NSW unveils bold reforms Terrace and townhouse bans lifted to tackle housing crisis
UDIA welcomes the Government’s decisive action to tackle the housing crisis and encourages diverse and accessible home construction. Image: Canva.
  • NSW Government will abolish bans on terraces, townhouses, and two-storey apartments.
  • Reforms enable construction of 112,000 homes, addressing housing shortage in key regions.
  • The Property Council of Australia and UDIA applaud NSW's decisive action to diversify and boost accessible homes.

The New South Wales (NSW) Government has announced a slew of reforms, forcing councils to abolish bans on building terraces, townhouses, and two-storey apartment blocks to improve urban density and stem the intensifying housing crisis.

Sydney weekly asking property prices

The plans will be made available for public feedback next week.

Adding much-needed supply to NSW

The reforms will allow for the construction of around 112,000 homes in the Greater Sydney region, Hunter, Central Coast, and Illawarra. This is equivalent to 30% of the 377,000 new homes the State Government aims to supply by 2029 under its Housing Accord.

Local councils typically set their own rules on the types of housing allowed within their jurisdiction. Hence, the Government found a substantial gap in density approval. Only two of 32 Local Environmental Plans (LEPs) permitted terraces and one to two-storey unit blocks under R2 zoning.

R2 zoning usually oversees low-density housing, also known as the ‘missing middle’.
Additionally, the Government states that 60% of R3 zones in Sydney, where multi-dwelling housing is most suitable, bans residential apartments of any size.

NSW Minister for Planning and Public Spaces, Paul Scully, said that despite being one of the least dense cities globally, less than half of Sydney’s councils permitted low-rise and mid-rise residential buildings in areas zoned for homes.

“We’re confronting a housing crisis, so we need to change the way we plan for more housing. We can’t keep building out we need to create capacity for more infill, with more diverse types of homes,” he said.

“Diversity of housing allows people to stay in their communities and neighbourhoods through different stages of their life, with family and friends able to live nearby. More housing choice means more options for everyone – renters, families, empty nesters.

“Density done well means townhouses, apartments and terraces clustered near shops, high streets and parks.”

Property Council showers move with praise

The Property Council of Australia endorsed the action, dubbing it a “sensible change to deliver a broader mix of well-located homes”.

“There is huge untapped potential for density done well in areas already zoned for low and medium density right across Sydney and our regions,” Property Council NSW executive director Katie Stevenson said.

“This is the type of housing that people want to live in, especially when it’s close to public transport and town centres.

“This change will bring much-needed consistency across council boundaries and ensure housing for young families doesn’t become a political football in the upcoming local government elections.

“Communities can’t stand still in time forever – they must evolve and grow.

“Local councils must move away from the outdated mindset of only considering the needs of existing residents and the vocal minority and start thinking about how best to support young families in their communities looking to rent or buy a home.”

“We can create more vibrant communities that protect local character while adding to the diversity of our neighbourhoods at the same time.”

Katie Stevenson, Property Council NSW Executive Director

UDIA warmly welcomes the announcement

The Urban Development Institute of Australia NSW (UDIA) also broadly welcomed the NSW Government’s announcement.

“We commend the Premier and Planning Minister for taking meaningful and decisive action to address our housing crisis. While dual-occupancies and six-storey flat buildings alone won’t solve the housing crisis, every new policy which results in more diverse and accessible homes is a win for NSW residents,” said UDIA NSW CEO, Steve Mann.

“This Government was elected on a bold promise to address the housing crisis, and that means challenging the status quo across multiple policy fronts. Today’s announcement shows the Government is serious about delivering on that promise,” he said.

However, Mann qualified his enthusiasm by saying that it was important that councils could not make changes to LEPs and Development Control Plans (DCPs) and stifle the policy’s intent.

Furthermore, he noted no clarity on how the proportion of low-rise and medium-density homes will be distributed across the potential new 122,000 homes. He urged the Government to release its modelling to shed light on the effectiveness of its measures through the planning system and make alterations to the policy should it fail to deliver on its promises.



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