NSW Low and Mid-Rise Housing Reform: Unlocking the “Missing Middle” in Housing

NSW Low and Mid-Rise Housing Reform: Unlocking the “Missing Middle” in Housing

IntroductionNew South Wales is embarking on a major shake-up of its housing rules in a bold bid to tackle the housing affordability crisis. The NSW Low and Mid-Rise Housing Reform is a recently introduced policy package designed to deliver more “missing middle” housing – the townhouses, terraces, duplexes and mid-rise apartments that fill the gap between suburban houses and high-rise towers. Announced in late 2023 and coming into force in early 2025, this reform changes planning controls across the state to encourage low- and mid-rise development within 800 metres (about a 10-minute walk) of hundreds of town centres and transit hubs. By making it easier to build small-scale apartments and multi-unit dwellings in these areas, the government expects to unlock up to 112,000 new homes over the next five years.

For everyday citizens, this means more housing choices in well-located neighborhoods. For developers and homeowners, it means new opportunities to redevelop properties and contribute to easing the housing shortfall. This comprehensive overview explains what the reform entails, why it’s needed, how it changes planning rules, and the benefits it aims to bring – from development opportunities to improved affordability. We’ll also look at examples of where these changes apply, and discuss the challenges and community reactions surrounding the policy (and how they might be addressed). By the end, you’ll have a clear picture of how the Low and Mid-Rise Housing Reform could reshape NSW’s housing landscape in the years ahead.

Why Introduce a Low & Mid-Rise Housing Reform? (Context & Need)

Sydney and many parts of NSW have been grappling with a housing crisis – characterized by sky-high prices, low rental vacancies, and a growing population outpacing the supply of new homes. Housing industry forecasts underscore the urgency: New South Wales is projected to commence about 252,000 dwellings in 2024–2029, which is over 120,000 homes short of the state’s target (377,000 new homes by 2029 under the national Housing Accord). In other words, if we continue business-as-usual, we risk a huge shortfall in housing, further driving up costs and locking out many families from home ownership or affordable rents. The state government has recognized that boosting housing supply – especially in well-located areas – is critical to improve affordability.

Another motivation is the lack of housing diversity. For decades, local planning rules in NSW largely produced two extremes: detached houses in sprawling suburbs or high-rise apartment blocks in a few centers, with relatively little in between. The “missing middle” housing types (like duplexes, terrace houses, townhouses, and small-unit blocks) have effectively been zoned out of many neighborhoods. In fact, until now terraces and townhouses were prohibited in the typical low-density residential zone (R2) in 31 out of 33 Greater Sydney councils, and 60% of all medium-density (R3) zones banned residential flat buildings (apartments). This long-term trend meant fewer choices for people at different life stages – for example, young families or downsizers often have to choose between a big house (which might be unaffordable) or a high-rise unit, with little middle-ground options in existing suburbs.

Urban sustainability and transit-oriented growth are also key factors. The new policy aims to direct growth to areas within walking distance of shops, services and public transport, rather than continuing to push development onto distant greenfield fringes. By gently increasing density around established town centers and train stations, the reform seeks to create more vibrant, walkable communities and make better use of existing infrastructure. This approach can help reduce car dependence (since new residents are near public transport), support local businesses with more customers, and protect outer suburban farmland and environment by accommodating growth within the existing urban footprint.

Finally, the reform comes after significant public consultation and mounting pressure to respond to the housing crisis. During public exhibition of the draft policy in early 2024, nearly 8,000 submissions were received – indicating the high level of public interest and concern. Common themes in feedback were worries about traffic, local character, environmental impacts, and ensuring infrastructure keeps pace. The government has tried to address these in the final policy (as we’ll discuss later) by selecting appropriate sites and including safeguards. But the overarching imperative driving this reform is clear: NSW needs more homes in the right places, and it needs them soon. Without unlocking new supply channels, “it’s simply too expensive to put a roof over your head” in many parts of NSW, as officials warn. The Low and Mid-Rise Housing Policy is one of the major tools introduced to meet this challenge.

What Exactly Does the Low & Mid-Rise Housing Reform Do? (Overview of Changes)

In broad terms, the Low and Mid-Rise Housing Reform changes planning controls to encourage more low- to mid-scale housing development within an 800-metre radius of 171 designated town centres and transit stations across NSW. It’s implemented via amendments to the statewide planning policy (the State Environmental Planning Policy (Housing) 2021, often called the Housing SEPP). The changes effectively override certain local council zoning rules that have been limiting medium-density housing, by making a variety of housing types permissible where they weren’t before, and setting uniform development standards. Here are the key elements of what the reform entails:

• Wider Range of Housing Types Allowed: The reform reintroduces missing-middle housing types into residential zones where they were previously banned. Specifically, it allows the development (with council approval) of:

  • Dual occupancies (two dwellings on one lot, e.g. duplexes) in zones where only single houses might have been allowed before.

  • Terraces and townhouses (attached homes in a row, typically 2 storeys) in low-density zones (R1 General Residential and R2 Low Density Residential) that had forbidden them.

  • Low-rise apartments (defined as residential flat buildings of 2–3 storeys) on R1 and R2 land, which represents a big shift for suburbs that previously could not have any apartment buildings at all.

  • Mid-rise apartments (3–6 storey residential flat buildings) on R3 Medium Density and R4 High Density land within the targeted areas, including lifting previous bans in many R3 zones.

  • Shop-top housing (mixed-use with shops at ground level and apartments above) in these areas, even in some zones that might not have allowed it before.

• Geographic Scope – 171 Key Areas: The new rules only apply in specified “low and mid-rise housing areas” mapped around 171 nominated town centres and train or light rail stations across Greater Sydney, the Central Coast, Illawarra-Shoalhaven, and the Lower Hunter/Newcastle region. In essence, planners mapped a selection of local centers that meet certain criteria (good access to shops, frequent public transport, infrastructure capacity, etc.). If a property is within an 800m walking distance of one of those town centre boundaries or station entrances, and is zoned residential (R1, R2, R3, or R4), then the Low/Mid-Rise policy’s provisions kick in for that property. (Areas with severe hazards like high bushfire or flood risk were excluded from the maps, as are dedicated employment zones, to avoid safety issues and preserve jobs land.) Property owners can check an interactive map of the 171 areas on the NSW Planning Portal to see if their land falls in a Low/Mid-Rise Housing Area.

• Staged Implementation: The reform was rolled out in two stages. Stage 1, which began on 1 July 2024, was a state-wide change that permitted dual occupancies and semi-detached houses in all R2 zones across NSW. This was like opening the first crack in the door – ensuring that even the lowest-density neighborhoods could at least have duplexes or twin homes instead of exclusively single dwellings. Stage 2 came into effect on 28 February 2025, and this is the major expansion allowing terraces, townhouses, apartments and shop-top housing in the specified 800m catchments around the selected centres. Stage 2 is the core of the Low and Mid-Rise Housing Policy and is what enables the broader range of housing types in those targeted areas.

• Non-Discretionary Development Standards: A crucial part of the reform is that it introduces clear, non-discretionary standards for these new housing types. These are essentially state-set rules on things like minimum lot sizes, building heights, floor space ratios (FSR), and the number of stories allowed. If a proposed development meets these standards, councils cannot refuse the application on the usual grounds of exceeding local planning controls. In other words, the Housing SEPP standards override any stricter limits in a council’s Local Environmental Plan (LEP) or Development Control Plan, unless the local plan is actually more generous. This creates a uniform baseline across NSW for what can be built in the Low/Mid-Rise areas, giving developers more certainty and streamlining the approval process. The intent is to reduce red tape and “planning by negotiation,” so that complying projects get approved faster and more predictably, accelerating housing delivery. (Councils still assess merit factors like design, privacy, parking, etc., but they can’t use zoning or density rules to stop a compliant project.)

To illustrate, here are some of the key standards defined by the policy:

• Dual Occupancies: Now permitted on any R1, R2, R3, or R4 residential lot that is at least 450 m² in area with a 12 m minimum frontage. The two dwellings together can have a floor space up to 0.65 times the lot area (FSR 0.65:1) and up to 9.5 m height (typically 2 storeys). If subdivision is desired, in R1–R3 zones each new lot must be at least 225 m² and 6 m wide (effectively allowing side-by-side Torrens title subdivision of a duplex). This makes duplex builds feasible on most standard suburban lots – a huge change for R2 Low Density zones that previously disallowed them in many LGAs.

• Terraces & Townhouses: These fall under “multi-dwelling housing.” Generally, the policy allows three or more attached dwellings on R1–R4 zoned land, as long as the lot is minimum 600 m² (for townhouses) or 500 m² (for terrace-style, which require a bit less total area but more frontage). A row of terraces also needs a minimum 18 m frontage (to fit at least three homes side by side, each ~6 m wide), whereas a townhouse complex (which might be staggered or in a court layout) needs 12 m frontage. Both are capped at FSR ~0.7:1 and 9.5 m height (2 storeys), keeping them “low-rise” and in scale with typical suburban building heights. Importantly, terrace developments can be subdivided into separate lots (so each house can have its own title) in R1–R3 zones, with each resulting lot as small as 165 m² and 6 m wide. This means, for example, an owner of a 600 m² block could build three attached terrace houses and legally split the land so each sits on ~200 m² – creating three separate properties where one stood before. That’s a big incentive for landowners and builders, effectively tripling the housing yield on suitable sites while still maintaining a low-rise streetscape.

• Low-Rise Apartments (Residential Flat Buildings): The policy newly permits small apartment buildings in R1 and R2 zones (where they were not allowed at all previously). On a lot of at least 500 m² and 12 m frontage, one can propose a low-rise apartment building (say, 3–6 units depending on size) up to 0.8:1 FSR and 9.5 m height. In practice, this means 2 to 3 storeys maximum in those low-density zones. Think of a two-storey walk-up apartment or a triplex – something that looks not much taller than a large house. This gentle density can blend into suburban areas while adding a few extra dwellings in place of one house.

• Mid-Rise Apartments: In the R3 and R4 zones (medium and high density zones) within the 800 m catchments, the reform lifts many existing prohibitions and sets new height/FSR limits based on distance from the centre. There’s a two-tier system:

  • Within 0–400 m of the town centre or station: residential flat buildings can go up to 6 storeys with a maximum FSR of 2.2:1 and height of about 22 m. This is solid mid-rise scale – roughly on par with a 5-6 storey modern apartment block. There is no minimum lot size or width for R3/R4 apartments in this inner band, meaning even smaller land parcels could potentially be developed, so long as the building design fits the height and density limits.

  • From 400 m to 800 m out: apartment buildings are capped at 4 storeys, FSR ~1.5:1 and ~17.5 m height. So in that outer part of the radius, the allowed building envelope is a bit more modest, ensuring a transition in scale as you move away from the centre. Four storeys might accommodate a mix of townhouses and apartments or a small flat building – again adding housing but not tower-like.

  This graduated approach (“6 storeys near the hub, 4 storeys a bit further out”) aligns with the principle of higher density right next to transport and shops, tapering down to low-rise at the edges of the 800 m area. It’s worth noting these are maximums; actual developments could be smaller. And if a local council’s zoning already allows taller or denser buildings in a given spot (for instance, some town centres might already permit 8–12 storey buildings under existing plans), those local provisions can still apply – the SEPP standards are mainly raising the minimum permissiveness, not taking away existing rights.

• Shop-Top Housing: Similarly, mixed-use buildings with ground-floor retail and apartments above are encouraged. In R3/R4 zones within 0–400 m, shop-top housing can reach 6 storeys (FSR 2.2:1), and 4 storeys (FSR 1.5:1) in the 400–800 m band. In R1/R2 zones, a small 2-storey shop with a couple of flats above (9.5 m height) is permissible on a suitable site. This could help revitalize local centers by adding residents right above shops and cafes, enhancing street life and safety.

All these changes “reintroduce permissibility on land already zoned residential”, as NSW Planning Minister Paul Scully put it. It’s an important point: the reform doesn’t rezone new land for housing, but rather allows more housing types on residential land that’s already there. In essence, a lot that could only have a single house yesterday might now accommodate a duplex or a trio of terrace homes; an area that only allowed houses and townhouses might now see a 4-storey apartment building if it’s near a transport node. By doing so, the government aims to bring back housing diversity and choice that had been zoned out over the years.

How Planning Controls and Zoning Are Changing

From a town planning perspective, the Low and Mid-Rise Housing Reform represents a significant shift in zoning practices and a partial centralization of control at the state level. Let’s break down a few key ways planning rules are being altered:

1. Opening Up Low-Density Zones: Perhaps the most dramatic change is in the traditionally strict R2 Low Density Residential zones (and to an extent R1 General Residential zones) across many suburbs. These zones have long been reserved for detached houses (and in some cases dual occupancies), with councils fiercely guarding neighborhood “character.” The reform essentially overrides local prohibitions to make R2 zones more flexible. As noted, duplexes are now allowed in any R2 zone statewide. And in the mapped 800 m areas, R1 and R2 zones will now permit multi-dwelling housing (townhouses/terraces) and even low-rise flats with 2 storeys. In practice, this might mean a quiet street of single cottages near a train station could start to see redevelopment into modern townhouses or a boutique apartment block (subject to meeting design standards). The development standards ensure these remain low-rise (under 10 m height) to respect the scale of existing neighborhoods. By capping height and FSR in R2 areas (e.g. 0.7:1 FSR, 2 storeys), the policy attempts to maintain a harmonious streetscape – new buildings shouldn’t dwarf the houses next door, theoretically preserving some of the local character even as density increases.

2. Revitalizing Medium-Density Zones: The R3 Medium Density zones were ironically underutilized in many councils – as the stats showed, a majority of R3 areas prohibited apartments, often limiting them to villa units or townhomes. This reform standardizes R3 as a true medium-density zone near centers, by allowing apartment buildings (where within 800 m of the nominated centres) and setting the heights at 4 to 6 storeys depending on proximity. It effectively overrides any local LEP clause that said “no residential flat buildings in R3.” The R4 High Density Residential zones, which usually allow apartments anyway, are also affected if they lie in these areas – some R4 sites that had height limits below the new SEPP standards might now enjoy the higher as-of-right 4–6 storey limits. No minimum lot size for apartment projects in R3/R4 near centers is a notable change; this encourages small infill developments (for example, replacing one house with a 4-unit apartment building on a small lot is now more feasible, whereas some councils previously required a large land assembly before any flats were allowed).

3. Consistent Rules Within 800 m (with a 400 m inner core): As described, the reform introduces a kind of concentric zoning concept around each centre: a core (0–400 m) where up to six storeys is allowed in appropriate zones, and an outer ring (400–800 m) where the limit is four storeys. This is a more nuanced approach than a blanket radius; it recognizes that being literally across the street from a train station might support a taller building than being 700 m away on the edge of the catchment. It’s the first time NSW has applied such statewide transit-oriented density gradients in its planning policy. In effect, it’s a state-imposed upzoning of these radii, superseding local zoning if the latter was less permissive. A visual way to picture it: imagine a map of a suburb with a circle of ~400 m around the train station – inside that, mid-rise apartments (5–6 storeys) can be built on any residential lot zoned for at least medium density. Then between 400 and 800 m (the outer circle), smaller apartment blocks (up to 4 storeys) and other multi-dwellings are allowed. Beyond 800 m, the new policy doesn’t apply, so the usual local zoning rules continue (likely limiting development to houses or two-storey forms). This structured change ensures density is focused “within walking distance” of transport, aligning with urban planning best practices for sustainable growth.

4. Interaction with Local Plans: It’s important to note that local councils’ planning instruments (LEPs and DCPs) are not being thrown out wholesale, but where there’s a conflict, the Housing SEPP rules take precedence. For example, if a council’s LEP stipulated a maximum FSR of 0.5:1 in an area but the new SEPP allows 0.7:1 for terraces, a proposal meeting the 0.7:1 cannot be refused for that density reason. However, if an LEP already allows something more generous (say the LEP height limit is 12 m but SEPP only guarantees 9.5 m in that zone), the developer can use the higher local limit. Thus, the reform sets minimum guaranteed development rights across the board. Councils can still guide design via DCPs – for instance, controls on setbacks, open space, parking, etc., remain in play and developments will need to meet those or justify variations. The state has also created design guides and pattern books to help ensure quality outcomes (e.g. a forthcoming NSW Housing Pattern Book will offer architectural templates for well-designed low and mid-rise housing). The goal is to avoid ugly or out-of-character developments by providing clear design standards even as the numeric controls (height, FSR, lot size) are relaxed.

5. Ongoing Role of Councils and Infrastructure Alignment: While the state has taken the lead, local councils aren’t completely sidelined. They were heavily consulted during the policy development – NSW Planning engaged one-on-one with 49 councils while refining the scheme. The identified 171 centres were partly based on councils’ own strategic plans and housing targets, ensuring the changes align with where growth was anticipated (the Minister even noted that these changes do not alter councils’ overall housing targets, they’re just a means to achieve them). Councils will continue to assess DA (Development Applications) for these projects, checking things like traffic impacts, utility servicing, and contributions for local infrastructure. In fact, one critique from local government is the need to ensure community infrastructure keeps pace – more residents will mean more demand on roads, schools, parks, etc. The government’s site selection criteria included looking at infrastructure capacity and they excluded some areas where roads or evacuation capacity are insufficient. Additionally, because development still requires consent, councils can impose conditions or require contributions (under Section 7.11 of the planning act) to help fund local infrastructure upgrades. So, while zoning is liberalized, the planning process remains a tool to manage growth responsibly.

Overall, these planning control changes represent a paradigm shift to a more unified, strategic approach – using state policy to overcome patchwork local restrictions and aggressively push for medium-density housing where it makes the most sense. It’s about breaking the mold of what can be built in our suburbs, in a controlled way, to deliver the housing that has long been missing in the middle.

Benefits of the Reform – From Affordability to Vibrant Communities

The Low and Mid-Rise Housing Reform is being touted as a win-win for both the public and those in the development sector. Here are some of the major benefits expected from this policy change:

• Increased Housing Supply (and Pressure off Prices): By unlocking tens of thousands of new dwellings in established areas, the reform directly targets the supply side of the affordability equation. The government estimates 112,000 extra homes over five years could be built thanks to these changes – a substantial contribution toward closing the projected housing shortfall. More homes coming onto the market, especially in high-demand locations, should help ease competition and temper price growth. The policy explicitly aims to tackle housing affordability by filling the gap between high-rise and sprawl. If successful, we could see a greater availability of moderately-priced homes (like townhouses and apartments) which are often cheaper than standalone houses in the same suburb. For renters, an increase in housing supply should eventually mean more vacancies and options, relieving some of the extreme rent pressure that builds up when supply is tight. While it won’t magically make Sydney “cheap,” this infusion of diverse housing is a critical step to bend the curve of rising costs by aligning supply closer to demand.

• Greater Housing Choice & Diversity: Not everyone wants or needs a full quarter-acre block with a big house. By encouraging a variety of housing forms, the reform will provide options tailored to different life stages and household types. Young singles or couples might opt for a new low-rise apartment near a train station as their starter home. Families could find spacious modern townhouses with 3-4 bedrooms that are more affordable than a detached house in the same area. Downsizing empty-nesters could move into a boutique apartment or terrace in the neighborhood they’ve lived in for years, rather than leaving their community entirely. Housing diversity means a community can accommodate everyone – from students to retirees – in a way that suits their needs and budget. This creates more socially inclusive neighborhoods and allows people to stay near their support networks as their housing needs change over time. The reform explicitly aims to reintroduce that diversity which had diminished under previous planning settings.

• Development Opportunities for Landowners and Builders: The policy opens up lucrative opportunities for those who own property in the designated areas and for developers seeking new projects. A homeowner on a large block might partner with a builder to add a duplex or a couple of terrace homes and realize a substantial financial gain (by selling or renting the new dwellings). Small-to-medium developers, in particular, stand to benefit – many infill development projects that were not viable or permissible before are now on the table. The clear state standards reduce uncertainty, meaning developers can plan projects with confidence that meeting the code will get approval. This lowers risk and holding costs, making development more attractive. New businesses and jobs in construction and related industries are another benefit – building tens of thousands of homes will create work for architects, builders, trades, planners, etc., stimulating the economy. From a commercial standpoint, one could say the reform “unlocks pent-up equity” in older suburbs: properties that were underutilized (say a single aging cottage on a 800 m² lot near a train station) can now be redeveloped into multiple modern dwellings, increasing the property’s value and yield.

• Affordability Through Smaller, Efficient Homes: The types of housing being enabled – like duplexes and apartments – generally have smaller land and floor areas per dwelling than a traditional house, which typically means a lower price per home. For example, three terrace houses on one block can each be sold for much less than the one house that was originally on that block would have sold for (yet still profitable, because three sales versus one). This improves affordability for buyers by providing more mid-price options. It also helps renters, since an apartment or granny-flat style unit tends to rent for less than a full house in the same suburb. Additionally, modern low/mid-rise developments are often more energy-efficient and cheaper to maintain (shared walls reduce heat loss, etc.), which can lower utility costs for residents. And by being located near transport and shops, households might save on transport costs (perhaps needing one less car), further improving overall living affordability. In short, more homes of the right size, in the right place, at the right price – that’s the promise.

• Vibrant, Sustainable Communities: This reform isn’t just about numbers; it’s also about urban quality of life. By adding residents near town centres, we can expect more vibrant local economies – new cafes, services, and shops can spring up or stay open longer with a larger customer base in walking distance. Streets that might have been quiet at night could become livelier (and safer) with more people around. Importantly, the reform aligns with transit-oriented development principles: more people living near public transport can lead to higher transit ridership and less reliance on cars. Over time, this can mean less traffic congestion and pollution per capita, helping NSW meet sustainability and emissions goals. It also makes efficient use of existing infrastructure like schools, parks and utilities – areas that already have these amenities will see more residents benefit from them, rather than building new infrastructure on the urban fringe. State officials even claim the changes will “maintain the character of an area and build better communities”. While “maintaining character” might be debated, the idea is that well-designed low and mid-rise housing can integrate into neighborhoods more gently than high-rises, thus preserving a sense of human scale and community feel. The reform is coupled with design guidelines and even a Pattern Book of architectural designs to ensure new developments are attractive and respect their context. For example, a row of townhouses can be designed to match the existing streetscape style more easily than a 30-storey tower could. Done right, the result could be leafy, pleasant streets with a mix of housing – the kind of environment proven to support strong community ties.

• Supporting the Housing Accord and Broader Economic Growth: The Low and Mid-Rise policy is a key plank in NSW’s commitment under the National Housing Accord, which is a federal-state agreement to boost housing supply. By delivering well-located homes, NSW stands to receive incentives or support linked to Accord targets and avoids falling behind other states in approvals. More broadly, addressing housing affordability is critical for the economic health of the state – when people spend a huge chunk of income on housing, it limits their spending on other goods and services. Creating more affordable living options near jobs and transport can improve productivity (shorter commutes, less stress) and make NSW cities more attractive for skilled workers. Over time, stabilizing housing costs helps ensure that key workers (teachers, nurses, police, etc.) can live in the communities they serve, which has social as well as economic benefits.

In summary, the benefits touted include more homes, more choices, better affordability, revitalized local centers, and a boost to construction and the economy. It’s essentially a promise to deliver the housing we need without sacrificing the qualities we love about our communities – a delicate balance, but one the policy is striving to achieve.

 Example of modern medium-density housing (a low-rise apartment and townhouse complex in Glebe, inner Sydney). Developments like this provide more homes while keeping a human scale, illustrating the kind of “missing middle” housing the policy encourages in established neighborhoods.

Examples: How and Where the Changes Apply

What do these reforms look like on the ground? Let’s explore a few examples and scenarios to make it concrete:

• Suburban Town Center – Lane Cove, Sydney: Lane Cove is a leafy suburb on Sydney’s lower North Shore with a small village center. Under the new policy, areas within about 800 m of Lane Cove Village shops, or near the nearby St Leonards and Wollstonecraft train stations, are designated for low and mid-rise housing intensification. This means a residential street that’s, say, 500 m from Lane Cove’s plaza and currently filled with single houses could start to see changes. One specific example is along Finlayson Street (about 300 m from the village) where a “mid-rise” apartment complex has already been built in recent years – an attractive 5-storey building known as the ‘Botanic’ development. This type of development would now be expressly permitted and easier to replicate on other sites in that radius. Mid-rise apartments up to 6 storeys are now allowed within the first 400 m near the centre, provided they meet the standards (FSR 2.2:1, etc.). Further out, up to 4-storey buildings or townhome complexes can be built within the 800 m range. Lane Cove Council was previously restrictive (like many affluent areas), but now a homeowner with a large lot near the village might team up with a developer to build, for instance, a three-storey apartment block where only a bungalow stood before. For local residents, it means they may soon see construction of more townhouses and small apartments in their suburb. The benefit is that more people can enjoy living in this convenient area, and local businesses get more customers. The challenge will be managing parking and traffic, given Lane Cove’s narrow streets – but any development will still need to provide off-street parking per codes and be assessed for traffic impacts (the reform doesn’t give a free pass on those requirements). In fact, the policy explicitly states councils still assess parking, sunlight, and other impacts as part of approvals.

• Outer Metro Hub – Penrith, Western Sydney: Penrith is a major center in Western Sydney with a railway station and many shops, but its surrounding residential areas have traditionally been low-density. Under the reform, a broad area around Penrith Station and downtown is included. Suppose you own an older house on a 700 m² R2-zoned lot about 600 m from Penrith Station. Formerly, you might have been limited to rebuilding a single house or maybe adding a granny flat. Now, you could potentially redevelop that property into, say, 4–5 townhouses (since 600 m² meets the minimum for multi-dwelling housing, and you could likely fit four 3-bedroom townhouses under the 0.7:1 FSR and 2-storey height limit). Each might share walls and have a small garden. Alternatively, you could build a two-storey apartment building with perhaps 6 units (meeting the 0.8:1 FSR for R2 apartments). For Penrith, which is experiencing population growth and high demand for more affordable homes, this means lots that used to house one family might now house four or six families, within walking distance of the train to Sydney and the local Westfield shopping center. It’s easy to see the multiplier effect: if even a fraction of eligible lots redevelop, hundreds of extra homes can appear in an area that already has transport, schools and shops – avoiding the need to push new housing to the city’s fringe where infrastructure is lacking.

• Regional City – Wollongong CBD and Suburbs: The Illawarra-Shoalhaven region is part of the policy’s focus. In Wollongong, the state’s third-largest city, the reform targets areas around train stations and town centers like Wollongong CBD, Corrimal, and Warrawong. Wollongong’s council has been planning for more infill housing, and now the state policy provides a consistent rule-set. For example, around Corrimal’s town centre (which has a train station on the Sydney line), older cottage blocks within 800 m may turn into low-rise flats or rows of townhouses. A case study could be taken from a similar NSW regional centre: Newcastle (which falls under Lower Hunter/Newcastle in the policy). Newcastle already has seen older suburbs like Hamilton and Mayfield sprout modern townhome projects. The reform will cement the permissibility of such projects and encourage more. Local residents in these regional areas can expect gradual change – not an overnight transformation, but over 5-10 years one might see a few houses replaced by a stylish triplex here, a set of 3 terraces there, and maybe a 4-storey apartment on a corner site near the shops. Each of those is a small addition, but collectively they add up to significant new housing supply for the community.

• Hypothetical Small-Lot Scenario: To illustrate on a micro level: imagine a couple inherits an old home on a corner block of 500 m² in an eligible area. Under previous rules, they could renovate or rebuild one dwelling, maybe sell to another single-house buyer. Under the new rules, because it’s 500 m² and a corner (good access), they could propose building three terrace houses. Each terrace might be on its own 165 m² lot after subdivision – perhaps a 3-bedroom home on 3 levels, but only 6 m wide. This is a common form of housing in inner Sydney historically (think Paddington terraces), but many suburbs haven’t seen new ones in decades due to zoning. Now, that couple can create two extra homes, sell them, and still keep one to live in (or sell all three). The new owners get brand new homes in an established area, likely priced lower than a freestanding house in the same suburb. Meanwhile, the look of the street evolves to a more terrace-style character, but it remains low-rise and arguably retains a neighborhood feel (with verandahs, individual entrances, and maybe consistent design that complements the area). This small-scale densification is exactly what the policy is meant to stimulate on thousands of sites across NSW.

 A mid-rise apartment building in Lane Cove – about 5–6 storeys high – exemplifies the kind of development now encouraged within 400 m of town centres and stations. Such buildings provide dozens of new homes in a compact footprint. The Low & Mid-Rise reform makes it easier to build these near transit, instead of restricting areas to only detached houses.

Of course, not every eligible site will redevelop – market conditions, owner preferences, and heritage considerations will influence outcomes. Some areas might see rapid changes if property values make it attractive, while others might stay much the same for years. The policy simply removes the regulatory barrier so that when there is demand and interest, projects can proceed without being stymied by outdated zoning.

Challenges, Concerns and Responses

Like any major planning reform, the Low and Mid-Rise Housing Policy has sparked debate and concern among various stakeholders – from local councils, to community groups, to developers themselves. Here we discuss some anticipated challenges and criticisms, along with how the government or others plan to address them:

• “One-Size-Fits-All” Critique & Local Infrastructure Needs: Local Government NSW (the association of councils) has been critical, warning that a “one-size-fits-all” statewide approach might not account for each area’s unique circumstances and could strain local infrastructure. They argue that simply allowing more housing everywhere (within the maps) is a missed opportunity to ensure proper investment in community infrastructure like roads, schools, parks and drainage that additional population will require. In response, the NSW Government points out that infrastructure capacity was one of the selection criteria for the 171 housing areas – areas without adequate infrastructure or with known constraints were generally not included. Furthermore, by concentrating growth in a walkable radius, the policy leverages infrastructure that exists in town centers (many of which have capacity due to previously flat or declining populations in some country towns or under-utilized services). The state has also recently announced or planned significant spending on infrastructure under broader housing initiatives – for example, new funding for schools or road upgrades in areas slated for more housing (often through programs like the Housing Infrastructure Fund). It’s clear, however, that close monitoring and collaboration with councils will be needed. The government has stated it worked with councils in drafting the policy and will continue to do so as it’s implemented. One practical measure to address infrastructure is using developer contributions: new developments will pay fees that councils can use to improve local facilities. The reform doesn’t remove that mechanism. Also, if a particular street truly cannot handle more dwellings (due to, say, flood evacuation constraints or lack of sewer capacity), such areas can be deemed not subject to the code – indeed flood-prone and bushfire-prone sites were explicitly excluded upfront. In summary, while not tailored to each suburb, the policy is being applied in a targeted way and the government acknowledges that infrastructure alignment is an ongoing task.

• Community Fears: Character, Congestion, and Consultation: Many residents hear “higher density” and worry about their suburb’s character changing or streets becoming congested. Common public reactions include concerns about traffic and parking overflow, loss of trees or open space as backyards are built over, privacy and overshadowing from new taller buildings, and a general fear of “overdevelopment.” During the consultation period, these were indeed the top issues raised – traffic, local character, environment, need for green space. How is the reform addressing these? First, heritage areas are partly protected: while the new controls do apply in heritage conservation areas, any development in those areas still has to meet existing heritage planning rules. That means if you’re in, say, a heritage precinct of Federation-era homes, you might technically be allowed to build townhouses, but the design would need to be sympathetic and preserve the heritage values, or it won’t get approval. Individual heritage-listed properties remain off-limits for redevelopment under this policy. Second, character and amenity considerations are addressed through the design and merit assessment process. The Minister has emphasized that new buildings must “improve or enhance the heritage of the area” if in such a setting – a high bar that should prevent inappropriate outcomes. For traffic, councils will still do traffic impact assessments. Being near public transport should mitigate some car use, and parking requirements still apply (so developers can’t suddenly build zero parking units in a suburban street unless the council is satisfied it works). The state is also championing design excellence – releasing pattern book designs that show how to do medium density without ugly outcomes, and requiring landscaping (retaining tree canopy, etc.) as part of developments. Enforcement of quality will be key. Lastly, community consultation doesn’t end here; individual DAs can still be notified to neighbors (unless done as complying development under a future code). The widespread exhibition and the changes made (like dropping some areas and adding protections) show that community feedback was heard to an extent. Continued dialogue and perhaps fine-tuning of the policy (the government has signaled it will monitor the rollout) are ways to address community concerns. It’s a balancing act – not everyone will be convinced, especially those opposed to any density increase – but making sure the outcomes on the ground are high-quality will help gain public acceptance over time.

• Council Implementation and Confusion: Some councils have expressed confusion about the mapping and the intersection with their local plans – as one local news outlet put it, “a maze of confusion for councils, developers, and land owners” initially. The legislation refers to maps and schedules that had to be clarified (e.g. defining the exact 800 m and 400 m zones, listing the town centre names). The Department of Planning has provided those details (there’s a Town Centre Map as a legislative map, showing the precise boundaries from which the 800 m is measured). It was admittedly a challenge that the policy regulations came out just days before commencement, giving little time for stakeholders to digest the fine print. However, the Department has been responding to inquiries (as cited in the article, they explained how to find the Town Centre map to those asking). Over time, as everyone becomes familiar with the new rules, the confusion should subside. The Planning Department is also likely to run workshops or issue guidance to council planners and industry (many planning professionals have already analyzed the changes in depth, as we’ve cited). Clear communication is being improved, and tools like the interactive map help property owners self-check eligibility easily. In short, the rollout had initial hiccups, but ongoing education and support are being provided.

• Will Developers Actually Build? Viability Concerns: Interestingly, while some residents worry about too much development, some in the development industry worry that too little might happen if the settings aren’t quite right. The Property Council of Australia (representing developers) welcomed the policy but noted it “took far too long” to arrive and that in very pricey areas (e.g. Sydney’s eastern suburbs) it might still be “really difficult” to make projects financially viable. Why? Because land is so expensive that allowing only 3–4 storeys might not yield enough profit to justify buying and knocking down existing homes. They suggest that in some high-value locales, further tweaks – like allowing greater height or density – might be needed to incentivize redevelopment. The government has partly addressed this through affordable housing bonuses: Developments that reserve at least 15% of floor space for affordable (below-market) housing get to exceed height limits by 30%. This means a site normally limited to 6 storeys could go nearly 8 storeys, for example, making the project more profitable while delivering affordable units. These kinds of bonuses (which were pre-existing in the Housing SEPP) are now layered on top of the new code. It’s an incentive for developers to participate and also a public good (more affordable units). If uptake is slow in certain areas, the government could consider adjusting the standards – the policy is an instrument that can be amended if needed. For now, though, there is optimism that many areas, especially middle-ring suburbs and Western Sydney where land is not as exorbitant, will see strong interest from builders. The expected numbers (112k homes) reflect an assumption that the economics will work out in a broad range of locations.

• Monitoring and Adjustment: A challenge for the reform will be monitoring its real-world outcomes. The government will need to track how many development applications are coming in under the new rules, and where. If some unintended consequence emerges (for example, too many small lots being redeveloped without enough open space, or certain towns getting swamped with proposals beyond infrastructure capacity), the policy may require fine-tuning. The commitment to “deliver outcomes the community expects” suggests they will be gauging community sentiment as it rolls out. The Planning Minister has indicated a willingness to work with councils on specific larger plans – e.g. he withheld applying the policy in parts of Parramatta Light Rail corridor because a bigger coordinated precinct plan is underway there. This shows flexibility: the state isn’t blindly imposing if a better local plan is in progress. We might see more instances where councils that are proactive in upzoning with their own strategies can effectively tailor the approach while still meeting housing goals. Ultimately, the success of the reform will be measured by homes built and community acceptance. The housing crisis adds pressure to make it work, but community concerns add pressure to get it right.

In conclusion, the Low and Mid-Rise Housing Reform is a bold and in many ways unprecedented planning initiative in NSW, aiming to transform our housing landscape for the better. It seeks to prove that we can grow smarter – adding much-needed homes in existing neighborhoods, near transport and jobs, in forms that enhance communities rather than detract from them. Both the general public and developers have much at stake in its success. The public stands to gain more affordable, well-located housing choices and more sustainable communities; developers and landowners gain new avenues for investment and development.

While there are genuine challenges to navigate – from ensuring infrastructure keeps up, to maintaining quality and character – the policy framework has been designed with these in mind, incorporating safety valves like heritage protections, hazard exclusions, and extensive design standards. As the policy takes effect, all eyes will be on the outcomes.

For residents curious or concerned about what it means for their street, the best approach is to stay informed and engaged: check if your property is in a Low/Mid-Rise area, see what could potentially be built, and participate in local planning discussions. For developers, the message is that now is the time to explore opportunities under the new rules – many sites that were previously off-limits or marginal could now be viable projects that contribute to easing the housing shortage. The NSW government, by pushing this reform, is effectively saying: we can no longer afford to leave the “missing middle” missing. By embracing low and mid-rise housing, the state hopes to create a more affordable, inclusive, and thriving future for its communities – one terrace, duplex, or mid-rise building at a time.

Sources:

• NSW Department of Planning and Environment – Low and Mid-Rise Housing Policy news release (21 Feb 2025)

• NSW Department of Planning – Low and Mid-Rise Housing Policy webpage

• Bartier Perry Lawyers – “Low and Mid-Rise Housing Policy – Stage 2 is here!” (analysis of Housing SEPP amendments)

• ABC News – “Apartments and terraces to be built around 171 NSW transport hubs…” (21 Feb 2025)

• InTheCove local news – “NSW Planning: Low & Mid Rise Housing – A Maze of Confusion…”

• NSW Department of Planning – Consultation summary on Low/Mid-Rise Policy

• Statements by NSW Planning Minister (Paul Scully) and stakeholders, highlighting policy intent and reactions.