Update on the Draft Design and Place SEPP

Simplifying development, or another layer of complexity? 10 min read

The widely anticipated draft Design and Place SEPP (DP SEPP) has now been publicly exhibited and contains some surprising departures from last year's Explanation of Intended Effects (EIE), which we discussed in detail here. Although relatively short, the DP SEPP will bring significant change by implementing the updated Apartment Design Guide (ADG), draft Ministerial Direction, and new Urban Design Guide (UDG).

The DP SEPP is undoubtedly ambitious, but the question is whether it achieves the goal to ‘simplify and consolidate… good design in NSW'. We explore this below.

Key takeaways 

• As foreshadowed by the EIE released in early 2021, the DP SEPP will replace the State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development (SEPP 65) and State Environmental Planning Policy (Building Sustainability Index: BASIX) (SEPP BASIX).
• While the focus of SEPP 65 and SEPP BASIX is solely on residential development, the DP SEPP is intended to mandate design considerations for a much wider range of development types including those covered by the new State Environmental Planning Policy (Housing) 2021 (Housing SEPP). It is unclear how the DP SEPP will operate harmoniously alongside the Housing SEPP, which already imposes design considerations for various housing typologies.
• The DP SEPP introduces a mandatory ‘principle based’ approach to the assessment process with five overarching design principles, accompanied by 10 design considerations and a longer list of matters to be taken into account for each design consideration. To grant consent, authorities must be satisfied that the proposed development is not only consistent with the design principles but also meets the objectives of the ADG or the UDG (or both). Development applications (DAs) will need to be accompanied by a design verification statement to certify this is the case.
• Departures from the ADG and UDG are available in the form of an 'alternative solution', as long as the outcome is either neutral or more beneficial, and requires similar certification in a design verification statement.
• Increasing the focus on design review, the DP SEPP requires a design review panel to assess certain kinds of development, based on project location, type, capital investment value and site area.
• Sustainability is also a priority, with the view to meeting the NSW Government's goal of net zero emissions by 2050 and the Net Zero Plan Stage 1 by 2030.

What will the SEPP apply to?

The DP SEPP will apply to a wide range of developments, including mixed-use developments containing a component of residential accommodation, extending to seniors housing, and on sites greater than 1 hectare no matter what type of development is proposed.

The DP SEPP even extends to office premises, retail premises, hotel or motel accommodation and non-residential State significant development (with some exclusions), by prescribing energy and water use standards (although no other design considerations apply).

Certain development will fall outside the DP SEPP. This includes exempt and complying development, some State significant development and development on land in rural zones or zones IN3, E1, E2, E3, W2, W2 or W3.

Mandatory design considerations

The DP SEPP sets five design principles, from which design considerations are derived, each of which must be taken into account by consent authorities when assessing a DA.

The design principles and considerations are necessarily subjective. A consent authority must 'be satisfied' the development 'is consistent with' the design principles, otherwise consent cannot be granted. Their assessment must take into account a list of matters for each design consideration, as well as a design verification statement prepared by qualified professionals addressing the design principles.

Depending on the location, type, capital investment value and site area of the development, many DAs will be required to undergo review by a design review panel, according to a process established by a new Local Government Design Review Panel Manual. Applicants must prepare a design review report to demonstrate how they have considered the advice of the panel and justify any departures from it.

For some developments, not all the design considerations will be readily applicable. The DP SEPP is silent as to how a consent authority can be satisfied in this situation.

Apartment Design Guide

Since it was introduced in 2015, the ADG was only ever intended to provide guidance. However, the experience of many proponents is that some councils have rigidly applied the ADG provisions as if they were mandatory controls.

In response to this criticism, the DP SEPP now proposes to allow an alternative solution when a DA departs from the ADG, but only if the consent authority considers the outcome either neutral to or more beneficial than the ADG criteria. It remains to be seen how consent authorities will determine the neutrality or benefit derived from this solution, given the challenges implicit in measuring and quantifying design concepts.

There will also be a new legal test requiring consent authorities to be satisfied the development 'meets the objectives' of the ADG, otherwise consent cannot be granted. Even though the DP SEPP provides that the consent authority must apply the design criteria flexibly and consider alternative solutions, these provisions seem more akin to mandating compliance with the ADG, rather than ensuring its flexible application (as was always intended).  

Other key changes include:

• guidance to support a diverse mix of apartments (Part 2.3);
• external storage and studio balcony depth adjusted (Part 2.10 and 2.5);
• updates to sustainability measures – tree planting in deep soil (Part 1.5), bike parking (Part 1.6), shading of glazed facades (Part 2.6), waste storage (Part 3.3) and rainwater harvesting (Part 3.2);
• furniture layouts to support the assessment of non-standard apartment size (Part 2.4);
• clarification about the measurement of cross-ventilation, by way of a standard method of measurement (Part 2.7); and
• guidance on indoor common space types and ground floor uses (Part 1.4 and Part 2.2).

Urban Design Guide

As foreshadowed by the EIE, the DP SEPP proposes to introduce for the first time a UDG to guide the design of the overall site, referred to as 'urban design development'. Development will be subject to the UDG if it is on land:

• not within an industrial zone with a site area greater than 1 hectare; or
• within an industrial zone that has a capital investment value of $30 million or more and a site area greater than 1 hectare; or
• of any site area, if an environmental planning instrument requires a development control plan (DCP) or master plan to be prepared before consent is granted.

Given that a requirement for a site-specific DCP is common for larger sites and those in release areas, this last category is likely to expose many sites across various local government areas to the UDG.

Often, the requirement for a site specific DCP is satisfied by lodging a concept development application, as explicitly allowed under the EPA Act. However, doing so will not 'switch off' the UDG requirement under the DP SEPP as presently drafted, and it is unclear how a consent authority would be satisfied that  a concept DA 'meets the objectives' of the UDG.

Like the ADG, the UDG has been hardwired into the DP SEPP by requiring consent authorities to be satisfied that the development meets its objectives, otherwise consent cannot be granted. The same 'neutral or beneficial outcome' test applies to any alternative solution proposed for developments that depart from the UDG.

Other key concepts include:  

• maximum block size for walkability
• a '20-minute neighbourhood' target, looking to shorten the distances from homes, parks, schools, shops and public transport
• guidance for the development process to consider topography, movement systems and urban structures

Despite the alternative solution mechanism and provision for consent authorities to apply the UDG design criteria flexibly, this does not sit comfortably with the requirement that consent must not be granted if the UDG's objectives are not met.

Sustainability

Sustainability has come to the forefront in the draft DP SEPP with the incorporation of the BASIX SEPP, perhaps unsurprisingly, given the NSW Government's adopted policy position of achieving net zero emissions by 2050. To facilitate meeting this target, new measures have been introduced, including:

• all new homes and renovations over $50,000 must meet the BASIX sustainability requirements, which will be updated in late 2022
• increasing targets for energy use and thermal performance, mirroring the proposed increase in the National Construction Code
• a new requirement not to exceed maximum embodied carbon emissions (i.e. carbon emissions resulting from the materials used to construct the building, including extraction, manufacture, and transport of those materials)
• an alternative merit assessment pathway – recognised professionals will be able to complete a sustainability assessment using other accredited modelling software
• new standards for non-residential development, including targets for energy, water and waste. An applicant will need to consider how to avoid fossil fuel dependence and how to operate at net zero emissions
• certain developments, excepting BASIX-affected development, will need to submit a 'Net Zero Ready Statement'.

This is the first time an environmental planning instrument will impose a restriction on embodied emissions. Under the DP SEPP, development consent must not be granted to a BASIX-affected development unless the consent authority is satisfied the development is capable of achieving maximum embodied emissions of:

• 5 tonnes of carbon dioxide for each occupant of a 'prescribed residential accommodation' (attached dwellings, dwelling houses, dual occupancies, group homes, multi-dwelling housing, secondary dwellings, semi-detached dwellings, and seniors housing that is a group of independent living units)
• 4 tonnes of carbon dioxide for each occupant of residential flat buildings and shop top housing

In circumstances where the technology to measure and report on embodied emissions is still under development, it is unclear how developers will demonstrate that these standards are met.  

Next steps and transitional arrangements

• The DP SEPP, ADG, UDG and supporting documents have just concluded public exhibition. The Department is now considering submissions with the stated intention to make the DP SEPP in mid-2022.
• A transitional period will apply after the DP SEPP is made so it will not come into effect until the end of 2022.
• Under proposed savings provisions, the DP SEPP will not apply to:
  • DAs lodged but not yet determined before the commencement date
  • detailed DAs lodged under a concept development consent if lodged within two years after the concept development consent was granted
  • modification applications either lodged but not yet determined before the commencement date, or lodged within two years after the original consent was granted.

Please contact a member of our Environment & Planning team if you would like to discuss the implications of the proposed DP SEPP.