Major planning battle brewing in NSW over walkable communities and sustainable homes

EXPLAINER: A key planning reform that would promote more sustainable buildings and communities hangs in the balance, with developers claiming the changes will increase the cost of housing.

The development lobby is seeking to kill off a proposed planning law, called the Design and Place State Environmental Planning Policy, or D&P SEPP, that would ensure buildings in NSW meet net zero standards before 2050.

At stake is the livability and sustainability of our homes and neighbourhoods in the face of fast advancing climate change. The battle over the proposal also has big implications for the green building and design sector.

The D&P SEPP sets out minimum standards for the design of apartments and large master planned developments. It mandates the use of more sustainable building materials, trees and gardens, as well as place-based planning with maximum block sizes for walkability.

It also increases the standards of energy efficiency and building performance, mandating that all new homes and renovations over $50,000 must meet Building Sustainability Index (BASIX) standards (which are slated for improvement) as part of the approvals process.

According to a cost-benefit analysis by Deloitte Access Economics, the policy will deliver $979 million in net benefits over 30 years, with $1.42 of benefits for every dollar of cost caused by the policy.

However, perhaps not surprisingly, the property development lobby has come out strongly against the policy, claiming it will make housing less affordable.

Here’s a rundown of the planning law changes, what’s happened so far, and what they mean for you.

First things first: what is a SEPP?

Before going further, it’s worth going over how the planning laws in NSW are structured.

The main law dealing with land use in NSW is called the Environmental Planning and Assessment Act 1979. It is overseen by the minister for planning, through the NSW Department of Planning and Environment.

Under the EP&A Act, the minister can guide the development process by setting what are known as state environmental planning policies.

In practice, SEPPs are often what planning ministers use to approve or block developments when they overrule local councils and their planning rules.

Rob Stokes’ three big reforms

From 2015 until late 2021, Rob Stokes was the planning minister for NSW. On 2 December 2021, he announced three very major reforms to planning laws.

First, he introduced nine principles that would guide how planning policies are applied. Nicknamed the “nine commandments”, they were unveiled in early December 2021, and came into force on 1 March.

Second, Minister Stokes simplified planning laws by combining the 45 SEPPs that previously existed into just 11, which are grouped together by theme. Each was also linked to one of the nine planning principles.

So, for example, the new design and place SEPP combined the old SEPPs covering the design quality of residential apartments with the SEPP for the Building Sustainability Index.

The new SEPPs came into force on 1 March (or 26 November for the new housing SEPP), except for the new D&P SEPP.

Third, the scope of the new D&P SEPP was greatly expanded beyond apartments and building sustainability. It became the first policy to implement Stokes’ nine principles, in order to put “sustainability, resilience, and quality of places at the forefront of development in NSW”.

As well as covering new apartments and public spaces, the new D&P SEPP would also cover “places of all scales, from precincts, large developments and buildings, to infrastructure and public space”.

Less than stoked: a new planning minister

Now here’s where things got interesting.

After taking over from Gladys Berejiklian, incoming Premier Dominic Perrottet announced a major cabinet reshuffle on 20 December 2021.

Despite the fact that Rob Stokes had announced his reforms just weeks before, Anthony Roberts was named the new planning minister. Meanwhile, Stokes was shuffled off to become the new Minister for Infrastructure, Cities and Active Transport.

On 14 March, just days after Stokes’ nine principles came into force, Minister Roberts announced they were scrapped.

Meanwhile, a big policy decision awaited the minister on the fate of the expanded D&P SEPP, which is based on Stokes’ nine principles.

So what is the new D&P SEPP and what does it cover?

The D&P SEPP aims to ensure we have “well-designed places that enhance quality of life, the environment and the economy”.

The policy is mainly based on best-practice principles, rather than inflexible hard and fast rules. These principles are designed to lift design standards, in order to lift the standard of living and reduce environmental costs, including by cutting emissions.

At the core of the D&P SEPP are two main sets of documents that are to be used for assessing building applications:

• a new Urban Design Guide (UDG) that mandates place-based standards for master-planned developments
  

• a revised Apartment Design Guide that sets out basic standards for new apartments

The SEPP also includes:

• updates to the Building Sustainability Index (BASIX) requirements for residential properties
  

• changes to environmental planning regulations

Apartment Design Guide

A major focus of the revised ADG is setting out principles for energy efficient apartments, using low-carbon building materials.

The design guidance includes using low-emissions materials and building processes to minimise embedded carbon, as well as a preference for all-electric buildings with induction cooking and heat pumps.

The document stresses the importance of making sure there is enough green space between buildings, allowing for trees and landscaped gardens. It encourages the use of green roofs (or walls), maximising access to natural daylight to every apartment and natural ventilation.

On the liveability front, it promotes greater housing diversity (including family apartments), enough space for people to work or study, more storage and usable balconies.

It also seeks to promote walking, cycling and public transport use by encouraging bike storage spaces and safe pathways to walk and cycle on. It also encourages builders to reduce the number of car parking spaces where other options exist, and make provisions for EV chargers to be installed in the future.

Urban Design Guide

The Urban Design Guide is the state’s first planning guide for larger scale developments and master planned communities. It sets out a place-based approach to development.

It sets out a maximum block size for walkability, along with 20-minute neighbourhood target distances from homes to parks, schools, shops and public transport.

BASIX changes

As part of the D&P SEPP, the NSW state government is looking at improving the Building Sustainability Index (BASIX) standards that are part of the state’s building approvals process.

The big changes here are to bring building standards for thermal energy and energy in line with proposed changes to the National Construction Code. Builders will also need to make sure that new houses meet minimum standards for embodied carbon emissions.

The rules will apply to all new homes and renovations over $50,000 in NSW, including apartments.

New regulations

D&P SEPP also includes new application requirements, including:

• a net zero ready statement for all new development (excluding homes cover by BASIX)

• documents that show embodied energy

• design verification statements for urban designers and landscape architects

• verification that the advice of design review panels has been incorporated

Urban developments covered by UDG will need to provide:

• estimated energy consumption and emissions (which also applies to offices, shopping centres, and hotels)

• for state-significant developments, explanation of how projects respond to Country and to inputs from Aboriginal stakeholders

Why developers hate it

In its submission, the Urban Design Institute of Australia said that it is concerned the D&P SEPP will:

• add time and cost to development and thereby reduce housing supply and affordability

• further complicate the planning process

• result in a more prescriptive approach to design

• reduce innovation

The UDIA said that while it “does support the effort to develop a principle-based approach to creating a high-quality urban fabric” the policy risks “adding time and cost to development and reducing feasibility”.

In a statement, Urban Taskforce Australia was critical of the consultation and survey that led to the creation of the D&P SEPP, describing it as “utopian in its aspiration”.

“The survey seeks the views of recipients on the design of their home, the attributes of their home and the character of their neighbourhood. But all of this is done without any real focus on the cost of change, the price of the improvements.”

The Property Council was also critical of the impact of the proposed policy on housing affordability.

“Whilst well intentioned, the SEPP as exhibited is unworkable and inadequate consideration has been given to the impact upon viability of new housing for current and future generations – this has significant consequences for families in NSW wanting to buy their first home.”