NSW Planning Reform: Build-to-Rent (BTR)

Build-to-rent (BTR) housing is part of the NSW Government’s strategies to diversify and increase housing availability. Build-to-rent housing refers to “large-scale, purpose-built rental housing that is held in single ownership and professionally managed.”

Build-to-rent housing is designed with the intent to rent rather than sell at completion. It is suited for long-term tenancies as a secure accommodation. Build-to-rent developments are usually owned and managed by institutional investors as long-term assets with regular income generated via the leases.

The Details

Build-to-rent housing is not a specific defined term in the NSW planning system. Instead, a BTR project is usually delivered within the definitions of "multi dwelling housing", "residential flat building", or "shop top housing" in LEPs. Therefore they can already be built wherever these land uses are permitted.

Since February 2021, there have been special planning rules (in the Housing SEPP) to encourage more BTR housing to be delivered. These provisions apply only to specific projects that have:

• At least 50 dwellings rented to tenants;
• All dwellings on the same lot, e.g. not subdivided as strata;
• A sole owner and sole managing agent;
• A commitment to not subdivide the tenanted dwellings for at least 15 years (in most zones) or in perpetuity (in business/CBD zones).

For such projects, the provisions state the following:

• Permitted anywhere that residential flat building is currently permitted, plus any E2/B3 Commercial Centre, MU1/B4 Mixed-Use, or SP5/B8 Metropolitan Centre zone;
• Can automatically use the full available maximum building height and FSR in the LEP, regardless of DCP height or bulk controls;
• Within Greater Sydney, cannot be required to exceed 0.2 car spaces per dwelling if near public transport stations and 0.5 car spaces per dwelling elsewhere, or any lower rate in the LEP;
• Outside of Greater Sydney, cannot be required to exceed the specified minimum car parking in the LEP/DCP;
• Active street frontage required if in a business zone;
• Consent authority mandated to "be flexible" in applying the Apartment Design Guide to encourage useful common spaces and ensure dwellings are suited for long-term residency;
• Can be approved as state significant development (SSD) when the capital investment value (CIV) exceeds $50 million for the Greater Sydney (excluding City of Sydney) and Central Coast regions, or $30 million for all other locations.

The major benefits in these special planning rules are expanded permissibility in business centres, flexibility with the Apartment Design Guide, potentially reduced car parking requirements within Greater Sydney, and the SSD pathway for larger projects to be approved by the State rather than Councils.

Furthermore, these projects are also eligible for a 50% land value reduction for tax purposes.

PropCode’s Database

At PropCode, our platform excels in aiding users to comprehend planning reforms like this one. With an expansive repository of planning documents, maps, and property data, we saw this as an intriguing case study to analyse further.

How many properties are affected by these special BTR provisions? To answer this question, not only does it require spatial data, such as lot boundaries and planning maps, but it also necessitates an understanding of existing permissibility from across all LEPs in NSW. This case study becomes both a spatial and text-based exercise that PropCode’s database can easily navigate through.

Impact of the Provisions

For analysis with PropCode's database, the most interesting part of the special BTR provisions is the additional permissibility in business/CBD zones. We have conducted a preliminary analysis of which specific locations benefit from this new permissibility.

We compared lot boundaries against existing planning maps for zones, FSR, height, and heritage as well as the current LEP permissibility for residential flat buildings and shop-top housing. This allows us to quickly identify not just broad zones but also specific lots that could contain at least 50 dwellings to qualify for the BTR provisions. We considered both FSR and height controls to get a rough estimate of dwelling capacity per lot assuming 100% of GFA goes toward BTR.

The table below shows where these lots with new permissibility for 50+ BTR dwellings can be found, excluding heritage-affected lots:

With the new permissibility of the provisions, these 287 lots could accommodate up to 60,000 dwellings in these generally dense well-connected centres. All of these lots were found in an existing E2 Commercial Centre zone that does not otherwise allow any of the residential building types for BTR.

It is important to note that these lots do of course contain existing buildings and may never redevelop to BTR. In fact, many of the identified lots are existing Westfield shopping centres in places like Eastgardens, Bondi Junction, Parramatta, and Hornsby. These centres could now consider adding BTR dwellings if they have unused space in the FSR and height controls.

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