The impact of NSW building reforms

These housing reforms are part of a broader housing and infrastructure agenda, accompanied by the Transport Oriented Development Program, Low and Mid-Rise Housing Policy, Infill Affordable Housing Bonus, and the Renewable Energy Planning Framework.

The Environmental Planning and Assessment (Planning System Reforms) Bill 2025 (NSW) (the Bill) introduces a raft of substantial amendments to the Environmental Planning and Assessment Act 1979 to streamline how housing projects are assessed, approved and coordinated in NSW.

The amendments also introduce tighter oversight mechanisms (including greater fines for conflict of interest) and updating statutory objectives. As promising as the new vision for housing development seems, there is also concern that the role of local councils, state agencies, and planning authorities has been diluted, potentially limiting community voices in the assessment of developments in their locality.

In June last year, the NSW Government assigned $6.6 billion towards the Building Homes for NSW initiative, promising to deliver up to 30,000 new homes. A media release on 18 June 2024 stated they would be “well-located homes, close to infrastructure and transport, with amenities and work opportunities, with surplus land to be made available for housing over the next four years.”

Breellen Warry is a partner at Maddocks in Sydney, where she is the sector leader for State Government NSW and specialises in planning and environmental law.

She says, “The key challenges often cited by builders and developers in the NSW planning system are complexity, delays, and uncertainty. Navigating the system can be difficult for all stakeholders, as it involves understanding complex legislative requirements and multiple planning and environmental controls (at a State, local and sometimes Federal level) that may apply to a single development.”

Warry adds, “The assessment process is often lengthy, and projects can take considerable time to progress. Duplication is common, with the same project frequently requiring several sets of approvals. Once approval is granted, developers may face detailed and complex conditions. These issues can affect projects of all sizes – from large-scale renewable energy developments to small residential builds and it can result in additional financial burden, including because of delays.”

The most noteworthy amendments proposed

The Bill has proposed that section 1.3 of the Act be modified to:

• remove the object of promoting the sharing of responsibility for environmental planning and assessment between different levels of government in the State.
• remove explicit references to increased opportunity for community participation.
• the Housing Delivery Authority (HDA) will have significantly broader powers to direct amendments, and the Minister must publish reasons for any decision not to accept a recommendation from the HDA.
• rather than the lengthy and comprehensive environmental assessments presently in place, Section 4.15(1)(b) of the Act has been amended to require the consent authority to consider only “significant” likely impacts of the development.
• As far as modifications, applicants can apply to vary the setbacks from the lot boundary, minimum landscaping requirements or site requirements such as the width of a lot. These variation applications must be decided on within 10 days (20 days if the council is also assessing the complying development certificate), or it is deemed to be approved by default.
• A single NSW community participation plan will be established by the Planning Secretary. That replaces existing local council community participation plans. Local councils may adopt their own engagement strategies or policies on the basis they adhere to the statewide plan. The Planning Secretary must publish the statewide community participation plan on the NSW legislation website. The community participation plan will be treated as a statutory rule under the Interpretation Act 1987 (NSW).

Major developments face less bureaucratic delays

In September, the NSW government claimed new developments, such as a housing estate, needed to deal with up to 22 state agencies.

Labor wants a single agency – the Development Coordination Agency – to act as a doorway to all approving agencies such as the planning and environment departments, Sydney Water and the Rural Fire Service.

Via the Environmental Planning and Assessment (Housing Delivery Authority) Order 2024, the government has legislated the Housing Delivery Authority (HDA) under the Environmental Planning and Assessment Act (1979) to enable developers to apply to the planning department to take over approval of major housing or mixed-use developments, worth more than $60m, from councils, as state-significant developments.

“World-leading” NSW housing pattern book

On 24 November, the NSW Government revealed the second collection of building design patterns to form the state’s housing pattern book, part of the Low and Mid-Rise Housing Policy, which aims to provide 112,000 homes across the state over the next five years.  The nine mid-rise (three to six storeys) apartment building designs, developed by Australian and New Zealand architectural firms, are additional to the eight low-rise designs released in July.

Each of the patterns have been designed to the Australian Building Codes Board Liveable Housing Design Standard, with cross-ventilation and solar access maximised. They’ve also been developed to enable ease of construction and to produce homes that are adaptable, cost-effective and energy-efficient.

Unlike the low-rise patterns, which can be applied on lots anywhere across the state where low- and mid-rise housing types are already permitted with consent, the mid-rise patterns currently require a development application (DA) to be submitted to local council.

According to the government media release, “councils have been provided with advice that will allow them to halve the average assessment times for these patterns.” In the new year, new planning laws “will enable an even faster and simpler planning pathway … with the mid-rise pattern book to be prioritised for access to the government’s newly created targeted assessment pathway.”

The government has indicated that for the first six months, the mid-rise patterns will be available at a subsidised cost of $1,500 for small lot and corner designs, and $2,500 for large lot designs, which, the media release claims: “is only one per cent of the typical costs for architect designs.”

The benefit to builders and developers is that projects that use a pattern book design are more likely to access a fast-tracked pathway.

For low-rise pattern developments, the Pattern Book Development Code 2025 (NSW) applies, which is also supported by amendments to the Environmental Planning and Assessment Regulation 2021 (NSW).

For mid-rise pattern developments, the relevant legislation is contained in Chapter 7 Pattern Book Development in State Environmental Planning Policy (Housing) 2021 and supporting amendments in the Environmental Planning and Assessment Regulation 2021 (NSW).

The low-rise patterns can be used across NSW where these low- and mid-rise housing types are already permitted with consent. All mid-rise patterns can be used on sites where Low- and Mid-Rise Housing Policy and Transport Oriented Development (TOD) reforms apply and the large lot apartment patterns can apply elsewhere across NSW where residential flat buildings are permissible with consent.

Affordability remains uncertain

Leo Patterson Ross, CEO of Tenants’ Union NSW, says, “The influence these reforms may have on affordability rest on three elements. First, that all additional stock places some downward pressure on prices of both rents and purchase. Second, that both pattern book and modern construction methods reduce costs and so make more projects more viable. Third, that both methods can offer higher energy efficiency and thermal comfort than older existing stock.”

He adds, “None of them directly address affordability outcomes, and the downward pressures may be overtaken by other elements such as speculative lending and land price rises.”

Overall, Patterson Ross says, “The best way for governments to support first home buyers is actually to make renting easier, fairer and importantly, cheaper. Attempting to save while paying such high rents is a real challenge, and we calculate that rents in Sydney on average are about $13,000 a year more expensive than they should be considering increases in wages or even more for general inflation. That money could be savings towards a deposit, or for many, better spent in local communities where they support local businesses and jobs.”

Social housing reforms still a wait-and-see success

Guardian Australia has reported that the government has sold more than two-thirds of publicly owned sites suitable for housing to private developers, though Homes NSW has the first right of refusal.

The NSW Government’s Building Homes for NSW program set the goal of increasing the social housing stock by 8,400 with $6.6 billion in funding. There is also a push to refurbish 30,000 existing homes.

There has been criticism that public and social housing are being increasingly run by third-party and non-profit providers rather than by the state, which sets rent at a percentage of the tenant’s income. Former public housing estates, such as the 749 public homes at Waterloo South, are set to be demolished. The replacement is 1,500 private houses, 600 affordable houses, and 1,000 community homes.

Prefabricated and modular homes part of “productivity reforms”

On 23 November, the NSW government announced “productivity reforms” to NSW building laws, including the fast-tracking of prefabricated and modular homes, which are cheaper and faster to construct. The proposed reforms, according to the media release, “seek to position NSW as the first Australian jurisdiction to integrate prefabricated homes into the building approval system, aligning the regulation with traditional building work, and requiring compliance with the Building Code of Australia.”

The government says amendments to legislation, which will come before NSW Parliament in 2026, aim to:

• Remove duplication between building and planning legislation
• Enhance certifier accountability
• Streamline building and occupation approvals
• Modernise the building regulatory system

For apartment buildings, one set of designs will be required to gain building approval, rather than the duplicate detailed designs mandated under the current planning and building legislation, which the government claims “is expected to save an average of $327,000 in design costs per apartment block alone.”

Presently, approvals for the installation of prefabricated homes are the remit of local councils, but the proposed reforms set clear rules for the manufacture, supply, transport, delivery and installation of prefabricated buildings.

The role of lawyers

Warry considers that these reforms do not dilute the role of lawyers with planning expertise.

She says, “We may see a drop off in Class 1 appeals in the Land and Environment Court as a number of the reforms appear aimed at keeping matters out of Court, either through centralising their assessment or otherwise, for example, providing additional avenues for decisions to be reviewed by a local planning panel. In addition, if more developments are assessed as complying development or targeted assessment development and assessment timeframes continue to improve, there may be less of a need for appeals to the Land and Environment Court. Despite this, legal expertise will be critical in advising on the reforms as they roll out and commence. We also envisage that the Land and Environment Court will be involved at some point in determining the scope of what is a likely “significant” impact under amendments to section 4.5(1)(b) of the EP&A Act, as well as the changes to the level of assessment undertaken for activities under Part 5 of the EP&A Act.”