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New Housing Diversity SEPP to hinder build-to-rent and seniors housing developments - 24 Aug, 2020



 A new Housing Diversity State Environmental Planning Policy (Housing Diversity SEPP) is likely to have an adverse effect on private developers. The amendments that have been proposed will be open for public feedback until 9 September 2020, after which they’ll be reviewed for possible implementation.

 

While the NSW Government insists the changes will ‘accelerate projects that support employment and economic development’ and help recover from the economic impact of COVID-19, a closer look at the SEPP indicates that it will more likely slow the build-to-rent and seniors housing sectors. Disappointingly, the changes that have been proposed appear to only ease planning rules and support new housing developed by the NSW Government’s Land and Housing Corporation.

 

There are 3 SEPPs up for repeal and replacement:

·         The State Environmental Planning Policy (Affordable Rental Housing) 2009 (the Affordable Housing SEPP).

·         The State Environmental Planning Policy (Housing for Seniors and People with a Disability) 2004 (Seniors Housing SEPP). 

·         The State Environmental Planning Policy No 70 — Affordable Housing (Revised Schemes) (SEPP 70).

 

At present, these SEPPs provide numerous planning incentives and provisions that protect private developers from being governed or penalised by certain local planning controls.

 

 

The new housing types to replace ‘boarding houses’

 

Under the proposed Housing Diversity SEPP, ‘boarding houses’ will be more narrowly defined and fragmented into four development types that threaten existing planning incentives for private developers.

 

1. Boarding Houses

Commercial property developers may be denied the existing planning regime as ‘boarding houses’ will be subject to new rules around rent affordability and management. Only developments that are managed by a not-for-profit community housing provider will be regarded as a boarding house.

 

It is proposed that boarding house development types will be not be a mandatory permitted use in R2 Low Density Residential zones, though will be permitted in the following zones:

·         R1 General Residential

·         R2 Low Density Residential (only in ‘accessible areas’)

·         R3 Medium Density Residential

·         R4 High Density Residential

·         B1 Neighbourhood Centre

·         B2 Local Centre

·         B4 Mixed Use

 

The proposed development standards for boarding houses are:

·         Minimum 3-month rent period

·         Mandatory communal living

·         12-25m2 room size

·         0.5 parking spaces per room, or 0.2 for social housing providers

 

2. Build-to-rent Housing

For commercial property developments with 50 or more self-contained dwellings and long-term private rent, affordability rules will not be imposed by the new Housing Diversity SEPP but rather encouraged by the State to be imposed by local councils. Historically, local councils have not shied away from rent controls, and if implemented, can mean that some developments may not be able to pay themselves off.

 

It is proposed that build-to-rent housing development types will be a mandatory permitted use in R4 High Density Residential, B3 Commercial Core, B4 Mixed Use and B8 Metropolitan Centre zones. The proposed development standards for build-to-rent housing are:

·         Minimum 3-year rent period

·         Communal living guidelines yet to be released

·         Dwelling size guidelines yet to be released

·         0.5 parking spaces per dwelling

·         Strata subdivisions to occur after 15 years

 

3. Co-living

For commercial property developments with 10 or more private rooms and short-term private rent, affordability rules will not be imposed by neither the NSW Government nor local councils.

 

It is proposed that co-living development types will be a mandatory permitted use in R4 High Density Residential, B4 Mixed Use, and R3 Medium Density Residential (for some local councils) zones. The proposed development standards for co-living are:

·         Minimum 3-month rent period

·         Mandatory communal living

·         30-35m2 room size

·         0.5 parking spaces per room

 

4. Student Housing

A development will only be considered student housing if it provides accommodation and communal facilities on a school or campus and is primarily occupied by the institution’s students during teaching periods. It may also incorporate self-contained dwellings. The proposed development standards for student housing are:

·         No minimum rent period

·         Mandatory communal living

·         10m2 room size

·         No requirement for parking spaces

 

 

Proposed amendments to seniors housing

 

There are several amendments to the Seniors Housing SEPP that have been proposed under the new Housing Diversity SEPP:

·         Update definitions of ‘height’, ‘people with a disability’ and ‘AS 2890’.

·         Update Schedule 1 (Environmentally Sensitive Land) to better suit planning conditions.

·    Amend provisions for ‘location and access to facilities’ so that point-to-point transport will not pass the accessibility requirement.

·         Extend site compatibility certificate from 24 months to 5 years.

·         Introduce rule of 20% maximum variation to development standards.

 

 

Who are the real winners

 

Under the proposed Housing Diversity SEPP, it appears that the majority of changes will negatively impact private developers while furthering the NSW Government’s ability to dominate dense housing developments and subdivisions. The NSW Land and Housing Corporation will benefit from regulatory advantages that make them exempt from the planning impacts that are likely to arise if the proposed amendments go ahead, including:

·         Increased cost and risk of obtaining development consent

·         Limited sites available for development

·         Decreased yield from investment

 

Despite the described intentions, it is difficult to see how any of these changes will alleviate the economic impact of COVID-19 on the build-to-rent and seniors housing sectors. To have your feedback heard, you can make a submission to the NSW Government up until 9 September 2020. You can also read more about the new Housing Diversity SEPP here