NSW Low and Mid-Rise Housing Policy: Overview and Implementation

The NSW Low and Mid-Rise Housing Policy represents one of the most significant planning reforms in recent years, designed to address the state's housing crisis by creating more diverse housing options in well-connected locations. Introduced by the Minns Labor Government, this policy aims to fill the "missing middle" between high-rise apartments and detached houses, potentially delivering 112,000 new homes across New South Wales over the next five years.

Policy Background and Objectives

The Low and Mid-Rise Housing Policy was developed in response to a critical housing shortage and lack of housing diversity across NSW. Over the years, the choice of housing available has reduced significantly, with many councils effectively banning medium-density housing options. Currently, only two of 33 councils in Greater Sydney allow terraces and townhouses in low-density (R2) zones, and residential flat buildings are prohibited in 60% of all medium-density (R3) zones.

The primary objectives of the policy include:

• Creating more housing choice for people at different stages of life

• Filling the gap between freestanding homes and high-rise apartment buildings

• Delivering well-located housing near transport and services

• Addressing housing affordability by increasing supply

• Reintroducing housing diversity back into communities

As Premier Chris Minns (2024) stated: "Housing is the single largest cost of living pressure people are facing and these changes will deliver more homes for young people, families and workers."

Two-Stage Implementation Timeline

The Low and Mid-Rise Housing Policy has been implemented in two distinct stages:

Stage 1: Dual Occupancies (Commenced July 1, 2024)

The first stage focused on permitting dual occupancies (two dwellings on one lot) in R2 low-density residential zones across NSW. This initial reform was implemented through amendments to the State Environmental Planning Policy (Housing) 2021.

Stage 2: Expanded Housing Types (Commenced February 28, 2025)

The second and more comprehensive stage came into effect on February 28, 2025. This phase expanded the policy to allow a wider range of housing types in designated areas, including:

• Dual occupancies

• Terraces and townhouses

• Low to mid-rise residential flat buildings

• Shop-top housing

These housing types are now permitted in residential areas within 800 metres walking distance of 171 nominated town centres and train stations across metropolitan Sydney, the Central Coast, Illawarra-Shoalhaven, and Hunter regions.

The 800m and 400m Rules Explained

The policy introduces two key distance-based rules that determine what can be built and where:

The 800m Rule

Properties within 800 metres walking distance (approximately a 10-minute walk) from mapped town centres or train/light rail stations fall within the designated "low and mid-rise housing areas". All residential zones (R1, R2, R3, and R4) within this radius are subject to the new planning controls.

For dual occupancies in these areas, the following non-discretionary standards apply:

• Minimum lot size: 450m²

• Minimum lot width: 12m

• Maximum floor space ratio: 0.65:1

• Maximum building height: 9.5m

• Minimum car parking: 1 space per dwelling

• Subdivision (R1, R2, R3 only): minimum 225m² per lot with 6m width per lot

The 400m Rule

An additional tier of development standards applies to properties within 400 metres of town centres or train stations, specifically for residential flat buildings and shop-top housing in R3 and R4 zones:

For R3 and R4 zones within 0-400m of centres:

• Maximum floor space ratio: 2.2:1

• Maximum building height: 22m (24m for shop-top housing)

• Maximum 6 storeys

• No minimum lot size or width requirements

For R3 and R4 zones within 400-800m of centres:

• Maximum floor space ratio: 1.5:1

• Maximum building height: 17.5m

• Maximum 4 storeys

• No minimum lot size or width requirements

Non-Discretionary Development Standards

A key feature of the policy is the introduction of non-discretionary development standards. These standards establish clear guidelines that override local council requirements in the designated areas.

Under Section 4.15(2) of the Environmental Planning and Assessment Act 1979 (NSW), if a development complies with these non-discretionary standards, a consent authority:

• Cannot take that standard into further consideration when determining a development application

• Must not refuse an application on the grounds that the development does not comply with those standards

This means that developments meeting these standards cannot be refused based on building height, floor space ratio, or other specified criteria, even if they conflict with existing Local Environmental Plans or Development Control Plans.

Expected Impact and Outcomes

The Low and Mid-Rise Housing Policy is expected to have far-reaching effects on NSW's housing landscape:

• Delivery of 112,000 new homes over the next five years

• Increased housing diversity and choice in well-connected locations

• Better utilisation of existing infrastructure and services

• Improved housing affordability through increased supply

• Transformation of underutilised land in R2 and R3 zones

The policy represents a significant shift in NSW's approach to urban planning, prioritising infill development around transport hubs over continued urban sprawl. By enabling a greater mix of housing types in established areas, it aims to create more sustainable, connected communities while addressing the state's critical housing shortage.