Australia: Significant amendments to Affordable Rental Housing SEPP (and changes to Part 3A approval processes)

NSW Development Update
Last Updated: 14 June 2011
Article by Anthony Whealy and Isabella Ferguson

Hot off the heels of the heavily attended PIA and Gadens seminar last night, we now provide (as promised) an outline and analysis of the key changes announced on 20 May 2011 to the State Environmental Planning Policy for Affordable Rental Housing (AH SEPP)  

In addition, to view our recent update on the State Government's overhaul of Part 3A (Major Projects), click here.

Overhaul of AH SEPP, effective immediately  

The Affordable Rental Housing SEPP was introduced in July 2009 to facilitate new affordable rental housing by providing a range of incentives to encourage developers to build new developments, of which at least 20% of units would be affordable rental housing, managed by not-for-profit community housing providers for a period of time (10 years).  As discussed more fully in our September 2009 update (click here to read), the general incentive provided was increased density/floor space being allowed.  

The SEPP has been reviewed over a number of recent months, culminating in it being battered and bruised by significant amendments announced on 20 May 2011.  In public announcements made that day, Planning Minister Brad Hazzard took aim at the SEPP and did not miss, labelling the SEPP as a 'a cash cow' allowing 'small time developers to rip into local communities and change their entire face', and referred to 'the butchery committed on communities' by the SEPP.  

Although Mr Hazzard's statement says that the State Government has 'stopped all new private development applications' under the SEPP (a claim also incorrectly reported by all major newspapers), the SEPP has not in fact been stopped. Rather, it has been amended, and now continues to operate, but in its amended form. 

  The key changes to the SEPP are:

  • For dual occupancies, multi dwelling housing, or residential flat buildings, the SEPP is now only available if the particular development is already permissible on the land (under another LEP or SEPP). Previously the SEPP allowed these developments in all residential zones, but 20% of the dwellings had to be used for affordable housing in zones where the DA was already permissible, and 50% of the   dwellings /units had to be used for affordable housing in zones where the DA would otherwise have been prohibited.  As the latter category is no longer available, only the 20% minimum requirement remains. 

  • The requirement that 20% of the number of dwellings be provided as affordable housing allowed developers to build for example 20% of units as small as 1 bedders to satisfy the affordable housing component, and build the other 80% as much larger 2 bedders or 3 bedders which would not be provided as affordable housing.  This loophole is fixed by requiring 20% of the total gross floor area to now be provided as affordable housing

  • Where such DAs are permissible, the amended SEPP does still provide floor space ratio (FSR) bonuses (otherwise why use the SEPP at all?). These bonuses remain unchanged from the unamended SEPP.   The extent of the bonus floor space depends on the amount/component of affordable housing provided, but generally the FSR bonus will be between 0.2:1 and 0.5:1. 

  • Where such DAs are lodged, seeking to achieve additional FSR as contemplated by the SEPP, a new 'character' test applies, whereby the consent authority must consider 'whether the design of the development is compatible with the character of the local area'.  Much information released by the Department misstates this requirement as one whereby the development must actually be compatible. However, the true position is that this is only one matter that must be considered and weighed up as against all other relevant matters for consideration. A development might not be compatible with the character of a local area, but might nevertheless warrant approval for other reasons. 

  • More problematic though is interpreting what is meant by 'the local area' - where does it start and where does it finish?  Media releases, fact sheets, circulars, and website statements released by the Department on 20 May all either use different terminology altogether (such as 'the surroundings' 'the neighbourhood' 'the locality' or 'the area') or are silent on what the concept of 'the local area' captures.  It seems to us that as a matter of legal interpretation, the term has to be construed broadly to give effect to the aims and objectives of the SEPP, which are to facilitate, rather than to restrict, affordable housing.  As such, the 'local area' would be a large area comprising at least a number of blocks, rather than looking at a development by reference to the buildings immediately adjacent to it or only within the same streetscape. If there are other large buildings within the broader 'local area', then the proposal may well be compatible with the character of that local area. This view would be supported by the Department's December 2010 Discussion Paper, which suggests an analysis of 'streets and blocks' should be required.

  • Tougher parking requirements now apply.  Previously the requirement was 0.5 spaces per dwelling.  Now the SEPP requirements are dependant on room numbers per dwelling. The 0.5 spaces continues to apply to 1 bedroom dwellings, but this doubles for 2 bedders and triples for 3 bedders.

  • The requirement that DAs relying on the SEPP (to obtain bonus FSR) be located within certain distances from accessible public transport facilities - for example 400m from a regular bus stop, or 800m to a railway station or wharf, are largely retained in identical form.  The difference here is that the bus stops must also be ones that are used until later at night (9pm weekdays rather than 6pm) and now also on weekends.

  • No changes were made to the SEPP in relation to granny flats (secondary dwellings);

  • In relation to boarding houses, these are permissible in many zones but within low density zones, they are permissible only when they are within specified distances from regular public transport facilities. Parking requirements also effectively double in low density zones, but are still reasonably low, for example 2 spaces are required for a 10 room boarding house. In other areas, away from accessible public transport facilities, a 10 room boarding house would require 4 spaces.  The new "character" test described above also applies to boarding hose DAs.

  • Savings provisions are provided for pending DAs that have already been lodged. However the savings provisions are somewhat harsh in that those applications, which have already been designed and may be well into their DA assessment, will now be subject to the consideration of whether their design is compatible with the character of the local area.  In addition, the requirement that they provide at least 20% of total "gross floor area" (rather than the old requirement for 20% of total dwellings), will apply to those pending applications.

  • The Government has also announced that it now intends to review the SEPP entirely with a view to producing a new affordable housing SEPP. Surprisingly though,  the Department will be working with councils to develop their own affordable housing strategies which, if satisfactory, will enable those councils to be exempted from the new SEPP altogether. This could see a return to a piecemeal, council by council approach to the State's affordable housing crisis. Or, more likely, a process of forcing all developers to pay for new affordable housing by way of mandatory levies whenever they carry out any new development of any kind. 


There can be little doubt that NSW is experiencing a genuine rental crisis. Market forces of supply and demand almost certainly guarantee that with less rentals available, rental prices will continue to increase, intensifying the shortfall in 'affordable' rental housing. The demand for rental housing in NSW is predicted to increase by 80% by 2045. There can be no doubt that NSW faces a genuine housing affordability crisis.

Previously the AH SEPP had the potential to go some way to increasing the stock of affordable rental housing in NSW.  Whether it went far enough was highly doubtful. The amendments to the AH SEPP, announced on 20 May 2011, while certainly a win for local councils and local communities, will make it less likely that the private sector will choose to contribute towards the construction of new affordable housing stock in NSW, other than perhaps on a very small scale by way of the retained 'granny flat' provisions of the AH SEPP.


Anthony Whealy

t (02) 9931 4867


Isabella Ferguson

t (02) 9931 4929


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.