Coming to a station near you –TOD program set to increase residential densities & property values around stations

What you need to know

• The NSW Government is implementing a policy to increase residential densities near existing and planned railway stations, and increase the supply of affordable housing.
• The first 8 precincts near transport hubs have been identified for accelerated rezoning (TOD Precincts). Development of residential flat buildings with a Capital Investment Value of over $60M in the TOD Precincts will have the benefit of a new fast-tracked State significant development pathway.
• The Housing SEPP has been amended to identify Transport Oriented Development Areas (TOD Areas), in which new planning controls and development standards apply. Depending on the zoning, residential flat buildings and shop-top housing may now be permissible development.
• Within the TOD Areas, there is now a 2% mandatory affordable housing contribution for new residential flat buildings or shop top housing with a GFA of 2,000 sqm or more. This is set to increase over time.
• The amendments to the Housing SEPP apply to development applications made from 13 May 2024. They do not apply to development applications made but not determined before 13 May 2024, nor to modifications to development consents granted before 13 May 2024.

What you need to do

• Consider whether your property is in a TOD Precinct and set for accelerated rezoning, or is in a current or future TOD Area. If so, consider the revised development potential and value and whether the TOD program provides opportunities to consolidate ownership or sell "in one line" with other owners.
• Consider opportunities to carry out higher density residential development in the TOD areas.

The NSW Government's top priority is to deliver more high quality homes that are well-located near public transport hubs and supported by attractive public spaces, vibrancy and community amenity. This is intended to improve housing supply and improve housing affordability in the Six Cities Region.

The Transport Oriented Development program has two parts which seek to increase residential densities around 45 new Metro and existing train stations.

1. Accelerated rezoning for TOD Precincts

To create infrastructure and capacity for 47,800 new homes over the next 15 years, eight priority high-growth areas near transport hubs will be the subject of accelerated rezoning, which will take place between September and November this year.

The State-led rezonings will be generally within 1,200 metres of Bankstown, Bays West, Bella Vista, Crows Nest, Homebush Hornsby, Kellyville and Macquarie Park stations. These are called Transport Oriented Development Precincts (TOD Precincts).

These TOD Precincts have been identified as having significant capacity to support additional growth. Each will be the subject of master planning, supported by technical studies, to determine precise boundaries appropriate development controls. A mix of housing types will be planned for in each TOD Precinct, ranging from high rise developments close to the station tapering down to low rise housing types at the edges of the precinct.

Planning pathway

Once rezoned, the State significant development pathway will be triggered by proposed residential development with a Capital Investment Value (CIV) threshold of $60M within the TOD Precincts. A dedicated assessment team will determine these SSD applications to ensure a quicker and more streamlined process, with a target of 90 days from lodgement to determination. Development consents will be time-limited to 2 years to encourage construction to commence, and new housing to be delivered more quickly. This pathway will remain in place until November 2027.

Affordable housing

A target of up to 15% of new homes in the TOD Precincts will be affordable housing in perpetuity. This will be achieved by providing increased height and floor space ratios for affordable housing to realise a site's full development potential.

Good design

The Apartment Design Guide will remain the principal guiding document for housing in the TOD Precincts. Developers of high and mid-rise development in the precincts may select an architect from a list pre-approved by the NSW Government Architect, and bypass requirements for to run a design competition.

Community infrastructure

The NSW Government has committed $520M to provide community infrastructure in the TOD Precincts, such as road upgrades, active transport links and quality public open spaces. Councils will also be encouraged to invest the money it receives from local contributions to make further improvements to existing parks and open spaces.

2. Amendments to the Housing SEPP – TOD Areas

On 13 May 2024, new amendments to State Environmental Planning Policy (Housing) 2021 commenced.

These amendments aim to deliver 170,000 new homes in mid-rise dwellings and apartment buildings that contain commercial space and affordable homes generally within 400m of 37 new Metro and existing rail stations. These are called Transport Oriented Development Areas (TOD Areas).

The Housing SEPP provides overriding planning controls and development standards for medium and high density residential development in TOD Areas (which are different from the 8 TOD Precincts which will be the subject of accelerated rezoning).

Initially, 18 TOD Areas have been created. These are generally the area within 400m of the following stations: Adamstown, Booragul, Cardiff, Corrimal, Gordon, Hamilton, Killara, Kogarah, Kotara, Lidcombe, Lindfield, Morisset, Newcastle Exchange, Roseville, Teralba, Turella, Wyong and Woy Woy. Specific sites within the TOD areas are mapped on the NSW Planning Portal Spatial Viewer, available here.

19 more TOD Areas are set to commence around the following stations:

• in July 2024: Banksia, Dapto, Gosford, Rockdale and Tuggerah
• in October 2024: Berala, Canterbury and North Strathfield Metro
• in December 2024: Ashfield, Belmore, Dulwich Hill, Lakemba, Marrickville and Croydon
• in April 2025: Cockle Creek, North Wollongong and St Marys Metro
• in June 2025: Punchbowl and Wiley Park

New chapter 5 of the Housing SEPP prevails over provisions of other environmental planning instruments (EPIs) to the extent of any inconsistency.

Permissible development

Within the TOD Areas, depending on the zoning of the land, residential flat buildings and shop-top housing is permissible with development consent under the Housing SEPP (even if it is prohibited under another EPI). Specifically:

• residential flat buildings are permissible in R1, R2, R3, R4 or E1 zones or equivalent zones, and in the Canterbury Bankstown LGA the B2 zone; and
• shop-top housing is permissible in E1 and E2 zones or equivalent zones, and in the Canterbury Bankstown LGA the B2 zone, and in the Gosford City Centre the B3 zone.

Overriding development standards

Chapter 5 of the Housing SEPP provides development standards that if complied with, prevent the consent authority from requiring more onerous standards. In the TOD Areas, these are:

• maximum building heights – for residential flat buildings is 22m and for shop-top housing is 24m;
• Floor Space Ratio (FSR) – an FSR of up to 2.5:1 for both residential flat buildings and for shop-top housing in specific zones;
• Lot width – a minimum lot with of 21m for both residential flat buildings and for shop-top housing;
• Minimum lot size – there is no minimum lot size for residential flat buildings and for shop-top housing.

If an EPI provides more generous standards, such as an FSR of 5:1 and a maximum building height of 60m, those more generous standards continue to apply.

In addition, development in a TOD Area might benefit from bonus FSR and height allowances under Chapter 2, Part 2, Division 1 of the Housing SEPP (which commenced on 14 December 2023).

If at least 10% of the development is affordable housing (not including any affordable housing required under Chapter 5 of the Housing SEPP or under any other EPI or planning agreement), and other non-discretionary development standards are met, then the development might benefit from an additional FSR or building height of up to 30%, depending on how much affordable housing is provided.

This affordable housing component of the development must remain for at least 15 years, and be managed by a registered community housing provider.

Affordable housing contribution

The Housing SEPP now mandates at least a 2% perpetual affordable housing contribution for development with 2,000m² of GFA or more in certain zones in TOD Areas.

This percentage is set to increase over time.

The 2% contribution is not calculated by including the affordable housing component, or any other affordable housing required by another EPI or planning agreement.

The Housing SEPP also provides development standards in respect of the amount of parking that must be provided for each affordable housing dwelling in a TOD Area. For a 1, 2 and 3 or more bedroom dwelling 0.4, 0.5 and 1 parking spaces must respectively be provided.

Good Design

The consent authority must not grant consent unless it has considered the Apartment Design Guide (and is presumably also satisfied that the residential flat building or shop top housing is consistent with it).

Active Street frontages

In E1 zones, and in and in the Canterbury Bankstown LGA the B2 zone, within TOD Areas, residential flat buildings must have active street frontages. This means that the building must have design elements that encourage interaction between the inside of the buildings and the external public areas adjoining the building, such as cafes with outdoor dining areas and shops with windows and doors that open onto the street.