Australia: Into the thick of it: The NSW Low Rise Medium Density Housing Code

Last Updated: 2 June 2018
Article by Peter Holt and Georgia Appleby
Most Read Contributor in Australia, September 2018

Friday, 6 July 2018 will mark the commencement of the Low Rise Medium Density Housing Code (the Medium Density Code). The Medium Density Code will allow one or two storey dual occupancies, manor houses or terraces to be approved as complying development.

What is complying development?

Complying development is a development that can be approved by either the Council or an accredited 'private' certifier by issuing a complying development certificate (CDC). Essentially, complying development is a form of 'fast tracked' assessment.

To be a complying development a development must be permitted with consent in the relevant zone.i Unlike a development application (DA), which is assessed on its merits, a CDC must be issued if the proposed development meets all the development standards (e.g. minimum lot size and frontage, building setbacks, building height, gross floor area and car parking) and the other requirements (relating to things like development on bush fire prone and flood prone land) set out in the Code.ii

The Medium Density Code would, for example, allow a row of two storey terraces with rear lane access to rear garages to be approved as complying development in a low density residential zone.

Filling in the 'missing middle'

The introduction of the Medium Density Code represents the next step in the expansion of complying development which began when the General Housing Code came into effect under the 2008 Labor Government. Since that time, Governments of both persuasions have recognised that increasing the scope of complying development is a key way of boosting housing supply.

In 2008, 8% of development was dealt with as complying, however as at 2015-16, this had increased to 33.2%.iii Up until this point, the forms of residential development that could be approved as complying development under the various codes were relatively small. Only new single storey and two story dwelling houses, and internal alterations and extensions to those houses were permitted to be carried out as a complying development.

The most forceful proponent of the Medium Density Code was the former Planning Minister, Rob Stokes. He was of the view that New South Wales needed more housing to meet the needs of its diverse and growing population. This is because the population is projected to grow by more than 1 million people every year until 2036. Consequently, NSW will need to find homes for an additional 2.1 million residents.

Currently new approvals housing fall into two categories – single dwelling houses and strata titled apartments. Well-designed and suitably located forms of medium density housing - like terraces, dual occupancies, manor homes or townhouses - could serve to fill the missing middle by providing greater housing choice.iv

The pros and cons of complying development

Two major benefits of complying development are certainty and reduced timeframes for assessment. This is because with complying development, if the development meets all the standards and requirements under the Code, the CDC must be issued. The timeframe for assessment is also much shorter because CDCs are not subject to the same sort of notification and public exhibition requirements as a DA. This is because the Code is designed to ensure that provided the development complies with the requisite standards, the impacts will be acceptable. Consequently, CDCs are able to be determined within an average of 22 days, compared with an average of 52 days for DAs.v

From a policy perspective, however, Councils have always been wary of the introduction of anything that would enable private certifiers to approve complying development within their respective local government areas.vi Historically, the introduction of the General Housing Code in 2008 was met by a concerted campaign from various councils, the Local Government Association of NSW and the Shires Association of NSW to 'Keep It Local'. Similarly, in 2013, when the Government put forward the idea that 80% of development should be determined as 'code assessable', the Planning Bill 2013 stalled in the Upper House and was eventually allowed to lapse.

Council fears about complying development are largely based on three concerns:

  1. what they see as the lack of accountability of private certifiers
  2. the impact of 'cookie cutter housing codes' on local character, streetscape and amenity
  3. although somewhat more privately, the loss of the revenue associated with development application fees.

In response to these concerns, the Government has introduced a two-pronged approach in which they take greater control over design, whilst also making it easier to challenge a CDC.

Firstly, with regards to design, the Medium Density Code will be accompanied by a Low Rise Medium Density Design Guideviideveloped in partnership with the Office of the Government Architect NSW (Guide). The purpose of the Guide is to improve the design of such development by maintaining greater control over design factors such as layout, landscaping, light, ventilation and privacy. The Guide will be integrated into the assessment process through new requirements in the Environmental Planning and Assessment Regulation 2000 which require applications for complying development under the Code to be accompanied by a design verification statement. This statement must be issued by a qualified designer or a person accredited as a building designer by the Building Designers Association of Australia and must address how the development is consistent with the relevant design criteria set out in the Guide.viii

The Government has also amended the Environmental Planning and Assessment Act 1979 to make it easier to challenge CDCs in the Land and Environment Court.ixIt has also foreshadowed the introduction of new temporary stop work order powers for Councils which will give them up to seven days to investigate an allegation that a development is not complying with the requirements of the Code.x These investigations will be funded by a new levy system on complying development which will accompany the stop work order powers.xi

Mixed responses to the draft Code

The introduction of the new Code has not been plain sailing. A draft version of the Code and Guide was publicly exhibited between October and December 2016. Following this, the Code was then published on 6 April 2018 and Councils were given three months to prepare for its introduction.xii

In response to the publication of the Code, both the Council of the City of Ryde (Ryde Council) and Canterbury Bankstown Council (and the local members) lobbied the Government to exclude their local government areas from the operation of the Code.

Following a rather unedifying public spat,xiii the Minister for Planning agreed to defer those local government areas from the operation of the Code until 1 July 2019, or until such time as the Council has undertaken a new Local Housing Strategy and Local Environmental Plan.xiv

Ryde Council, in particular, was concerned about the impact of terraces and manor houses (which are essentially a type of apartment building with no more than two stories and between three to four units) on those parts of the local government area zoned R2 Low Density Residential. Neither terraces, nor manor houses were previously permitted in this zone. Under the Code this would have changed as an amendment to the Ryde Local Environmental Plan 2014 would be made which permitted manor houses with consent in that zone.

In response, the Government, on 18 May 2018, amended to Code to provide that terraces and manor houses can only be carried out as complying development where other forms of medium density development like apartment buildings or multi dwelling housing commonly known as villas (or both) are already permitted with consent under Council's local environmental plan.xv

Press reports suggest that other Councils have been invited to seek to apply to defer the application of the Code.xvi

The loss of both Ryde and Canterbury-Bankstown from the operation of the Code are not inconsiderable concessions. Those councils head the list of councils with the highest dwelling targets within metropolitan Sydney for their respective districts. According to newspaper reports, the expansion of complying development and other rezonings within those local government areas is now on hold pending the outcome of a Local Housing Strategy and a new Local Environmental Plan. The experience has been that these processes can take five to six years to be completed.

What to expect as we near commencement

Further concessions aside, the Code will come into effect from 6 July 2018. While we should anticipate some troubleshooting in the first six to 12 months, the Code is here to stay. Not least because we need these forms of housing more than ever, particularly within metropolitan Sydney, but also because the Government's central focus is on making housing more affordable.xvii For those reasons, expanding what can be done as complying development makes good public policy sense.

Footnotes

iSection 4.2 of the Environmental Planning and Assessment Act 1979.
ii Section 4.26 of the Environmental Planning and Assessment Act 1979.
iii'Local Development Performance Monitoring Data Highlights 2015-16', Department of Planning and Environment, 18 October 2017 (accessible at https://datasets.seed.nsw.gov.au/dataset/local-development-performance-monitoring-2015-16/resource/84316f1c-390c-4955-a227-52bb68109f32).
ivStokes, Rob 'The Missing Middle will no longer be M.I.A' published on 17 October 2016 (accessible at www.linkedin.com).
v 'Local Development Performance Monitoring Data Highlights 2015-16', Department of Planning and Environment, 18 October 2017 (accessible at https://datasets.seed.nsw.gov.au/dataset/local-development-performance-monitoring-2015-16/resource/84316f1c-390c-4955-a227-52bb68109f32).
vi Complying development was introduced in the EP&A Act in 1998.At this time councils were given the opportunity to create their own requirements to identify development as complying, however few did.
vii 'Low Rise Medium Density Design Guide', Department of Planning and Environment, 2017 (accessible at http://www.planning.nsw.gov.au/Policy-and-Legislation/Housing/~/media/56B9F795CFD44E71812332AFD30799E1.ashx).
viii Environmental Planning and Assessment Amendment (Low Rise Medium Density Housing) Regulation 2017.
ix Section 4.31 of the Environmental Planning and Assessment Act 1979.
x Second Reading speech for the Environmental Planning and Assessment Amendment Bill 2017, 18 October 2017.
xi Second Reading speech for the Environmental Planning and Assessment Amendment Bill 2017, 18 October 2017.
xii 'New Code to deliver well-designed housing option', Minister for Planning, 6 April 2018 (accessible at http://planning.nsw.gov.au/~/media/Files/DPE/Media-Releases/2018/April/New-code-to-deliver-well-designed-housing-options-media-release-6-april-2018.ashx).
xiii'Manor Homes – The Facts' and 'NSW Government Housing Code – The Real Facts', Weekly Times, 2 May 2018.
xiv 'NSW Government defers new Housing Code', City of Ryde, 15 May 2018 (accessible at https://www.ryde.nsw.gov.au/Council/Media-Centre/News-and-Public-Notices/NSW-Government-defers-new-Housing-Code).
xv State Environmental Planning Policy (Exempt and Complying Development Codes) Amendment (Low Rise Medium Density Housing) Amendment 2018.
xvi Saulwick, Jacob 'Missing muddle: government gives ground on terrace housing plan', Sydney Morning Herald, 18 May 2018 (accessible at https://www.smh.com.au/national/nsw/terrace-housing-backflip-councils-density-code-20180517-p4zfyj.html).
xvii 'Making housing more affordable', NSW Government, 22 December 2017 (accessible at https://www.nsw.gov.au/improving-nsw/premiers-priorities/making-housing-more-affordable/).

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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