‘The Missing Middle’ – Medium Density Housing in New South Wales

There has been a recent focus in New South Wales planning regarding medium density housing forms, and in particular the classic inner city ‘terrace house’. The expansion of these traditionally inner city housing forms to Sydney’s suburbs and greenfield estates has been suggested as a potential solution for the city’s housing crisis. The city needs to provide 600,000 new dwellings over the next 15 years, and cutting red tape for terraces and townhouses is seen as a way of getting there.

The NSW Department of Planning and Environment has released a discussion paper which looks at the way in which additional housing types can be included as ‘complying development’ under the State’s housing codes policy, State Environmental Planning Policy (Exempt and Complying Codes) 2008 (‘the Codes SEPP’). This would establish complying development rules for townhouses, terraces, villas, dual occupancies and manor homes, reducing approval times and costs and delivering greater housing choice.


Contemporary dual occupancy and attached housing forms
Source: Department of Planning and Environment

The policy gap for development of medium density housing types is referred to as ‘the missing middle’, due to the lack of any overarching State planning policies unlike for single dwellings (under the Codes SEPP) or residential flat buildings (under State Environmental Planning Policy No. 65).

Complying development under the Codes SEPP currently provides a fast tracked and streamlined approval for many developments, including single dwellings and ‘granny flats’.  Since the introduction of the policy in 2009, there has been a substantial increase in the number of dwellings approved under Complying Development as opposed to a Development Application.  In 2013-2014, 29% of all development approvals in NSW were completed under the Policy, representing $4.4 billion.

The Discussion Paper recommends complying development standards for low rise medium density developments, resulting in between 2 to 10 dwellings on a single lot of land.  This is presented in 3 built form scenarios, depending on the lot size:

  • Dual occupancy development (resulting in 2 dwellings) on a single lot of at least 400m2
  • Manor homes resulting in 3 to 4 dwellings on a single lot of at least 500m2
  • Townhouse and terrace house development resulting in between 3 and 10 dwellings, on lots of a minimum 600m2

Any development resulting in more than 10 dwellings would require a Development Application through the relevant Council.  All development is proposed to be subject to a maximum height of 8.5m regardless of the relevant Council Local Environmental Plan, and no attic levels will be permitted.  Strata subdivision will be allowed in all developments, with Torrens title permitted for dual occupancies only.

The below table compares the proposed medium density controls against three separate Council DCPs within the Sydney metropolitan area: Blacktown, The Ponds, and Randwick.  The below table looks at the requirements for developing 10 x 3 bedroom dwellings as multi-dwelling housing.


The above table demonstrates that the proposed controls are neither overly onerous or generous when compared to metropolitan medium density controls, notwithstanding the above representing only a small portion of the 41 local government areas in Sydney.  The intention to streamline the delivery of this residential product is therefore considered positive, with the rationalisation of medium density controls across the State creating a far more navigable system for local developers and landowners. As an example, the “Blacktown” and “The Ponds” examples presented in the above table are both within the Blacktown LGA, but fall under separate planning controls.  This results in some significant differences, such as minimum lot sizes or private open space requirements, and leaves some areas in the LGA having different controls on two sides of the same street.

This promotion of smaller dwelling forms has the potential to unlock development in a number of existing areas and in growing greenfield regions.  However, this move not be seen as a panacea to Sydney’s housing problems.  Underlying land values in the vast majority of inner city and even outer suburbs would render any ‘affordable’ terrace-style re-developments unfeasible.  This is likely to impact take up rates.  Density increases around key transport nodes and local centres still needs to be sought, as is currently being spearheaded by the Department.  This ensures that Sydney will grow in line with its population, and work in tandem with new medium density policies to improve housing stock and choice.

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