Australia: Getting Around Council- Rezoning And Affordable Housing Developments

A recent practice note by the Department of Planning (the Department) has confirmed that it is now possible for rezoning proposals to be dealt with by the Department, rather than local councils in some circumstances. The Department's confirmation is good news for the industry.

As discussed in our July update, the key issue with the new "gateway" LEP making process that commenced on 1 July was whether council would still have the ability to veto a rezoning proposal by refusing to progress it, or whether the state government could instead take charge of the rezoning proposal.

The new process still requires the proponent of a typical spot rezoning to initiate the rezoning request with the local council. However, a recent practice note issued by the Department confirms the view expressed by Gadens that a proponent is able to request intervention by the Minister where the council "has failed to comply with its obligations with respect to the making of the proposed LEP or has not carried out those obligations in a satisfactory manner". An example provided in the practice note is where the council has failed to give reasonable consideration to a planning proposal.

The three circumstances in which the Minister can initiate rezoning proposals are:

1. The proposed LEP relates to a matter that, in the opinion of the Minister, is of state or regional planning significance
2. The Planning Assessment Commission or a regional panel recommends that the proposed LEP be made
3. The council has failed to comply with its obligations with respect to the making of the proposed LEP or has not carried out those obligations in a satisfactory manner.

Developers can approach the Minister with a rezoning proposal under either (1) or (3) above. However, developers will need to have first approached the local council and in applying to the Minister, will need to provide an explanation as to why the proposal cannot be efficiently progressed by the local council. One example might be that the local council has dismissed the application out of hand.

Developers cannot directly approach the Planning Assessment Commission or regional panels to initiate an LEP proposal.

The Department's clear confirmation of the ability to apply to the Minister and potentially overcome local council delay or opposition to a rezoning proposal will be a welcome change for the industry.

Incentives for private developers to provide affordable housing

On 31 July 2009 a new State Environmental Planning Policy (Affordable Housing) 2009 (the SEPP) commenced which creates incentives for private developers to provide affordable housing.

Whereas the old SEPP 10 (Retention of Low Cost Rental Accommodation) aimed to prevent the loss of existing affordable housing, the new SEPP aims to positively encourage the development of additional affordable housing by making it attractive for private developers. It does this by granting incentives to developments which incorporate at least 20% affordable housing. The new SEPP also contains provisions aimed at retaining existing low cost rental accommodation, similar to SEPP 10 (which has now been repealed).

The SEPP facilitates new affordable housing developments by making such development permissible in all residential zones across the state. "Affordable housing" is broken down into a number of different types of housing, with different provisions applying to each type.

The SEPP allows an application to be made where it may otherwise be prohibited, and also provides specific grounds upon which local council may not refuse an application, such as lot size and parking provision. However, the SEPP is not comprehensive and many LEP controls, and other relevant controls such as SEPP65, will still apply. Where the SEPP allows a development that is otherwise prohibited and varies certain standards, a council may still refuse the application on merit grounds such as overshading, privacy etc.

Affordable housing within the developments must be managed by a registered community housing provider for at least 10 years. Conditions of development consent, and restrictions on title, will require the maintenance of the affordable housing dwellings for at least 10 years. The balance of the development may be immediately sold or rented for market rates, which, if done properly, should subsidise the proportion of the development reserved for affordable housing. The affordable housing proportion of the development can be sold or rented at market rates at the end of the minimum 10 year period.

The types of development facilitated by the SEPP that private developers should be aware of are summarised below.

In fill housing

The SEPP contains important provisions relating to multiple-dwelling housing and residential flat developments that override local prohibitions and controls to allow higher density development where such development incorporates a proportion of affordable housing dwellings. For developments to be eligible in the Sydney region, there is a further requirement that the development be located within specified distances to public transport.

In residential zones where residential flat buildings are not permissible, low rise multi-dwelling housing of up to 8.5 m in height will be permitted where at least 50% of the dwellings in the development will be dedicated to affordable housing. The SEPP will override local controls that restrict Floor Space Ratio (FSR) to below 0.5:1, providing that an application cannot be refused on scale or density grounds if it achieves an FSR of 0.5:1 or less (where local controls allow a higher FSR, the higher FSR will apply). A short term FSR incentive is provided to allow an FSR of 0.75:1 for applications lodged before June 2011. The SEPP also provides other grounds upon which an application cannot be refused, such as parking provision.

In residential zones where residential flat buildings are permissible, developers can obtain an FSR bonus for including at least 20% affordable housing units in the development. The amount of the bonus will depend upon both the existing FSR control and the proportion of affordable housing units provided – a different calculation will apply depending upon whether the development includes between 20– 49% affordable housing units or 50% or more affordable housing units. The maximum FSR bonus applies when at least 50% of the units are affordable housing, and will result in an additional 0.5:1 for sites with an existing FSR control of up to 2.5:1, or 20% on top of existing FSR for sites with an existing FSR control of more than 2.5:1.

Joint ventures with Housing NSW – site compatibility certificates as an alternative to rezoning

Where private developers team up with Housing NSW for residential flat developments that would otherwise be prohibited on sites near Sydney train stations and certain nominated major NSW regional cities and towns, a site compatibility certificate can be sought from the Department to allow a development application to be lodged without the need for rezoning.

Granny flats

The SEPP overrides local controls to make granny flats permissible in all residential zones across the state (but does not allow them to be subdivided from the main block).

The combined floor space of the principal dwelling and the granny flat must comply with LEP maximum floor space controls, but no additional parking is required. Granny flats can also be complying development if certain standards are met (as specified in the SEPP) and can be approved in as little as 10 days. The Department has stated that the intention is not only to provide accommodation for family members, but also to allow the granny flats to be sub-let to tenants.

Boarding houses

The SEPP makes boarding houses permissible in all residential, mixed use, local centre and neighbourhood centre zones.

Boarding house developments must comply with council maximum FSR and height controls for the zone, with the exception of zones in which residential flat buildings are permissible, where floor space bonuses are available.

Boarding rooms may have private kitchenette and bathroom facilities, and must be between 12 sq m and 25 sq m, excluding kitchenette and bathroom (with councils having the discretion to allow smaller rooms).

The SEPP also contains provisions in relation to supportive accommodation, group homes, and public housing.

Conclusion

By allowing for increased density of residential development, which creates the potential for increased yield from existing sites, the SEPP offers a real incentive for developers. With careful planning, developers may be able to use the SEPP to both their and the State's advantage.

Some practical difficulties may arise because the SEPP is not comprehensive, and many local council controls will continue to apply. For example, it is possible that the additional density permitted by the SEPP will not able to be utilised, due to restrictive council height and setback controls. However, in such a case it is our view that a developer would have good grounds to support an exception to council controls, in order to achieve the aims of the SEPP.

Some exceptions to the SEPP apply, such as scenic protection areas and sites which contain items of environmental heritage. Advice should be sought on a case by case basis as to the possible application of the SEPP.

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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.