments that contain private dwellings.

State Significant Development

Changes are also proposed to the State Environmental Planning Policy (State and Regional Development) 2011 (SRD SEPP). Development carried out by or on behalf of the LAHC on land identified on a State Significant Development Sites Map and which has a capital investment value (CIV) of over $30 million is currently assessed as state significant development. The criteria will change so that development carried out by or on behalf of the LAHC with a CIV of over $100 million will be assessed and determined as state significant development. Within the City of Sydney, this kind of development when carried out on government owned land will be primarily determined by the Minister as the consent authority. However it is proposed that the Minister’s powers could be delegated to the City of Sydney where appropriate.

Opportunities for new developments

The technical provisions in the proposed Housing Diversity SEPP seek to facilitate a broader strategic aim – to grow social housing, and to do so in partnership with the private sector and community housing providers. The NSW Government’s "Future Directions for Social Housing in NSW" sets a ten year plan for social housing and envisages a transformation of social housing away from a system dominated by public sector ownership, control and financing. The LAHC’s “Communities Plus” program is overseeing the redevelopment of social housing developments into integrated communities, with mixed private and social housing, developed in partnership with private developers and housing providers. Telopea is a major project of the LAHC that will see the redevelopment of a 13 hectare site into an integrated community with 4500 homes including 1000 affordable and social housing dwellings. Frasers Property and Hume Community Housing were announced as LAHC’s development partners on the project in December 2019.

The proposed changes expand the expeditious and beneficial planning provisions available to the LAHC and its development partners, to include these new integrated developments. On the smaller end of the scale, self-assessment and development standard provisions applicable to LAHC projects may be beneficial for private developer partners who can deliver not only social housing stock but private and affordable dwellings as part of the project. Some of the more major projects will be freed from the lengthy state significant assessment pathways as a consequence of the increase of the CIV threshold from $30 million to $100 million. COVID-19 has prompted renewed calls for a focus on social housing provision. In early August the National Housing Finance and Investment Corporation and LAHC announced a historic deal to provide $100 million in loans and grants to fund enabling infrastructure works that will expedite new social housing construction planned as part of the LAHC’s Communities Plus program. Further opportunities for the private sector to partner with LAHC are expected so that social projects can be delivered as quickly as possible.

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