The Housing SEPP

The Big Ideas in the Detail

Between July and September 2020, the Department of Planning Industry and Environment exhibited an Explanation of Intended Effect (EIE) for a proposed new?Housing SEPP. The proposed SEPP sought to facilitate the delivery of more diverse and affordable housing types and consolidate three existing housing-related SEPPs – including the Affordable Rental Housing SEPP and the Seniors Housing SEPP – into a single SEPP.

The Draft Housing SEPP – and associated amendments to the Environmental Planning and Assessment Regulation and the Standard LEP Instrument – were placed on public exhibition last week, with consultation open until 29 August 2021.

The draft SEPP differs quite substantially from the exhibited EIE. It now proposes to incorporate the provisions of two additional SEPPs for Caravan Parks and Manufactured Home Estates, and the provisions relating to ‘student housing’ have been removed.

However, the most significant changes to the draft SEPP – and the likely outcomes for provision of housing in NSW – are to be found in the legislative details. Housing covers such a broad spectrum of accommodation types, and is such an important part of our economic, social and environmental fabric, that it is almost impossible to summarise the key changes to the SEPP for any single audience. However, as Jean Fran?ois Paul de Gondi said in the late 17th Century – ‘in a major matter, no details are small’. Therefore, it is important that all stakeholders review the draft SEPP, and provide feedback to the Department before the consultation period closes.

Under the current provisions of the Affordable Rental Housing SEPP, boarding houses in certain zones benefit from a floor space bonus which is used to incentivise the delivery of this type of ‘affordable’ accommodation. The EIE exhibited last year amended the controls for boarding houses to include a requirement that they be provided as ‘affordable housing’ and managed by a community housing provider.

To address the potentially resulting gap for compact, private-market, short-term rental dwellings, the exhibited EIE introduced a definition and associated planning controls for ‘co-living housing’. Many stakeholders raised concerns that the absence of an incentive for this type of housing would inhibit the delivery of ‘co-living housing’, thereby disadvantaging many ‘key workers’ who often stay in this type of accommodation. It is promising to see that the draft SEPP now includes a 10% density bonus for ‘co-living housing’.

Like the controls for boarding houses, the draft SEPP applies a number of non-discretionary development standards for co-living housing including a parking requirement for (the lesser of) 0.5 parking spaces per private room, or the maximum parking spaces permitted under a relevant planning instrument. If there is any part of the draft SEPP that could be thought through in more detail, it is the parking provisions. The car parking controls for ‘co-living housing’ in the draft SEPP are potentially problematic for the following reasons:

They do not recognise reduced parking demand in short-term accommodation: ‘Co-living housing’ is proposed to be permitted in zones in which residential flat buildings or shop top housing are permissible with consent. Based on sound planning principles, these zones are generally located near public transport, services and employment opportunities, thereby reducing reliance on private vehicles. ‘Co-living housing’ is only proposed to be permitted in the R2 Low Density Residential zone where located in an ‘accessible area,’ i.e. within 800m of train station or 400m of a light rain station or regular bus service. In addition, given the short-term nature of the tenancies in ‘co-living housing’ – minimum 3 months but not subject to a Residential Tenancies Agreement – car ownership in this type of housing is likely to be lower. Therefore, it may be appropriate to lower the car parking rate for ‘co-living housing’, particularly in metropolitan areas of Greater Sydney.

Parking rates for co-living housing are not clearly defined in the planning system yet: Most local council car parking controls are included in development control plans and not planning instruments, and many are expressed as requirements or minimum rates – not maximums. In addition, ‘co-living housing’ is a relatively new concept; whereas many councils have specific parking rates for low to high density housing, parking rates for ‘co-living housing’ are not included in most planning policies yet. Therefore, it is important that the draft SEPP provide a reasonable, evidence-based parking rate for ‘co-living housing’, particularly as many councils treat the non-discretionary standard as a requirement.

Another aspect of the draft SEPP that may also draw attention due to its feasibility implications, is the proposed change to Infill Affordable Housing delivered under Part 2 Division of the Affordable Housing SEPP. Currently, developers can benefit from a floor space bonus for housing delivered in certain locations provided a portion of the housing is dedicated and managed as a ‘affordable housing’ for a minimum of ten years. This is proposed to be increased to 15 years under the draft SEPP.??

Whilst the retention of affordable housing for longer periods to meet the needs of the community is positive, this needs to be balanced against economic drivers to ensure that this type of infill affordable housing continues to be delivered in the right locations. It would be interesting to see the economic and feasibility analysis undertaken to support the extension of the ‘affordable housing period’ to 15 years.

Very keen to hear other stakeholders' views on the draft SEPP.