Building backlog with 40,000 homes in limbo as high costs and interest rates bite

Written by David Lovato – CPC Development Lending Solutions

June 2024

The construction of nearly 40,000 homes across Australia has stalled, despite the projects all having the necessary building approvals in place, according to a recent KPMG report.

KPMG’s analysis found that, as of 31 December 2023, over 37,000 dwellings had been approved in Australia but construction had not commenced. This figure represents a 9% increase compared to the previous five-year average. 

This increase is alarming, particularly as Australia grapples with a deepening housing supply crisis, characterised by rising prices and rent.

To make matters worse, the backlog is most acute in high-density dwellings such as townhouses and apartments, which are crucial for delivering housing at scale.

KPMG urban economist Terry Rawnsley said that, in Sydney and Melbourne alone, these types of dwellings constitute approximately 80% of the nearly 18,000 halted projects. 

 “There is always a lag between housing being approved and construction commencing, but current estimates show an abnormal number of dwellings sitting in this category, suggesting other market factors are stalling the pipeline of new builds,” he said.  

Rawnsley noted that Sydney has been particularly hard hit with more than 11,000 projects approved but not yet commenced in the most recent quarter.

“With the pool of newly approved dwellings falling, one might expect the pool of not yet commenced dwellings to be falling too, but it remained steady,” he said. 

Meanwhile, Melbourne had  6,840 dwellings pending as of December, one of its highest figures over the past five years. 

Brisbane and the ACT also reported significant numbers of stalled projects, with:

  • Brisbane seeing an 8% increase over its previous five-year trend
  • The ACT nearly doubling the number of approved but unbuilt dwellings from 864 to 1,772.

Why the stall?

Several factors are contributing to the delay in projects breaking ground. 

Foremost among them are skyrocketing construction costs, even though building materials price growth has levelled off since the pandemic highs.

However, labour and borrowing costs are through the roof with higher interest rates and robust wage demands from trades inflating costs significantly.

Simultaneously, rising interest rates have squeezed potential buyers’ purchasing power, further complicating the market dynamics.

As a result, many projects designed pre-COVID are now financially unfeasible as the cost increases have outpaced potential revenues. This problem is particularly pronounced in areas like western Sydney, a major hub for new housing developments, where new apartment prices are more constrained.

This economic squeeze is prompting developers to either shelve projects indefinitely, creating what Rawnsley terms “zombie approvals,” or to shift focus towards more profitable luxury developments, reducing the number of units in favour of higher returns. 

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.


Can modular housing solve Australia’s housing crisis?

Written by David Lovato – CPC Development Lending Solutions

May 2024

Australia’s soaring home prices and rental rates are increasingly placing housing out of reach for many. 

This crisis is being exacerbated by a growing population and a shortfall in housing supply, which the National Housing Supply and Affordability Council has recently forecast to continue widening in the coming years. 

One potential solution some experts including researchers at the University of South Australia (UNISA) and the University of Melbourne are increasingly championing is modular and prefabricated homes. They argue that this innovative construction approach could potentially transform the housing market by addressing the urgent demand for affordable, high-quality homes. 

Understanding Australia’s housing crisis

The root of Australia’s housing crisis lies in the simple economic principle of supply and demand. Despite the urgent need for more housing, construction rates have not kept pace with demand. 

For instance, building approval numbers in March were close to decade-lows, according to the Australian Bureau of Statistics.    

This shortfall has been attributed to various factors including high construction costs, regulatory barriers, and a shortage of skilled labour. 

Why modular homes could be the answer

Modular homes are constructed in a factory setting and then transported to the building site where they are assembled. This method offers several benefits that could help alleviate the housing crisis:

  • Speed of construction: Modular homes can be constructed much faster than traditional homes. Components are built simultaneously off-site while the foundation is prepared on-site, significantly reducing overall project timelines.
  • Cost-effectiveness: With controlled factory settings, modular construction reduces waste and can be more cost-effective. Bulk materials can be purchased at discounted rates, and the assembly-line process reduces labour costs.
  • Quality and sustainability: Factory settings allow for more controlled construction conditions, which can enhance the quality and durability of homes. Additionally, modular homes often incorporate energy-efficient designs and materials, supporting more sustainable living.
  • Flexibility and scalability: Modular buildings can be easily designed to meet diverse needs, from single-family homes to multi-storey apartment complexes, making them a versatile solution across various market segments.

Weather-independent construction

One of the lesser-discussed advantages of modular homes is their resistance to weather-related delays. 

Weather has been identified as one of the top causes of delays and subsequent cost increases in the building industry, affecting 45% of projects worldwide, according to UNISA. 

Modular construction largely circumvents this issue, as the majority of the building process occurs indoors. UNISA estimated the savings of this weather-independent construction to come in at approximately $40,000 on a build worth $6.4 million.

Financing challenges 

Despite their advantages, financing modular and prefab homes presents unique challenges.

Traditional lenders are often hesitant due to the unconventional nature of the construction method. 

Key issues include:

  • Funding release: Many lenders typically release funds for construction projects in stages, based on on-site progress. However, because a significant portion of a modular home’s construction is completed off-site, these regular progress checks don’t align with traditional funding models.
  • Security concerns: Lenders may also be concerned about the lack of physical collateral during the construction phase, as the property isn’t yet ‘on the land’ it will ultimately occupy.

Creative financing solutions

Fortunately, innovative solutions are emerging to bridge these financing gaps:

  • Amended payment terms: To align with the modular construction process, some lenders will agree to modify their payment terms. This can involve specific agreements to release funds based on different stages of off-site and on-site completion.
  • Using existing assets as security: Developers might use existing property as collateral to secure funding, providing lenders with the needed security to release funds earlier in the construction process.
  • Partnering with modular companies: Some developers and lenders are forming partnerships directly with modular construction companies. These partnerships can include pre-arranged financing agreements that accommodate the unique aspects of modular construction.
  • Specialised financial products: A few forward-thinking financial institutions have begun offering loan products specifically designed for modular construction. These products take into account the unique aspects of modular building, such as faster construction times and different risk profiles.

Engaging with lenders early

If you are considering a modular housing project, engaging with lenders early in the process is crucial. 

Discussing the modular construction model upfront will help lenders understand the process and, potentially, tailor their financial products to better meet your needs. 

Working with a specialist property development finance broker such as Crowd Property Capital can help you find the right lender open to more creative funding solutions.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.


Everything you need to know about NSW’s Transport Oriented Development Program


Written by David Lovato – CPC Development Lending Solutions

April 2024

New South Wales is grappling with a housing crisis that’s seen demand significantly outstripping supply, leading to skyrocketing property prices and tightening rental vacancy rates.   

This imbalance has made it increasingly difficult for many residents to afford suitable housing, prompting the NSW Government to seek innovative policy solutions. 

One such measure is the Transport Oriented Development (TOD) Program, aimed at increasing housing availability by developing areas around transport hubs.

Understanding the TOD Program

The TOD Program seeks to encourage the development of residential and commercial spaces around transport hubs, like train stations and bus interchanges. 

But it’s about more than just building near train stations; it’s about creating more livable, accessible, and sustainable urban environments. 

As such, the program focuses on two main components:

  • State-led rezonings near priority transport hubs: This involves the development of areas within 1,200 metres of selected transport hubs to maximise the use of public transport and reduce reliance on cars.
  • A new State Environmental Planning Policy (SEPP): Aimed at facilitating more mid-rise housing and mixed-use development within 400 metres of 31 well-located transport hubs and town centres. This policy aims to create denser, more diverse urban environments where people can live close to where they work and play.

The NSW government has identified 8 priority high-growth areas near transport hubs in greater Sydney for accelerated rezoning: 

  • Bankstown
  • Bays West
  • Bella Vista
  • Crows Nest
  • Homebush
  • Hornsby
  • Kellyville
  • Macquarie Park

The eight precincts will be rezoned between September 2024 to November 2024 to fast-track housing in these areas – with the ambitious target of creating capacity for up to 47,800 new homes over 15 years, all within walking distance of these stations.

Additionally, the state government will invest $520 million in community infrastructure within these precincts, such as critical road upgrades, active transport links and good-quality public open spaces. 

Why does it matter for developers?

These reforms present significant opportunities for property developers, including:

  • Increased development opportunities: The program creates more opportunities for new residential and commercial projects by opening up land around transport hubs. 
  • Enhanced marketability: Properties within walking distance of transport options are typically highly attractive to buyers and renters alike. As such, these developments are likely to enjoy higher demand and, potentially, better returns on investment.
  • Streamlined approvals: The program is part of broader planning reforms aiming to simplify and accelerate the development approval process. Faster approvals mean developers can move from concept to construction more quickly

Backlash and concerns

Despite the clear benefits in terms of increased housing supply and more efficient urban planning, the TOD proposals have faced some backlash. Critics argue that increased density could lead to overdevelopment, straining local infrastructure like roads, schools, and green spaces. There is also concern about the potential loss of local character and heritage in some areas, as well as the impact of construction on existing communities.

Residents and some local councils have expressed worries that the ‘one size fits all’ approach may not suit the unique needs and contexts of different suburbs. There are fears that rapid changes could lead to gentrification, pushing out existing residents due to rising property values and rents.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.


Who is responsible for building defects?


Written by David Lovato – CPC Development Lending Solutions

March 2024

Sydney’s Opal Tower might be the most high-profile case of an apartment block with severe structural problems, but it’s far from being the only one. 

In fact, a recent NSW Building Commission report found that 53% of apartments registered in the state from 2016 to 2022 have had at least one serious defect.

As a property developer, understanding who bears responsibility for building defects is crucial as it helps you manage risks effectively and ensure the project’s success. 

Understanding building defects

Firstly, it’s important to define what constitutes a building defect. 

Generally, it’s any aspect of the building that doesn’t perform to the required standards set out in your building contract, the National Construction Code, or relevant Australian Standards. 

These can range from minor issues like peeling paint, which are more cosmetic, to significant structural failures that can pose safety risks.

The developer’s role

As a developer, you play a pivotal role in the construction process, overseeing the project from conception to completion. 

While you might not be directly involved in the physical construction, you are ultimately responsible for engaging the contractors and professionals who are. 

This means that any defects found can indirectly fall on your shoulders. However, the extent of your responsibility can vary based on contracts, warranties, and the specific circumstances of your case.  

Builders and contractors 

The direct responsibility for correcting defects typically falls to the builders and contractors who carried out the work. 

Under Australian law, builders are required to warrant that their work is free from defects for a certain period — usually around 6 to 7 years for structural defects and 2 years for non-structural defects, depending on the state or territory.

It’s important for you as a developer to have clear, comprehensive contracts with your builders and contractors that outline their obligations regarding defect rectification. This not only ensures clarity but also provides a legal framework for resolving disputes should they arise.

Architect and engineers

Architects and engineers play a critical role in the design and specification of the project. So what happens if a defect is the result of poor design rather than the construction itself? 

Well, in such cases, the responsibility might lie with the engineering and design professionals, who are expected to provide designs that meet regulatory standards and are fit for purpose.

Material suppliers

The quality of materials used in construction also cannot be overlooked. After all, defective or subpar materials can lead to significant issues down the line, from cosmetic flaws to structural failures. 

Suppliers are expected to provide materials that comply with industry standards and specifications. Should a defect arise due to faulty materials, the supplier could be held responsible, again contingent on the terms of their supply agreement.

Dispute resolution

Disagreements over the responsibility for defects can sometimes escalate into disputes. In such cases, mediation and arbitration become important tools for resolution. 

There are also statutory bodies, such as the Building Commission NSW and the Victorian Building Authority, which can offer advice and assistance in resolving disputes over building defects. 

Engaging with these processes can be a constructive way to resolve problems without resorting to lengthy and costly legal battles.

Managing the process

The best approach to dealing with building defects is to mitigate the risks from the start. 

This involves:

  • Selecting reputable builders and contractors: Conduct thorough vetting, check references, and review past projects to ensure they meet your standards.
  • Implementing strict quality controls: Establish clear quality benchmarks and conduct regular inspections throughout the construction process.
  • Maintaining open communication: Foster a culture of transparency and open dialogue with your construction team to quickly address any issues that arise.
  • Understanding your legal obligations: Stay informed about your rights and responsibilities under Australian construction law and ensure all contracts are clear and comprehensive.

For property developers, navigating the complexities of building defects is part and parcel of the development process. 

While the responsibility for rectifying defects primarily lies with builders and contractors, remember you’re not just a bystander in this process. Your role involves orchestrating the various moving parts and ensuring that the project adheres to all regulatory and quality standards. This includes diligent oversight of the work being carried out by your contractors as well as the materials being used.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.


Five things lenders look for in a development finance proposal


Written by David Lovato – CPC Development Lending Solutions

Jan 2024


When a property developer applies for finance, the lender asks themselves one basic question: how likely is the applicant to repay the loan in full and on time?

To answer that question, the lender is going to pay close attention to everything from your financial statements to your exit strategy, so they can get a clear picture of both you and your project.

With that in mind, you and your broker should present your application in a way that makes it easy for the lender to review your scenario and understand its positive features. That will increase your chances of being approved and receiving the most favourable terms.

Here are the five most common things lenders look at with a property development finance application:

1. Your finances

The lender will take a close look at your financial statements, to understand what your financial position is right now and how it’s likely to evolve throughout the process.

You’ll need to prove you’ll have sufficient cashflow to pay your bills throughout the development project and meet your obligations to the lender. As part of that process, you’ll need to provide a feasibility study that lays out all your expenses and income – and, just as importantly, when those transactions are expected to occur.

2. Your project

The lender knows that the more successful your development is, the more likely its loan is to be repaid. So the lender will scrutinise:

  • The location, design and intended use of your development
  • The construction plan and schedule
  • The contractors and materials you plan to use

Naturally, the lender will want to see proof that you’re planning to comply with building, zoning and environmental rules.

The lender will also want to know how much demand your properties are likely to receive from potential buyers. So you’ll need to provide a market analysis; the more detailed and fact-based you make this report, the better it will be received.

You’ll also need to provide a document outlining the project’s potential risks and your plan for responding to them. Don’t make the mistake of omitting risks in an attempt to avoid scaring the lender; instead, be upfront, so you can prove you would be a safe pair of hands if problems occurred during the project.

3. Your exit strategy

To reassure the lender, you will need to explain:

  • How you will repay the loan – will you raise the funds through sales, through refinancing or in some other way?
  • When you will repay the loan – will you make one lump-sum payment at the end of the build or will you make a series of payments?

4. Your track record

As part of its due diligence, the lender will want to know what projects (if any) you’ve completed in the past and how similar they are to this specific proposal.

The more experience and success you can point to, the more creditworthy you’ll appear in the eyes of the lender.

5. Your security

If you were unable to repay the loan, the lender will need to know what recourse it would have.

That includes knowing what assets it could seize, how easy they would be to sell and what their resale value would be.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form.


How Australia’s new unfair contract regulations help protect small developers


Written by David Lovato – CPC Development Lending Solutions

December 2023


Effective from 9 November 2023, the Australian Consumer Law has been updated to prohibit unfair terms in standard-form contracts. Thanks to these changes, small business owners, including property developers, will be better protected against predatory lending practices. 

Understanding the changes

An unfair term is one that:

  • Creates a significant imbalance in the parties’ rights and obligations.
  • Is not necessary to protect the legitimate interests of the party advantaged by the term.
  • Would cause detriment (financial or otherwise) to a small business if it were to be applied or relied upon.

In the context of property development financing, this means that small developers will be shielded from terms that could, for instance, impose excessive interest rates or default charges that are disproportionate to the lender’s actual costs.

Previously, the courts could declare such terms void but could not penalise lenders for including them in contracts. 

However, under the new changes, businesses could face penalties up to the greater of:

  • $50 million
  • Three times the value of the benefit obtained, or 
  • 30% of the business’s turnover in the relevant period. 

Additionally, individuals, including company directors, could also face penalties of up to $2.5 million. 

This substantial financial disincentive is expected to encourage lenders to review and amend their standard form contracts to ensure compliance​​.

The definition of a small business has also been broadened. 

Any business with fewer than 100 employees or an annual turnover of less than $10 million is afforded these protections, which apply regardless of the contract’s value. This expanded scope means that more small property developers will benefit from the protections against unfair contract terms.

What this means for you

In practice, this means a more level playing field for small developers seeking loans. 

That’s because terms that once might have been buried in the fine print, like unfair interest rates or default charges, could now cost a lender dearly if they’re deemed to be taking advantage of a small business’ lack of bargaining power.

As a result, you can now have greater confidence when entering into loan agreements. Lenders will likely be more cautious and fair in their dealings, knowing that the cost of including unfair terms can be prohibitively high.

Tips for small developers

While these changes offer a new level of protection, it’s still important for you to be vigilant when signing contracts. 

This means:

  • Reviewing contracts carefully: Always take the time to read and understand the terms of any loan agreement. 
  • Seeking legal advice: If you’re unsure about any terms, it’s wise to consult with a legal professional.
  • Understanding your rights: Familiarise yourself with the Australian Consumer Law and the specific changes regarding unfair contract terms.

Finally, a knowledgeable finance broker who specialises in property development finance, such as Crowd Property Capital, can provide invaluable assistance when trying to get your project funded. 

A good broker can help you understand the complexities of loan agreements, guiding you through the terms to ensure they are fair and do not exploit your position as a small developer.

They can also help negotiate better terms and identify the most suitable lenders who adhere to ethical lending practices.

Crowd Property Capital is a property development finance specialist. We help property developers overcome their funding challenges by sourcing loans for land, construction and residual stock. Contact us at [email protected] or fill in this form. 

Lender in focus: LSH Credit


Written by David Lovato – CPC Development Lending Solutions

October 2023

When it comes to property development, every detail counts, and that includes your choice of lender. 

Enter LSH Credit, which specialises in providing finance for completed residential properties. While they typically offer loans of up to $5 million, they are open to considering deals above this threshold on a case-by-case basis, albeit with lower loan-to-value ratios (LVRs).

In this second ‘lender in focus’ article, we’ll shed light on LSH Credit’s unique offerings and why they could be the finance partner you’ve been searching for.

What makes them different?

What sets LSH Credit apart from the crowd is its commitment to transparency and ethics. This means you needn’t worry about hidden clauses, mysterious charges, or unwelcome interest rate surprises.

They also aren’t reliant on external investors but rather lend off their balance sheet with rates starting from the mid-8s on a 12-month term, alongside a 1% net establishment fee.

What’s their credit policy like?

For property developers considering LSH Credit, there are some key criteria to keep in mind. 

Firstly, they are generally willing to finance up to 65% LVR in the metropolitan areas of Melbourne, Sydney, and Brisbane. While they steer clear of construction and land bank deals, they will consider cash outs, refinances, residual stock, and acquisitions.

To apply, you’ll need a profit and loss statement and balance sheet spanning two years for profiling purposes. They also want to see a six-month business transaction statement to ensure ongoing business activity.

A streamlined application and assessment process

LSH Credit believes in upfront due diligence to minimise surprises. 

Term sheets are typically issued within 1-3 days, and formal approvals range from 1-5 days, depending on the deal’s size. 

Their assessment process focuses on the sponsor’s assets and background, the security’s location and quality, and the exit strategy for repayment.

Why choose LSH Credit?

Three key reasons stand out. 

LSH Credit:

  • Offer transparency and simplicity in their lending approach
  • Assess your application on its merits, rather than a one-size-fits-all approach.
  • Work closely with their existing borrowers, so can provide ongoing support throughout your property development journey

LSH Credit is a lender that ticks a lot of boxes; however, they may not be the right fit for you as a borrower. CPC has access to many lenders like LSH, so we can find you the right lender for your situation. 

Looking to get your property development project off the ground? CPC works with a broad range of lenders so can help you overcome any funding challenges. To confidentially discuss your options, contact David Lovato on +61 434 932 634 or [email protected].


Lender in focus: Jadig Finance


Written by David Lovato – CPC Development Lending Solutions

September 2023

As property developers, choosing the right financial partner can mean the difference between your project’s success or its stagnation. But navigating Australia’s crowded finance marketplace can be a complex and overwhelming task.  

To help, CPC Development Lending Solutions is profiling some of our lenders so you can understand what each brings to the table.

First up is Jadig Finance, a lender that specialises in financing projects below the $20 million mark. This includes everything from senior and mezzanine debt for site and development finance to property-backed investment lending. 

What makes them different?

As a family business, Jadig Finance puts a strong emphasis on transparency and building lasting relationships. So instead of viewing your project as a mere business deal, they are genuinely invested in your project’s success, setting the stage for a mutually beneficial partnership that delivers solid results.

This is a lender that, quite literally, takes business personally. 

As a result, they pride themselves on their flexible, pragmatic approach, which means they can offer bespoke funding solutions even in challenging scenarios. Thanks to their asset-class agnostic stance, they’re open to a broader range of projects, assessing each on its merits, rather than checklist criteria.

Speaking of which, Jadig Finance offers a credit policy that’s both transparent and respectful. Their experience-driven approach cultivates partnerships built on trust. 

Finally, we all know that, in property development, time is money. Recognising this, Jadig Finance has streamlined its assessment process, with most applications turnaround within 48 hours.

A final word

While Jadig Finance offers a compelling proposition, they won’t be the perfect fit for everyone as different clients have different needs. As such, there are scenarios where other lenders may be more appropriate. This is why CPC works with a broad range of lenders as it means our clients have access to lending solutions tailored to their unique requirements and project specifications.

To confidentially discuss your options, contact David Lovato on +61 434 932 634 or [email protected].


How property developers can avoid collaborating with builders on the brink


Written by David Lovato – CPC Development Lending Solutions

August 2023


Recent statistics from ASIC, the financial services regulator, show over 2000 Australian construction companies went into liquidation since mid-2021. That averages out to more than two companies every day. 

And it’s not just fledgling enterprises either, with notable names like Porter Davis Homes Group, Probuild, ABG Group and Condev among the casualties.

Australian Constructors Association (ACA) chief executive Jon Davis said the industry was in deep trouble, with firms entering administration at more than twice the rate of other sectors. 

“Building sector profit margins have fallen from around 3% to below 1% and liquidity has collapsed from 15% to below 5%. Most concerningly, over half of all large builders are now carrying current liabilities in excess of current assets— a technical definition of insolvency,” he said. 

“The building industry is a textbook example of market failure.”

Given this, you might be wondering if there is anything you can do to avoid working with a builder who might go bust during the project. 

Well, while nothing is ever guaranteed, there are steps you can take to minimise risk

1. Do your due diligence

Before signing on any dotted line, conduct a thorough background check on the potential builder. Investigate their trading history, past projects, and any media coverage. A simple online search can reveal a wealth of information, including any red flags or controversies. 

2. Run credit checks 

You can investigate a builder’s payment history with suppliers and subcontractors by getting a report from credit agencies, such as Equifax, illion and Experian. Delayed payments or defaults are often an early warning sign of financial trouble.

3. Talk to previous clients

Nothing beats talking to others who’ve worked with the builder. Ask them candidly about their experience. Were there any delays? How did they handle problems? Would they hire them again? This can give you a real insight into how the builder operates.

4. Avoid lowest-bid temptations

While it can be tempting to choose the cheapest bid, this might mean compromising on quality and reliability. Balance the cost with other factors like experience, reputation, and financial stability.

5. Assess their supply chain strength

 A builder’s financial health isn’t only about their immediate finances. If they’re reliant on a supply chain that’s struggling, it could affect your project. Ask about their suppliers, their payment terms, and any contingencies in place for disruptions.

6. Understand their business model 

A builder’s business model should be sustainable and not overly reliant on one or two large projects or clients. Diversification in projects and clientele often indicates a more resilient business.

7. Don’t pay upfront

To reduce financial risks, set clear milestones for payments rather than large upfront sums. This ensures you’re paying for completed work and provides an incentive for the builder to maintain timelines.

8. Build long-term relationships

Foster long-term relationships with trusted builders. As you collaborate on multiple projects, you’ll get a better sense of their reliability and financial stability. This familiarity can act as a buffer against potential risks.

9. Consult with experts 

Last, but by no means least, engage with professionals who have their finger on the pulse. As a broker specialising in developer loans, Crowd Property Capital can offer you valuable advice on financial risk management.

CPC Development Lending Solutions can help you get your next project funded. To confidentially discuss your options, contact David Lovato on +61 434 932 634 or [email protected].


Fast-tracked planning approval pathways in NSW


Written by David Lovato – CPC Development Lending Solutions

July 2023


Greater Sydney is in the midst of a housing supply crisis, with the city facing a projected shortfall of 134,000 dwellings over the next five years. 

To tackle this, the NSW government is reforming the planning system so that it incentivises developers to build affordable, high-density housing.

Under the changes, housing developments valued at more than $75m, which include a minimum of 15% affordable housing, will gain access to a new State Significant Development pathway, meaning planning decisions will be made faster.

Developers will also be able to build 30% higher and add 30% to the floor space to land size ratio than local environment plans allow, as this fast-tracked planning pathway pulls the approval process out of the local council’s control.

But what about smaller projects? 

After all, getting local council planning approval for a development project can be a complicated, expensive and time-consuming process, regardless of its size, as:

  • Every council has different local planning rules and regulations
  • Every council interprets statewide planning laws in its own way

Fortunately, the Low Rise Housing Diversity Code (formerly known as the Low-Rise Medium Density Housing Code) can be used to ‘sidestep’ the local development pathway.

Here is how it works. 

A fast-track approval pathway

The Low Rise Housing Diversity Code was introduced by the state government to promote the construction of diverse and affordable housing options in low-rise residential areas.

It does this by creating a fast-track approval pathway for the following property types:

  • Dual occupancies
  • Terraces
  • Manor houses

This means that as long as the proposal complies with the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008, you can receive approval in as little as 20 days, giving you planning timeframe and outcome certainty. 

What do you need to know about the code?

The code applies to eligible residential lots located in areas zoned:

  • R1 (general residential)
  • R2 (low-density Residential)
  • R3 (medium-density residential)
  • RU5 (village)

These areas generally consist of established neighbourhoods and urban environments where low-rise housing can be integrated seamlessly. 

Some exclusions do apply though, including:

  • State or locally-listed heritage items and heritage conservation areas
  • Land reserved for public purposes 
  • Environmentally sensitive areas.

Housing types under the Code

As mentioned, the Code allows for the fast-tracking of dual occupancies, terraces, and manor houses. 

Dual occupancies refer to two separate dwellings located on the same lot, that can be attached or detached. 

Terraces allow for up to three dwellings on a single lot. These dwellings must front a public road, with no other dwellings located above or below.

A manor house is a building containing between three and four dwellings that is up to two storeys in height (excluding any basement). Each dwelling is attached by a common wall or floor with at least one dwelling fully or partially located above another dwelling.

Lot sizes and development standards

To comply with the code, proposed developments need to meet the minimum lot size requirements:

  • Dual occupancy – the size of the lot being developed must meet the minimum lot size required to build a dual occupancy under the relevant council’s local environmental plan (LEP). If the LEP does not specify a minimum lot size, the Code applies a minimum 400m2 lot size.
  • Manor houses – a minimum 600m2 lot size requirement applies.
  • Terraces – the size of the lot being developed must meet the minimum lot size required to build multi-dwelling housing under the relevant council’s LEP. If the LEP does not specify a minimum lot size, the Code applies a minimum 600m2 lot size.

There are also specific criteria related to building design, setbacks, landscaping, privacy, and parking.

CPC Development Lending Solutions can help you get your next project funded. To confidentially discuss your options, contact David Lovato on +61 434 932 634 or [email protected].