The next stage of housing reform is officially underway. Phase 2 of the Low and Mid Rise Housing Reform commenced on 28 February 2025, introducing significant changes that will affect residential development across the region. In this article, we outline the key updates, their implications, and how to navigate the evolving planning landscape.
What is Low and Mid-Rise Housing Policy Reforms?
The first stage of the Low and Mid-Rise Housing Policy (Policy), which took effect on 1 July 2024, introduced key amendments to the State Environmental Planning Policy (Housing) 2021 (Housing SEPP). These initial changes permitted dual occupancies and semi-detached dwellings within the R2 Low Density Residential zone across all of New South Wales.
The second stage of the Policy commenced on 28 February 2025, and will permit development of dual occupancies, terraces, townhouses, apartments, and shop top housing in designated “low and mid-rise housing areas” across Greater Sydney, the Central Coast, the Lower Hunter and Newcastle, and the Illawarra-Shoalhaven.
Where will the Policy apply?
The Policy applies to “low and mid-rise housing areas” which are residential zones located within 800 metres walking distance of 171 nominated town centres and train or light rail stations. These low and mid-rise housing areas have been selected based on the following factors:
- Access to shops, services and amenities;
- Public transport services frequency and travel times;
- Critical infrastructure capacity; and
- Hazards and constraints.
These low and mid-rise housing areas have been identified to accommodate increased housing density, and an indicative map of the 171 designated areas has now been released.
It is important to note that certain categories of land are excluded from the definition of low and mid-rise housing areas. Excluded land includes:
- Areas already mapped as Transport Oriented Development (TOD) under Chapter 5 of the Housing SEPP;
- Land subject to high risks from natural hazards, such as bushfire and flood;
- Land in proximity to dangerous goods pipelines or subject to high levels of aircraft noise;
- Land containing heritage items; and
- Sensitive environmental areas, including coastal and rainforest lands.
Additionally, all land within the Bathurst, Blue Mountains, Hawkesbury, and Wollondilly Local Government Areas is excluded from the reforms due to elevated bushfire and flood risks.
What are the amendments?
The following is a summary of the key amendments to the Housing SEPP by the Policy:
| Development Type | Applicable Zones | Minimum Lot Size | Minimum Lot Width | Maximum FSR | Maximum Building Height | Subdivision Permitted |
| Dual Occupancies | R1, R2, R3, R4 | 450m² | 12m | 0.65:1 | 9.5m | Yes — R1, R2, R3: Minimum 225m²/lot, 6m width |
| Multi-Dwelling Housing (3 or more dwellings) | R1, R2, R3, R4 | 600m² | 12m | 0.7:1 | 9.5m | Not specified |
| Multi-Dwelling Housing (Terraces) | R1, R2, R3, R4 | 500m² | 18m | 0.7:1 | 9.5m | Yes — R1, R2, R3: Minimum 165m²/lot, 6m width |
| Residential Flat Buildings (RFB) | R1, R2 | 500m² | 12m | 0.8:1 | 9.5m | Not specified |
| RFB (0–400m from train/light rail station or town centre) | R3, R4 | No minimum | No minimum | 2.2:1 | 22m (up to 6 storeys) | Not applicable |
| RFB (400–800m from train/light rail station or town centre) | R3, R4 | No minimum | No minimum | 1.5:1 | 17.5m (up to 4 storeys) | Not applicable |
| Shop-Top Housing | R1, R2 | 500m² | 12m | 0.8:1 | 9.5m | Not specified |
| Shop-Top Housing (0–400m from train/light rail station or town centre) | R3, R4 | No minimum | No minimum | 2.2:1 | 24m (up to 6 storeys) | Not applicable |
| Shop-Top Housing (400–800m from train/light rail station or town centre) | R3, R4 | No minimum | No minimum | 1.5:1 | 17.5m (up to 4 storeys) | Not applicable |
How will the amendments affect existing planning controls?
The recent amendments to the Housing SEPP introduce new non-discretionary development standards over specified areas, that consent authorities must apply when assessing development applications.
Under section 4.15(2) of the Environmental Planning and Assessment Act 1979 (NSW), if a development complies with a non-discretionary standard, the consent authority cannot refuse the application on the basis of non-compliance with that standard, nor can it take that standard into further consideration. For example, a maximum building height of 9.5m for residential flat buildings in R1 and R2 zones will override stricter height limits under any applicable LEP or DCP.
Consent authorities and developers must now familiarise themselves with the updated standards, noting that where multiple standards apply, the more generous standard will prevail. However, consent authorities may still assess other planning considerations — such as parking, landscaping, and amenity — under existing SEPP, LEP, and DCP provisions.
Summary
The Phase 2 reforms to the Low and Mid Rise Housing Policy mark a significant shift in residential development planning across New South Wales. With new non-discretionary standards being introduced, there are expanded opportunities to deliver a greater variety of housing types. However, careful navigation of the Policy remains essential, as consent authorities will still be permitted to consider all other existing provisions in SEPPs, LEPs and DCPs.
As the reforms continue to reshape the residential landscape, early and thorough due diligence will be key to successfully progressing development proposals. Our team is closely monitoring the rollout of these changes and is available to provide advice on how best to respond to the evolving planning environment.
If you have any questions about how the Phase 2 reforms may affect you, please contact our Local Government and Planning Team.
