NSW's "Missing Middle" Housing: Types, Rules & Benefits

The term "missing middle" refers to housing types that bridge the gap between detached single-family homes and high-rise apartment buildings. These diverse housing forms have historically been common in NSW but were effectively banned across many local government areas in recent decades. The Low and Mid-Rise Housing Policy aims to reintroduce these housing types to create more diverse, affordable, and well-located homes.

Dual Occupancies: Two Homes on One Lot

Dual occupancies represent the simplest form of medium-density housing, consisting of two dwellings on a single lot of land.

Types of Dual Occupancies:

• Attached dual occupancies: Two dwellings on the same lot that are physically connected

• Detached dual occupancies: Two separate dwellings on the same lot (not including secondary dwellings or granny flats)

Development Standards Under the New Policy:
For dual occupancies in low and mid-rise housing areas (within 800m of centres):

• 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 (in R1, R2, R3 zones): Minimum 225m² per lot with 6m width per lot

Key Benefits:
Dual occupancies allow property owners to maximise land value by accommodating two households on a single lot. They provide housing diversity while maintaining a low-density character compatible with existing neighbourhoods.

Terraces and Townhouses: Attached Multi-Dwelling Housing

Terraces and townhouses fall under the category of "multi-dwelling housing," which refers to three or more dwellings on a single lot of land with ground-level access to each dwelling.

Types of Multi-Dwelling Housing:

• Terraces: Row of attached dwellings sharing side walls, typically with a narrow frontage and two or more stories

• Townhouses: Similar to terraces but often with more space between units and sometimes arranged in clusters rather than rows

• Manor houses: Low-rise buildings containing 3-4 dwellings, resembling a large single house

Development Standards Under the New Policy:
For terraces in low and mid-rise housing areas:

• Minimum lot size: 500m²

• Minimum lot width: 18m

• Maximum floor space ratio: 0.7:1

• Maximum building height: 9.5m

• Minimum car parking: 0.5 spaces per dwelling

For other multi-dwelling housing:

• Minimum lot size: 600m²

• Minimum lot width: 12m

• Maximum floor space ratio: 0.7:1

• Maximum building height: 9.5m

• Minimum car parking: 1 space per dwelling

For manor houses:

• Minimum lot size: 500m²

• Minimum lot width: 12m

• Maximum floor space ratio: 0.8:1

• Maximum building height: 9.5m

• Minimum car parking: 1 space per dwelling

Key Benefits:
Terraces and townhouses provide an efficient use of land while maintaining street-level access and private outdoor space. They offer a good balance between density and livability, making them popular with families and downsizers.

Residential Flat Buildings: Low to Mid-Rise Apartments

Residential flat buildings (RFBs) are developments containing three or more apartments in a building of two or more stories.

Types of Residential Flat Buildings:

• Low-rise: Typically 2-3 stories

• Mid-rise: 4-6 stories

• High-rise: More than 6 stories (not covered by this policy)

Development Standards Under the New Policy:
For RFBs in R1 and R2 zones within 800m areas:

• Minimum lot size: 500m²

• Minimum lot width: 12m

• Maximum floor space ratio: 0.8:1

• Maximum building height: 9.5m

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

• Maximum floor space ratio: 2.2:1

• Maximum building height: 22m

• Maximum 6 storeys

• No minimum lot size or width requirements

For RFBs in 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

Key Benefits:
Residential flat buildings provide higher-density housing in areas with good access to transport and services. They can accommodate more residents in well-connected locations while requiring less land per dwelling than detached houses or townhouses.

Shop-Top Housing: Residential Above Commercial

Shop-top housing refers to one or more dwellings located above ground-floor retail or business premises.

Development Standards Under the New Policy:
For shop-top housing in R1 and R2 zones within 800m areas:

• Minimum lot size: 500m²

• Minimum lot width: 12m

• Maximum floor space ratio: 0.8:1

• Maximum building height: 9.5m

For shop-top housing in R3 and R4 zones within 0-400m of centres:

• Maximum floor space ratio: 2.2:1

• Maximum building height: 24m

• Maximum 6 storeys

• No minimum lot size or width requirements

For shop-top housing in 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

Key Benefits:
Shop-top housing creates mixed-use developments that combine residential and commercial uses, contributing to more vibrant and walkable neighbourhoods. This housing type efficiently uses land while providing convenient access to shops and services for residents.

Why the "Missing Middle" Matters

The reintroduction of these housing types addresses several critical issues:

1. Housing Diversity and Choice

Different households have different needs. The "missing middle" provides options for:

• Young professionals seeking affordable first homes

• Families who want more space than an apartment but can't afford a detached house

• Empty nesters looking to downsize while staying in their community

• Singles and couples who prefer low-maintenance living

2. Housing Affordability

Medium-density housing is typically more affordable than detached houses in the same area due to:

• More efficient use of land

• Lower construction costs per dwelling

• Shared infrastructure and services

3. Efficient Use of Infrastructure

Building more homes near existing infrastructure makes better use of:

• Public transport

• Schools and community facilities

• Parks and open spaces

• Utilities and services

4. Environmental Sustainability

Medium-density housing can be more sustainable than detached housing by:

• Reducing urban sprawl

• Decreasing car dependency

• Lowering per-capita energy and water consumption

• Preserving more natural areas on the urban fringe

Implementation and Future Outlook

The Low and Mid-Rise Housing Policy is expected to deliver up to 112,000 homes across NSW over the next five years. By reintroducing these diverse housing types in well-connected locations, the policy aims to create more housing choice, improve affordability, and build better communities.

As Minister for Planning and Public Spaces Paul Scully (2025) stated: "This policy fills a gap in new housing supply. Allowing low and mid-rise housing in more locations will help increase the number of homes in our state, improve affordability for renters and buyers and give people a choice on the type of home they want to live in."

The success of this policy will depend on how effectively it is implemented and how well these housing types are integrated into existing neighbourhoods. With careful design and planning, the "missing middle" housing types can enhance community character while providing much-needed housing options for NSW residents.