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Ways to increase yield of a development site - Affordable Rental Housing SEPP

There are a few loopholes in the NSW planning system that allow a developer to gain a greater yield for a site than would otherwise by permitted under the standard planning controls (the LEP and DCP). One of these loopholes is the affordable rental housing SEPP.

Some of the options made possible under this policy that I will explore in this post include the following:

- Infill affordable housing

- Secondary dwellings (granny flats)

- Boarding houses

Let's look at these in detail:

Infill affordable housing

This is a type of development where at least 20% of the floor area must be set aside as affordable housing and managed by a registered community housing provider for at least 10 years. As an offset for this, a developer is entitled to a bonus in the amount of floor space that can be constructed on the site (depending on the percentage of affordable housing) and a reduction in the amount of car parking required compared to most Council standards. There are also consistent standards for dwelling size, landscaping and solar access and the development can only be undertaken on certain sites in accessible areas.

In practice, this type of development was much more advantageous when the policy was first introduced, although a series of amendments have watered down its effectiveness, meaning that it is now mostly only used by community housing providers.

Secondary dwellings (granny flats)

The policy provides that a granny flat of up to 60 square metres can be constructed on most lots in residential areas with a size of at least 450 square metres. Quite often, the granny flat can be approved by a private certifier, avoiding the need to obtain approval from the local Council.

Boarding houses

The policy provides that a boarding house development can be constructed on most land zoned residential. A series of standards are provided that in many cases are more generous than local planning controls with regard to floor space, car parking, private open space and accommodation size.

Standards are also provided with regard to landscaping, solar access and the type of facilities that need to be provided in a boarding house development. While boarding house developments did decline for a number of decades after the strata titles act came into effect, in recent years there has been a resurgence in boarding house developments throughout Sydney as a result of this policy.


In many cases, the affordable rental housing SEPP can provide good options to increase the yield of a development site. For any further enquiries about how the policy may be applied, feel free to get in contact.

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