Bad news for Developers and for home-buyers
The decision in Botany Bay City Council v Botany Development Pty Ltd (No 2)  NSWLEC 55
On 9 April 2015, the Land and Environment Court of New South Wales handed down a decision which has negative implications for both developers and home buyers and which will potentially impact residential development projects across all of New South Wales.
This decision surprised much of the industry and has come at a time where the affordability of housing and the housing shortages in New South Wales are a hot topic.
By way of background, Botany Bay Development Pty Ltd (Developer) made an application for development consent to Botany Bay City Council for a residential development consisting of approximately 158 apartments. The proposed apartment sizes of the 1 bedroom apartments were between 50.7 square metres and 67.5 square metres and did not meet the minimum standards set out in Botany Bay Development Control Plan (DCP), notwithstanding that the apartment sizes exceeded the “Rules of Thumb” contained in the Residential Flat Design Code (RFDC).
The issue here was the interpretation of State Environmental Planning Policy (SEPP) No 65 – Design Quality of Residential Flat Development.
The Developer argued that clause 30A(1)(b) of SEPP No 65 prevented Botany Bay City Council from refusing consent to the development application on the basis of the size of the apartment area as the minimum sizes set out in the “Rules of Thumb” in the RFDC were exceeded (notwithstanding that the minimum size requirements of the Botany Bay DCP were not met).
Clause 30A(1)(b) of SEPP No 65 generally provides that a consent authority must not refuse consent to a development application for the carrying out of residential flat development on the grounds of apartment size if the proposed area for each apartment is equal to, or greater than, the recommended internal area and external area for the relevant apartment type set out in Part 3 of the Residential Flat Design Code.
The Residential Flat Design Code, which is referred to in clause 30A(1)(b) of SEPP No 65, provides two different sets of sizes of apartments. There is a table of the RFDC which specifies internal and external areas for nine different apartment “types”, and there are “Rules of Thumb” which provide for the areas of 1, 2 and 3 bedroom apartments. Generally speaking, the Rules of Thumb are far more favourable for Developers (particularly in this case, where the Developer would have satisfied the “Rules of Thumb”) than the standards set out in the table.
The Court found that the table specifying apartment “types” was the correct benchmark in connection with the interpretation of clause 30A(1)(b) of SEPP No 65. It follows that the Developer was ultimately unsuccessful.
Forcing developers to make apartments larger creates problems for both developers and home buyers. Although bigger apartment sizes may result in better comfort and amenity for occupiers, forcing developers to provide larger apartments results in higher development cost ratios, less favourable feasibilities for projects and (to the detriment of buyers) higher apartment prices in order to account for the feasibility issues.
If you have any queries regarding this article, please contact Peter Carkagis or Steven Spyros on +61 2 9222 8000.