The Department of Planning, Industry and Environment (DPIE) is presently exhibiting a new policy; Proposed Housing Diversity SEPP. The explanation of intended effect (EIE) states there are three primary objectives:

1. Consolidating existing policies;
2. Facilitating more social housing; and
3. Ensuring the residential development sector is positioned to assist the economic recovery of New South Wales post COVID-19 pandemic.

The proposed policy is both an active COVID-19 response and a tessellate instrument in a more broad movement to encourage build-to-rent (BTR) housing. 

What does the Housing Diversity SEPP mean for me?
The proposed SEPP will introduce three new diverse housing types – “build-to-rent housing”, “student housing” and “co-living”. 

The Housing Diversity SEPP will consolidate:

1. State Environmental Planning Policy – Affordable Housing (Revised Schemes) – commonly referred to as the “boarding house SEPP”;
2. State Environmental Planning Policy (Affordable Rental Housing) 2009 – widely referred to as “AH SEPP” or “ARH SEPP”; and
3. State Environmental Planning Policy (Housing for Seniors and People with a Disability) 2004 – often referred to as “Seniors SEPP”.

Boarding house developments will no longer form part of the standard R2 Low Density Residential zone. Furthermore, the proposed SEPP will mandate affordability in boarding house developments. Finally, the Floor Space Ration (FSR) bonus will be a standard 20%.
The proposed SEPP will amend the existing provisions of the Affordable Rental Housing SEPP by:

1. Facilitating an exempt and/or complying pathway to modify an existing dwelling to a group home;
2. Allow Councils to levy financial contributions on some developments to compensate for the (potential) loss of low-rental dwellings on account of the project;
3. Permit Councils to set the maximum size of a secondary dwelling in rural zoned developments.

The proposed SEPP will amend the existing provisions of the Seniors SEPP by:

1. On the proviso, a development application is lodged within twelve months of a Site Compatibility Certificate (SCC) issue, extend the validity from two years to five years;
2. Providing clarity with respect to provisions regarding existing registered clubs;
3. Ensure that development standards in a Local Environment Plan (LEP) take precedent over state provisions;
4. Alter the “location and access to facilities” provisions and modify definitions; and
5. Update “environmentally sensitive land” identified in Schedule 1, where Seniors SEPP provisions are not applicable.

What is Build-to-Rent?
BTR housing is a type of housing within apartment developments offering lessees long term stable rentals. The building ownership is a sole owner, the management is a single company, and on-site services are provided.

BTR housing may be assessed as State Significant Development (SSD) if the capital investment value is $100m or more in metropolitan areas other than the City of Sydney or $50m or more in regional areas.

The proposed SEPP will allow a desirable minimum car parking space requirement for developers, with height and FSR managed at a local level.

Strata subdivisions will likely be prohibited under the proposed SEPP to ensure singular ownership for a fixed period of time in the assets lifecycle. 

What is Student Housing?
The proposed SEPP will introduce Student Housing into the Standard Instrument. Student Housing as a housing type includes accommodation and communal facilities for students enrolled at an educational institution during teaching semesters/trimesters. Fully self-contained dwellings may form part of the housing type.

The proposed SEPP will not have any effect on permissibility, building height, or FSR – which will continue to be regulated at a local level. The proposed SEPP may hover include other development standards or design guidelines.

What is Co-living?
You are most likely familiar with co-living under the name “new generation” boarding houses. The proposed SEPP will introduce co-living into the Standard Instrument and will establish development standards permitting co-living where residential flat buildings are presently permitted.

In conclusion, the proposed Housing Diversity SEPP brings much-needed reform and clarity to existing housing policy in New South Wales. You will need to ensure your development aligns with the appropriate housing type such that the provisions will facilitate your project with the new development standards. These changes balance the incentives offered to developers with the need for effective housing strategies in the community.

There is an opportunity to be heard on this matter; if you would like to make a submission to the Department of Environment, Industry and Planning, click here.

Precise Planning has assisted in project managing and preparing planning reports for hundreds of projects in NSW. If you would like to speak to an expert about your land or an idea for a property contact us here.