The Low and Mid-Rise Housing reforms - what will it take to turn planning reform into housing delivery?

The NSW Government's Low and Mid-Rise (LMR) Housing reforms represent one of the most significant planning interventions in recent years. Introduced in response to the state's housing shortage, the reforms are designed to encourage more housing diversity in well-located urban areas by permitting a broader range of housing types, including terraces, townhouses and apartment buildings, near transport hubs and strategic centres.

The reforms have generated strong debate across government, councils, industry and the broader community. A recent panel discussion hosted by Bartier Perry in association with the Australian Institute of Urban Studies NSW brought together representatives from the NSW Department of Planning, local government and the development industry to consider a crucial question: even if planning barriers are removed, will the reforms actually deliver more housing?  

The discussion highlighted an important reality. Planning reform may be necessary to increase housing supply, but it is unlikely to be sufficient on its own.

A housing crisis requires more than planning reform

The rationale behind the reforms is clear. The NSW Government has set ambitious housing delivery targets and has adopted a more centralised approach to planning after concluding that existing processes were not delivering housing at the scale required. During the discussion, Department representatives pointed to strong market interest in some areas of Sydney and significant numbers of dwellings entering the planning pipeline.

However, housing approvals do not necessarily translate into housing delivery.

Across the development sector, rising construction costs, labour shortages, increased finance costs and economic uncertainty continue to place pressure on project feasibility. Several panellists noted that while some higher-value locations may support redevelopment under the new controls, many projects remain commercially challenging.

Undoubtedly, facilitating a planning framework that enables such developments has been crucial, however to address feasibility issues, it will be necessary to consider what can be done in terms of issues such as developer contributions. We consider this further below.

The feasibility challenge

One of the strongest themes emerging from the discussion was that housing delivery is ultimately governed by feasibility.

The regulatory framework may create development opportunities, but projects must still be capable of securing finance, managing construction risk and generating a viable return. Several speakers suggested that some planning controls may continue to constrain otherwise viable projects and that further refinements may be necessary to encourage housing delivery. The Department indicated it remains open to reviewing aspects of the LMR framework as implementation progresses.  

Questions were also raised about minimum lot sizes, development controls and whether existing assessment pathways are appropriately calibrated to support the intended housing outcomes. Reconciling conflicts between what is envisaged by the LMR controls and Council’s existing controls is seen as major issue by all concerned.

State intervention and the changing role of local government

The reforms have also reignited debate about the relationship between state and local government planning controls.

Representatives from local government expressed concern about the loss of local planning authority and the challenges associated with applying uniform planning controls across diverse local government areas. Others argued that state intervention has become necessary after years of housing under-supply and inconsistent local planning outcomes.

While opinions differed on the appropriate balance, there appeared to be broad agreement that housing delivery is most likely to succeed where state planning objectives and local implementation are aligned. Several panellists suggested that local councils should have greater flexibility to determine how housing targets are achieved, provided those targets are met.

Whilst greater collaboration between local and state government will assist, reconciling differences in terms of applicable controls is not likely to be finalised quickly enough to ensure ambitious delivery targets are met.

Over time, we will have the benefit of judicial guidance in terms of weight to be attributed to existing controls in the face of LMR controls. 

Housing diversity and affordability remain unresolved

While increasing housing supply is a primary objective of the reforms, questions remain about the extent to which they will improve affordability or housing diversity.

Examples were cited of developments in premium markets producing predominantly larger, higher-value apartments rather than a broad range of housing types. Concerns were also raised about affordable housing provisions and whether current mechanisms adequately support long-term affordable housing outcomes.

This raises a broader policy question. If affordability is an objective of planning reform, is increasing supply alone sufficient, or are additional mechanisms required?

The answer may ultimately require a more integrated approach involving planning, infrastructure, funding and housing policy. We would advocate for such reforms as each area is an important cog in our collective ability to tackle head on our supply issue.

Infrastructure must keep pace with growth

The connection between housing delivery and infrastructure emerged as another critical issue.

The Department emphasised that proximity to transport infrastructure was a key consideration in identifying areas suitable for increased density and highlighted ongoing efforts to coordinate housing growth with infrastructure planning.

At the same time, concerns were raised regarding development contributions, infrastructure funding and the increasing costs borne by developers and ultimately homebuyers. Some participants argued that existing contribution frameworks warrant review to ensure they support, rather than hinder, housing delivery.

We see this is a critical issue. Ultimately, contributions are passed onto consumers by developers. We acknowledge their importance, but it is a barrier to setting the high prices across NSW. This issue is exacerbated by developers passing on increased building costs.

Looking ahead

The LMR reforms are still in their early stages and it will take time before their effectiveness can be properly assessed. What is already clear, however, is that planning reform alone cannot solve the housing challenge.

The discussion reinforced a broader lesson for policymakers, councils and the development industry alike: successful housing delivery requires more than increased development rights. It requires economically viable projects, coordinated infrastructure investment, effective planning pathways and a regulatory framework that balances growth with community outcomes.  

The coming years will reveal whether the LMR reforms can achieve that balance. Their success is likely to depend not only on what planning controls permit, but on whether those controls translate into projects that are practical, feasible and capable of being delivered.

The reforms are creating new opportunities. That said, unless the feasibility issue is addressed, we won’t see a meaningful uplift in supply.

What is also clear from our discussions with our developer and local government alike is the need to somehow reconcile the differences between existing planning controls and LMR controls. Those existing controls were developed in the context of there being no LMR policy, with an intended outcome that differed to what is now sought. 

We will report further developments in this area as they arise.

Author: Dennis Loether

This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.