New NSW Housing Policy ‘Final Nail in Coffin’ for Co-Living

New South Wales’ new housing policy has been met with howls of protest from the property industry.

The Housing State Environmental Planning Policy (Housing SEPP) is designed to provide NSW residents with “more options” when considering alternate models for new dwellings.

NSW planning minister Rob Stokes said the new policy would now simplify planning rules, consolidating five existing housing-related SEPPs.

“The way we live in 2021 is very different to the past and we need a fresh approach to housing to accommodate our modern lifestyles,” Stokes said.

“We’ve already made it easier to build social housing and put rules in place around build-to-rent developments.

“This is the next step in providing affordable, liveable homes for people at all stages of life.”

Under the new housing SEPP, the state government plans to promote and deliver “diverse” affordable and seniors housing products.

It will also reverse a previous decision to prohibit seniors housing and boarding houses from R2 low-density residential zones.

The policy also reconsiders the accessibility and local character requirements so as not to restrict affordable and seniors housing projects.

However, the changes have been met with backlash, as the growing shortage in developments continues to negatively affect affordability.

But UDIA NSW chief executive Steve Mann said concerns remained over the reduction in incentives for seniors and affordable housing, and the continued restriction on these types of housing products within low density residential zones.

“There [remain] many challenges with the successful delivery of affordable and seniors housing beyond just the Housing SEPP,” Mann said.

“[These concerns] will have the effect of making [these types of] developments unviable and reduce supply of these much needed housing types in NSW.”

Under the Housing SEPP, the age that defines eligibility for seniors living will increase from 55 to 60.

The Housing SEPP has also introduced “co-living” as a new type of housing product, providing developers with the ability to pursue the asset class wherever apartment projects are allowed.

Under the new policy, density for boarding houses will increase from 20 to 25 per cent, and co-living developments would be eligible for a 10 per cent density bonus until August 2024.

However, co-living projects will not be allowed in low-density areas, forcing these developments only to be constructed in higher density zones.

Urban Taskforce Australia chief executive Tom Forrest said the new Housing SEPP was a “slap in the face” for the NSW productivity commissioner, opposing his stance on housing.

“The result, after 15 months, is very disappointing,” Forrest said.

“The SEPP is an unfortunate final nail in the coffin for co-living to be delivered by the private sector.

“While there is a 10 per cent bonus included in the SEPP for co-living development, the level of prescription and limited permissibility is likely to challenge the feasibility of delivering this relatively new housing form in many urban locations.”

Property Council NSW director Luke Achterstraat said the Housing SEPP had failed to address the importance of student accommodation, a sector that had been experiencing turbo-charged growth before the pandemic but had since had its core market of international students vanish over the past two years.

“With the return of international students to Australia in the coming weeks as borders reopen, ensuring we have a supply of appropriately located, modern and high-quality student housing accommodation is critical,” Achterstraat said.

“Supply ensures that students have a positive experience and the university sector continues to grow and expand.

“Student housing is a very particular type of accommodation which doesn’t fall into any of the typical types of residential development, hence the need for specific planning provisions to support this.”