Affordable housing 'state significant' development rules change

On Friday 2 August 2024 the NSW Government changed the rules as to when ‘affordable housing’ is to be treated as ‘state significant’ development.

The existing rules

Under the existing rules, development is ‘state significant development’ if:

• the affordable housing scheme (introduced on 14 December 2023) applies;
• the development does not involve prohibited development;
• for development in greater Sydney (including the Blue Mountains, Hawkesbury and Wollondilly local government areas) and the Central Coast local government area — the part of the development that is residential development has an estimated development cost of more than $75 million; and
• for development on other land —the part of the development that is residential development has a capital investment value of more than $30 million.

The ‘state significant development’ stream does not apply to ‘build-to-rent’ housing (which has its own separate potential pathway to ‘state significant development’ status).

The above rules do not apply to development applications lodged on the NSW Planning Portal, but not finally determined, before 14 December 2023.

The new rules

From 2 August 2024 — in determining the ‘estimated development cost’ — the cost of ‘existing residential development’ must be included if both the following two rules are satisfied.

Firstly, the development must be carried out on the same land as the ‘existing residential development’.

Secondly, the development must result in:

• for development on land in greater Sydney (including the Blue Mountains, Hawkesbury and Wollondilly local government areas) and the Central Coast local government area — at least 40 additional dwellings; or
• for development on other land — at least 20 additional dwellings.

The expression ‘existing residential development’ is given a special legal meaning. It is residential development the subject of a development consent granted after 14 December 2021.

It is not necessary for dwellings be constructed to be counted as ‘existing residential development’. They only need to be subject to a development consent granted after 14 December 2021.

This change has the potential to bring some ‘alterations and additions’ development applications into the state significant development stream. ('Alterations and additions’ development applications are sometimes informally called ‘amending development applications’.)

At present, many developers are pursuing ‘alterations and additions’ development applications to add affordable housing (with extra height and floor space) to already approved (but not yet constructed) residential development.

Some such applications may now be subject to assessment by the Department of Planning, Housing and Infrastructure (and determination by the Department or the Independent Planning Commission).

The new rules only apply for one year. That is for applications lodged on or after 2 August 2024 and before 3 August 2025.

The rules do not apply to applications lodged before 2 August 2024.