Stage 2 of NSW’s Low and Mid-Rise Housing Reforms Now in Effect

As of 28 February 2025, Stage 2 amendments to the State Environmental Planning Policy (Housing) 2021 (Housing SEPP) have come into effect as part of the NSW Government’s broader Low and Mid-Rise Housing Policy. These reforms are designed to increase housing supply and diversity by facilitating the development of low- to mid-density housing — often called the “missing middle” — which includes dual occupancies, terraces, townhouses, and low-rise apartments.

Where Do These Changes Apply?

The Stage 2 reforms impact 171 selected areas across NSW, which are identified as ‘Indicative Low and Mid-Rise Housing Areas.’ These zones are primarily residential areas within an 800-metre walking distance of town centres and public transport hubs, such as train or light rail stations. The selection process considered factors including access to goods and services, public transport availability, and critical infrastructure capacity.

Certain areas have been excluded from the policy’s scope due to environmental or safety concerns. These include bushfire-prone regions, coastal wetlands, sites near dangerous goods pipelines, and areas affected by high aircraft noise. Furthermore, the reforms do not apply to properties that are listed heritage items or located within heritage conservation zones.

To see if your property falls within one of these zones, the NSW Government provides an interactive map that clearly marks all affected areas. You can explore this detailed spatial portal here, which allows users to search by address, suburb, or postcode to identify if their property is within an affected zone.

What Are the Key Amendments?

The Stage 2 policy introduces new non-discretionary development standards that override many local planning controls (Local Environmental Plans and Development Control Plans), except where those local controls are more generous. The main changes include:

Dual Occupancies: Allowed in R1, R2, R3, and R4 zones on lots with a minimum size of 450m² and minimum frontage of 12 metres. Developments must comply with a maximum floor space ratio (FSR) of 0.65:1 and building height capped at 9.5 metres.

Subdivision: Permitted in R1, R2, and R3 zones, allowing lots to be subdivided into parcels as small as 225m² with a minimum width of 6 metres.

Multi-Dwelling Housing (Terraces, Townhouses): Allowed on lots generally sized 500–600m² or larger, with maximum building height of 9.5 metres and an FSR of 0.7:1.

Residential Flat Buildings: Permitted in various residential zones with different standards depending on proximity to transport hubs. For example, within 400 metres of a train station or town centre, buildings can reach up to six storeys with an FSR of 2.2:1, while areas 400–800 metres away have slightly reduced limits.

Shop-Top Housing: Allowed with similar size and height provisions as residential flats, enabling apartments above ground floor retail spaces in appropriate zones.

Affordable Housing Bonuses: Existing provisions that allow increased building height and floor space for developments including affordable housing continue to apply alongside these new standards.

Impact on Development Applications

These amendments mean that development applications meeting the new non-discretionary standards cannot be refused based on conflicts with local planning controls unless those controls offer greater allowances. However, other planning considerations such as parking, landscaping, and amenity factors will still be assessed on their merits.

Looking Ahead

To support quality and consistent design, the NSW Government is developing the NSW Housing Pattern Book, expected to be released by mid-2025. This guide will provide architectural and design guidelines tailored to low- and mid-rise housing, helping developments integrate well within existing neighbourhoods. These reforms represent a significant evolution in NSW’s approach to managing housing supply and urban growth. By unlocking new development opportunities in well-connected suburbs, the policy seeks to create more diverse, affordable, and sustainable housing options for residents.

For more detailed information or to check if your property is affected, you can explore the NSW Government interactive map here.