NSW has just been through the biggest planning shake-up in more than 30 years. If you own residential property in Greater Sydney, the Central Coast, Newcastle or the Illawarra, there's a reasonable chance the rules about what you can build on your block have changed — and most people don't know it yet.
Here's what the Low and Mid-Rise Housing Policy actually means, and how to work out whether it applies to you.
The missing middle
For a long time, NSW planning created a strange gap in our housing options. Freestanding houses on one end. High-rise apartment towers on the other. And almost nothing in between.
Terraces, townhouses, small apartment buildings — the housing forms that make suburbs like Newtown, Balmain and Surry Hills so liveable — had quietly been made impossible to build again across most of the city. Only two of 33 Greater Sydney councils allowed terraces and townhouses in low-density residential zones. Residential flat buildings were banned in 60 per cent of medium-density zones.
It was a planning system that preserved the look of older neighbourhoods without allowing anyone to actually recreate them.
The Low and Mid-Rise Housing Policy is the state government's attempt to fix that.
What changed, and when
The reforms came in two stages.
Stage 1 started on 1 July 2024. It unlocked dual occupancies and semi-detached homes across nearly all R2-zoned land in NSW — state-wide, not just near transport.
Stage 2 started on 28 February 2025, and it went further. It applies to residential land within 800 metres walking distance of 171 nominated town centres and train, metro or light rail stations. Inside these areas, terraces, townhouses, residential flat buildings and shop-top housing became permissible in zones where they'd previously been off the table.
But the more important change isn't just what's now allowed. It's how those applications get assessed.
The policy introduced non-discretionary development standards — floor space ratios, building heights and lot sizes that apply regardless of what your council's local plan says. If your development meets these standards, a council can't use those matters as grounds for refusal. That's a real shift in how the system works, and it's the part both applicants and councils are still getting used to.
Does it apply to your property?
This is where it gets complicated — and where we spend a lot of time with clients.
The NSW Planning Portal has an indicative map, but it's a starting point, not an answer. The 800 metres is a walking distance measurement, not a straight line from a station entrance. The actual boundary on your street might look quite different to what you'd expect on a map.
Beyond location, individual site constraints can change the picture significantly. Heritage listings, flood-prone land, bushfire-prone land and contaminated sites can all affect whether and how the policy applies. Heritage conservation areas are a particularly nuanced case — the policy does apply, but development still requires council assessment, and councils are handling this very differently across the city.
Some areas are excluded from Stage 2 altogether. The Blue Mountains, Hawkesbury and Wollondilly LGAs are out due to bushfire and flood risk. Transport Oriented Development areas operate under their own separate controls.
It's also worth knowing that not all councils have welcomed these reforms. Woollahra Council tried to have the policy suspended in parts of Rose Bay, Double Bay and Edgecliff. They didn't succeed — but it's a sign that the political environment around these changes is still live.
What it means depending on where you sit
For homeowners, the question we hear most is whether you can now build more than a single dwelling on your block. In many cases — if your land is in an affected zone and within the 800m catchment — the answer may now be yes. A terrace pair, a small apartment building, a dual occupancy where one wasn't possible before.
For developers and investors, the policy has unlocked sites with new medium-density potential. Land values in affected areas are already moving to reflect this, which is something to factor in if you're acquiring rather than working with land you already hold.
For strata committees and managers, the reforms may feel less directly relevant — but they're worth understanding. Neighbouring properties may now carry different development potential, and that can flow through to overshadowing, parking, traffic and future strata contexts in ways that are worth being across.
The opportunity is real — but so is the complexity
We've had clients come to us with sites they assumed were stuck at single-dwelling use, only to find they now have genuine medium-density options under the new rules. The policy has created real opportunity for a lot of Sydney landowners.
But it doesn't make every site viable. Land values in the catchment areas have moved. Construction costs are what they are. And individual constraints don't disappear because the zoning rules have changed.
What we always recommend is a proper planning assessment before you commit to a design, a purchase, or even an architect brief. A site that looks borderline on the indicative map can sometimes have more potential than expected — and a site that looks straightforward can have constraints that change the picture completely.
If you're trying to work out what the new rules mean for your property, we're happy to take a look.