'Apartment' should not be a dirty word

‘Apartment’ should not be a dirty word.

I say that having lived in apartments in #sydney for the better part of 14 years.

I’ve lived in shop top housing, red brick walk-up apartment buildings, art deco apartment buildings, high-rise apartment buildings in urban renewal areas, low-rise apartment buildings in heritage conservation areas, apartment buildings that were designed by award winning architects, and apartments that were *cough* almost not legally habitable. I have lived in a studio apartment, a 1 bedroom apartment, 2 bedroom apartments, and 3 bedroom apartments. I have lived with and without a balcony, with and without car parking, with and without ‘communal amenities’.

For context, I have also lived in freestanding houses and terrace houses, so apartments are not all that I have known but I like to think by now I know them quite well.

Why so many apartments? I was a renter in Sydney for 12 years and anyone who has experienced the private rental market will know that rental security is hard to come by – but that is an issue for another day, though it likely colours why I am such a supporter of ‘#buildtorent housing’ in Australia.

In my professional life I often work on behalf of developers who may be looking to secure development consent to build apartments. Having done this for 12 years though, I can say plainly that it is getting harder. It is getting harder when it is increasingly more important to build apartments. The Housing Australia (2023) projects there will be a housing shortfall in Australia of 106,300 dwellings between 2022 and 2027, equating to an annual deficit of over 21,000 per annum, much of which should be delivered in the form of apartments. Over half of councils in Greater Sydney did not meet the (then called) Greater Sydney Commission’s five-year target for homes to be delivered between 2016 and 2021, to no penalty.

It is becoming increasingly difficult to initiate apartment developments and consequently increase housing supply. This challenge stems from various factors, not solely the complexities of the NSW planning system, which often bears the brunt of the criticism, whether justified or not.  Other factors include increased construction costs, tightening of lending requirements, slowing off the plan sales, increases to interest rates– the list goes on. I also don't deny also the impact of high profile defect cases impacting public sentiment, dominating the media at the expense of all the amazing developments that don't grab headlines. While many will point to fiscal or monetary policies as being arguably more impactful to the delivery of new housing supply, and influencing Australia’s housing affordability crisis*, I prefer to focus on what I can reasonably influence. That is streamlining the planning system to make it easier to approve the construction of new housing, particularly apartments.

* When I say Australia’s housing affordability crisis, I mean not only the fall in housing ownership rates but the significant crisis in unmet demand for social and affordable housing, rental insecurity and unaffordability, mortgage unaffordability, and generational crisis where a young persons’ ability to purchase a home increasingly depends on the wealth of their family. It is simply too big of an issue for one lever alone to resolve.

Quite frankly I see little downside in making the NSW planning system more streamlined to support the delivery of new housing supply, provided that the land is serviceable, the system maintains a minimum level of design and amenity standards, and the external impacts of such developments are manageable and reasonable (note I have not said impacts are ‘minimised’). The only downside appears to be public outcries of “dog boxes” or “shoe boxes” (terms I have read in public submissions) being built in an area, and these cries driving authorities to support only the minimum number of new dwellings that that they ‘have to’ under political pressure.

I have heard from other urban planners that any reform or ‘stripping back’ of the NSW planning system would cause worse design outcomes, be ‘less democratic’, or that streamlining the planning system to the “benefit of developers” would undermine the public’s faith in planning as a profession representing the public interest. I would argue though that the current planning system isn’t working for anyone.

It isn’t working for local communities, who in my experience have very reasonable concerns about the lag in infrastructure (including social infrastructure) delivery with new housing supply and population growth, unpredictable built form outcomes, and a lack of influence in shaping outcomes in the legislated public exhibition process. I believe it isn’t working for my colleagues working within local councils or the state government in assessment roles, who appear in many instances to be overworked managing an exorbitant number of applications and working with understaffed internal technical departments. And finally, it sure is not working for developers, nor in many instances the future residents of these developments.

While some in the community may argue ‘developers can do what they like’ in NSW, I can assure you having worked through these applications that is not the case. Getting through the hoops that must be addressed to win development consent are complex. In fact, I have often laugh at the media reporting the issue of a development consent as ‘this developer has WON an approval’, like it was by chance and not the efforts of tens if not hundreds of people.

So what can the NSW planning system do to make it easier to deliver new housing supply?

The NSW planning system does not actually build new apartments, and it cannot demand that something is built. This is important to recognise because in Australia we are heavily reliant on the private sector to actually deliver the housing to provide shelter to our growing population. A population which is growing to address many labour shortages in this country, a slowing productivity growth rate, and demographic challenges which mean that we are increasingly reliant on a smaller number of people to support our aging population. Rather than “deliver housing”, the statutory planning system can incentivise certain development being delivered, and either disincentivise or ‘stop’ certain development from occurring. It is a framework that can make it harder or easier to deliver housing, but it cannot legislate it into being. That may be the role of other parts of government, but not to get confused, the planning system does not actually deliver apartments.

This doesn’t mean that the NSW planning system doesn’t have a role to play in addressing the housing affordability crisis, in its own way. Given the scale of the affordability crisis surely any incremental improvement should be supported and not berated as ‘a small part of the problem’. The planning system can use its levers to make it easier for developers, or the Government or community housing sector, to deliver the right housing, in the right locations.

Changes have previously been implemented to the NSW planning system during the COVID pandemic and in response to environmental crises, nimbly and efficiently. We can again be agile and use the same levers to respond to this crisis.

In the absence of wholesale reform of the NSW planning system (which for the record, I am all for doing if there is the political support to get a new Act through Parliament), here are four current initiatives being implemented which from my perspective are a great step in the right direction for improving the planning system to support housing delivery and in particular new apartments:

1.    Additional funding for council planners – Over the past couple of years the NSW Government has through the Planning Delivery Unit implemented programs for “fly-in squads” of planners to aid understaffed councils in assessing backlogs of housing applications. This has had a tangible impact on the ability of certain under-resourced councils to determine housing applications. A sustainable and longer-term solution though is needed to incentivise both more students to study urban planning, and more planners to work in assessment roles in local government.

On 19 May 2023, the NSW Government announced the Strong Start Cadetship program which aims to cut down development application (DA) backlogs and speed up planning assessment timeframes in about half of NSW's local government areas. This program will make funding available to NSW councils to pay a portion of young planners’ tuition fees, to address skills shortages. As Minister Scully has recently said to Parliament "urban planning is one of the great occupations of the future". This has the potential to build the capacity of councils in the long term and is commended. However, in my experience there are not only shortages of planners within councils but also in the internal technical teams such as traffic engineering, waste management and so on that also significantly impact DA timeframes.

2.    Reform design review processes – The NSW Government Architect has in May 2023 addressed the issue of long waits (4+ months) for a mandatory (for many projects) meeting with the State Design Review Panel (SDRP). The recent changes to increase the threshold for referral to the SDRP is to be commended, though in my view more should be done. The target 12 weeks is still an exceptionally long wait time to have a project reviewed by design review panel.

3.    Build-to-rent provisions – NSW was the first state in Australia to recognise Build-to-Rent (BTR) housing as a distinct asset class of housing within the planning system, including planning provisions for BTR in the (now called) State Environmental Planning Policy (Housing) 2011. The NSW Department of Planning and Environment have held firm in their policy position, despite some pushback from local councils, in permitting BTR housing in the E2 Commercial Centre and B3 Commercial Core zones where other housing may be prohibited. I am hopeful with the recently announced halving of the managed investment trust withholding tax rate for BTR from the Federal Government that NSW will start to see a greater influx of new BTR projects in the state.

4.    Reform in the infrastructure contributions system – Long since it was first conceived, a Bill was introduced in May 2023 into the NSW Legislative Assembly to implement the next stage of infrastructure contribution reform, being the imposition of ‘Housing and Productivity Contributions’ (HAPs).

If passed, the HAPs will come into effect from 01 October 2023. Contributions will be levied on most development in Greater Sydney, the Lower Hunter, Central Coast, and the Illawarra-Shoalhaven (some exemptions will apply) and used for the purposes of regional infrastructure which includes public amenities or public services, affordable housing, transport infrastructure, regional or State roads and measures to conserve or enhance the natural environment.

By improving the transparency of infrastructure contributions, developers are more readily able to manage land valuations and costs, and communities will receive funding for infrastructure to support growing populations and increased housing supply. However, with an increased layering of contributions – a cumulative assessment of development feasibility and consistency should be monitored to ensure contributions are transparent, predictable, simple to understand, and are implemented with appropriate transitional provisions to enable land prices to reflect the cost of delivering new housing.

Again, in the absence of wholesale planning reform, what more can be done within the NSW planning system to make it easier to deliver new housing and in particular new apartments in NSW? I personally would like to see more action and initiatives taken to:

1.    Implement stronger and higher housing targets for local councils in the next review of the existing District/City Plans currently being prepared by the Greater Cities Commission. Given the wording of the enacting legislation for the Commission required to set new housing approval targets, I would like to see these housing targets at least 30% higher than population growth forecasts. I would like to see new housing approval targets that are ambitious, because knowing that they won’t all be delivered as housing on the ground, we should look to support new housing developments where they make sense, and not just because ‘we have enough suitably zoned land “over there” in an area where developers may not wish to develop, may not yet be able to develop due to lack of suitable infrastrucutre, and/or people may not wish to live.

2.    Relax density standards in existing urban areas, where housing developments achieve a built form that reflects the articulated future desired character of an area. There are many examples in NSW where maximum floor space ratios (FSR) and maximum height of building development standards do not align. Further there are many examples of FSR and maximum height of building development standards being set based on an existing built form and not a desired character or scale.

I can say working through site-by-site applications which propose variations to one or more development standards that they are often caused not by a developer ‘being greedy’ but by a developer trying to deliver a housing outcome that aligns with one or more controls and a prevailing or desired urban design character of an area. Yet the assessment framework to suggest such a variation is met with an incredibly legalistic clause 4.6 variation test, or very opaque and complex planning controls which tend to lead to long assessment timeframes (the average timeframes have blown out from 69 days in July 2021 to 116 days in March 2023) for very similar outcomes.

3.    In order to significantly reduce planning approval timeframes, remove the need for concept or staged applications where a development control plan sets clear numeric standards for building setbacks, building heights, and other clear limitations for development (such as maximum floorplate controls). Concept DAs are a very useful tool in establishing building envelopes for new large-scale developments, especially in urban renewal areas or large green and brown field sites. However, there can often be duplication in Concept DA conditions that are otherwise managed through development control plan guidelines which are required to be addressed in the Detailed (or Stage 2) DAs. Removing this requirement from appropriate sites could alone reduce the timeframe for the approval of apartment developments by 9-12 months.

Finally, I would like to see more effort in changing the narrative of apartments being a dirty word. I have said to clients of mine before who have wanted to develop sites for residential “oh council won’t support that”, or “that will be an uphill battle if you want to include any residential”. I say this to be practical, and to mitigate risks for my clients, not because I don’t support residential on their sites.

There has been a push in recent years to support employment generating uses in the Eastern Harbour City and the Central River City in Sydney to the point that proposing apartments in a development can be considered risky, wicked, and ‘pushing the boundaries’. To increase housing supply at the scale needed to support our population we need to support and incentivise new apartments everywhere on sites that are close to public transport, close to amenities, close to educational establishments. Incentivise residential development, rather than dis-incentivise or severely restrict it on the grounds of ‘minimising’ impacts to the few. I believe in managing impacts to ensure that any adverse impacts on existing residents are reasonable and are outweighed by benefits of development to existing surrounding residents, future residents, and importantly future generations.

We should support new apartment developments that also have a dentist, a cycle studio, a costume shop, a café, a gallery, or a rum distillery on the ground floor (full disclosure I have lived above every single one of these uses) which can also be used by the surrounding community. I support planning controls that allow residential apartments where and only where (for example) a recreational facility, affordable housing, childcare, or a medical facility is provided as part of that development – provided the expectations are known early and up front. Incentivise the delivery of what a community may desire by allowing more apartments in suitable locations.

Explain the benefits of increased infrastructure contributions levied on new development to existing communities. We should support new apartment developments where the local infrastructure contributions and housing and productivity contributions will help fund the delivery of new parks, affordable housing, transport infrastructure, and measures to conserve or enhance the natural environment.

Building apartments isn’t a dirty business, they are the homes that I and over 16% of all Australians live within. Developers (and investors including superannuation funds) make money building apartments, sure, but unless there is a wholesale change in the way new housing supply is delivered in Australia, we will continue to rely on the private market to deliver housing to accommodate our growing population. While we can point to fiscal and monetary levers and say ‘well they too can impact housing affordability’, we should be in agreement that Australia needs to, among other things, increase new housing supply to address housing affordability. As planners, I hope that we can be more ambitious, challenge the status quo and look at opportunities to deliver new apartments and housing wherever possible. We should strive to achieve more than the bare minimum.

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