On 14 December 2023, in-fill affordable housing reforms were introduced in the State Environmental Planning Policy (Housing) 2021 (Housing SEPP) to encourage private developers to boost affordable housing.
One of the key reforms introduced by the State Environmental Planning Policy Amendment (Housing) 2023 (Housing Amendment) is the new ‘affordable housing’ bonus, which permits a floor space ratio (FSR) bonus of 20 – 30% for developments that include at least 10 – 15% of gross floor area (GFA) as ‘affordable housing’.
An outline of the infill affordable housing amendments published by the NSW Government can be accessed here.
When does the bonus apply?
A development that includes residential development is eligible for a bonus if:
- It is permitted with consent under Chapter 3, Part 4 of the Housing SEPP or another environmental planning instrument;
- The ‘affordable housing’ component is at least 10%;
- All or part of the development is carried out –
- for development on land in the Six Cities Region (save for Shoalhaven LGA) in an accessible area.
- for development on other land, within 800m walking distance of land zoned E1 Local Centre, MU1 Mixed Use, B1 Neighbourhood Centre, B2 Local Centre or B4 Mixed Use (or equivalent land use zone).Importantly, for the bonus to apply, at least 10% of the development’s GFA must be used for ‘affordable housing’ for at least 15 years.
How is the bonus calculated?
The additional FSR (as a percentage) is calculated as twice the ‘affordable housing’ component. To illustrate:
- a 10% ‘affordable housing’ component is equal to a potential additional FSR of 20%;
- a 12% ‘affordable housing’ component is equal to a potential additional FSR of 24%;
- a 15% ‘affordable housing’ component is equal to a potential additional FSR of 30%.
Developers should keep in mind that if affordable housing is provided as part of a development due to another environmental planning instrument or planning agreement within the meaning of
Environmental Planning and Assessment Act 1979 (NSW), it will not be counted towards the ‘affordable housing’ component.
What is the maximum bonus?
A maximum 30% bonus in FSR is permitted for developments where at least 15% of GFA is ‘affordable housing’.
Can you combine different FSR bonuses?
Section 12A of the Housing SEPP envisages developers accessing additional FSR under more than one of the following schemes:
- in-fill ‘affordable housing’;
- boarding houses;
- co-living housing; and
- seniors
However, if a development proposes to use the additional FSR permitted under more than one of these schemes, the overall maximum FSR must not exceed 130% of the maximum permissible FSR for the land. Essentially, the additional FSR remains restricted to 30%.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
Liability limited by a scheme approved under Professional Standards Legislation.
Author: Maysaa Parrino & Ericka Pham
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