NSW Low and Mid-Rise Reforms: Dual Occs and Terraces Expand

As of Friday 28 February 2025, the second and much bigger stage of the NSW Government’s Low and Mid-Rise Housing Policy is live. If Stage 1 last July quietly opened the door to duplexes across most of the state’s low-density zones, Stage 2 kicks it wide open: within 800 metres walking distance of 171 nominated centres and stations, dual occupancies, terraces, townhouses and low- and mid-rise apartment buildings are now permissible across the residential zones, backed by state-set development standards that councils cannot use as grounds for refusal.

For small and mid-sized builders across Greater Sydney, this is arguably more useful than the headline-grabbing TOD apartment reforms, because it works at the scale you already build: two dwellings on a suburban lot, a row of terraces on a wider one. But the reforms change planning permissibility, not physics. Two or three roofs on a lot that used to hold one still have to drain somewhere, and the councils assessing these applications will be looking hard at exactly that. Here is what the reforms say, what they mean for your pipeline, and the engineering realities that decide whether a compliant-looking lot is actually a buildable one.

The two stages at a glance

The policy arrived in two instalments, delivered through changes to state planning policy rather than council-by-council rezonings.

Stage 1 — from 1 July 2024

Stage 1 made dual occupancies and semi-detached dwellings permissible with consent in nearly all R2 low-density residential zones across NSW — 124 local government areas. Before this, plenty of Sydney councils simply prohibited dual occupancies in R2, which is why the duplex boom of the late 2010s was so geographically patchy. Stage 1 removed that prohibition almost everywhere: the knock-down-rebuild duplex play stopped being a postcode lottery.

Stage 2 — from 28 February 2025

Stage 2 is the density-near-centres piece. Within 800 metres walking distance of 171 nominated town centres and train, metro and light rail stations across Greater Sydney, the Central Coast, the Illawarra-Shoalhaven and the Hunter, new controls permit dual occupancies, terraces, townhouses, and low- and mid-rise apartment buildings in the R1, R2, R3 and R4 zones. The government expects the policy overall to support around 112,000 homes over five years.

Two details deserve emphasis. First, the catchment is walking distance, not a radius — it follows the street and path network, so an 800 metre crow-fly circle drawn on an aerial photo will both include lots that miss out and miss lots that qualify. Second, the centres are nominated: your local shops may or may not be on the list. Both points mean the mapping has to be checked address by address before you price a site.

The headline standards for dual occupancies and terraces

Within the Stage 2 areas, the policy sets non-refusal development standards — if your proposal meets them, the consent authority cannot refuse it on those grounds. The two that matter most to small builders:

Dual occupancies: lots of at least 450 square metres with 12 metres frontage, maximum FSR 0.65:1, maximum height 9.5 metres.
Terraces (three or more dwellings): lots of at least 500 square metres with 18 metres frontage, maximum FSR 0.7:1, maximum height 9.5 metres.

Read those numbers against what many Sydney councils have historically required for a dual occupancy — commonly 550 to 700 square metres and 15 to 20 metres of frontage — and you can see how many previously “unduplexable” lots just moved into play. A 460 square metre lot with 12.2 metres of frontage near a nominated station is now, on the state standards, a dual occupancy site. The 9.5 metre height limit comfortably accommodates two storeys.

Terraces are the quiet story here. The typology that built Paddington and Erskineville has been effectively zoned out of most of suburban Sydney for decades; a 500 square metre standard with 18 metres of frontage brings it back as a realistic project type — three dwellings on a lot that previously yielded one or two.

What this means for small builders

The duplex play expands again. Stage 1 dealt with permissibility across R2; Stage 2 adds state-backed lot standards near centres. The classic knock-down-rebuild duplex — buy the tired house, build two, sell or hold — now works on smaller lots in more suburbs, with less exposure to restrictive local numerical controls.
A third typology enters the pipeline. Builders comfortable at duplex scale can step up to three-to-five dwelling terrace rows without jumping to apartment-grade construction. Same trades, same class of structure, more doors per site.
Competition for stock will sharpen. Lots inside the 800 metre catchments that meet the frontage tests are a definable, mappable commodity. Expect agents and your competitors to work that out quickly, if they have not already.
Feasibility discipline matters more, not less. When the planning gate opens, the projects that fail do so on cost and constructability — and on sites of this size, drainage is routinely the constraint that decides it.

Engineering realities, typology by typology

Here is the engineer-to-builder part. The reforms let you put two or three dwellings where one stood, but every one of those projects has to answer the same civil questions, and the answers get harder as lots get smaller.

Twice the roof, same old street

A dual occupancy roughly doubles roof and hardstand area on the lot, and a terrace row can push impervious cover beyond 70 per cent. That extra runoff has to be managed. Most Sydney councils’ DCP drainage controls trigger on-site detention (OSD) at exactly this scale of development — often for any dual occupancy, or once impervious area crosses a threshold. Budget for an OSD tank or basin, the engineering to size it, and the positive covenant that keeps it maintained. On a 450 square metre lot, finding room for OSD alongside landscaping, private open space and driveways is a genuine design exercise; it belongs on the concept plan, not as an afterthought at CC stage.

Which way does the lot fall?

The single most valuable due diligence question on any infill lot: does the land fall to the street or away from it? Stormwater must reach a legal point of discharge — usually the street gutter or a council pit. If the lot falls to the rear, your options are typically a drainage easement over the downstream neighbour (a private negotiation with real cost, time and refusal risk), a charged or pump-out system where the council permits one, or in some areas an existing inter-allotment drainage line. None of these is a deal-breaker on its own, but every one of them costs money and time, and an easement negotiation can stall a project for months. Two otherwise identical lots either side of a ridge line can differ in project cost by tens of thousands of dollars for this reason alone.

Driveways and levels on a 12 metre frontage

The 12 metre dual occupancy frontage is workable, but tight. Two crossovers (or a shared one), garage entries, bin presentation, a pedestrian path and any OSD surface storage all compete for that width, while council driveway grade limits and the transition from street level to garage slab constrain the section. On sloping sites, getting the driveway grades, garage levels and finished floor levels to work together — while still draining the lot to the legal discharge point — is where a day of civil design early saves a redesign later.

Torrens versus strata: the drainage difference

How you title the project changes the drainage design. A Torrens (freehold) subdivision of a dual occupancy generally requires each lot to drain independently to a lawful discharge point, or formal inter-allotment easements where one lot drains through another — councils will want this resolved on the subdivision plans. A strata subdivision can treat drainage and the OSD system as common property, which is often simpler to engineer but leaves the owners corporation with the maintenance obligation. Terrace rows subdivided Torrens-style need particular care: shared pipes crossing multiple lots need easements and clear maintenance responsibility. Decide the titling strategy before the stormwater design is finalised, because retrofitting one to suit the other is messy.

Picking the right sites

A short field guide for the buying phase:

Corner lots are gold: two frontages ease the driveway squeeze, help meet frontage standards, and usually guarantee fall to a street gutter somewhere.
Fall to the street beats size. A 470 square metre lot draining naturally to the kerb is often a better project than a 550 square metre lot falling to the rear.
Check existing services — sewer mains and easements crossing the lot can sterilise the building footprint; a sewer peg-out and dial-before-you-dig search cost little.
Verify the mapping for the specific address: inside the 800 metre walking catchment of a nominated centre, or not. Do not rely on the suburb name or a radius sketch.
Look at the street drainage. Kerb and gutter with pits nearby is a good sign; a grassed swale and no pits within 100 metres is a question to answer before exchange.

Cautions before you commit

Non-refusal is not exempt development. You still need a DA — or a CDC where the complying development pathway fits — with full documentation, including stormwater plans. The standards limit what a council can refuse on, not what it can ask you to demonstrate.
Council DCP controls still apply where not inconsistent with the state standards. Drainage, OSD, landscaping and waste provisions generally sit outside the non-refusal standards, so the local engineering rules are alive and well.
Mapping is address-specific and may be refined. Nominated centres and walking catchments should be confirmed on the current mapping for each site — and confirm the controls as they stand when you lodge, as settings can evolve.
Other constraints are untouched. Flood planning areas, bushfire mapping, heritage conservation areas and biodiversity controls all continue to operate. A lot inside the catchment with a creek at the back fence still needs a flood check.

Planning strategy matters as much as engineering on these projects. Within our group, URBA handles the town planning and DA advice that sits alongside our civil design.

Beyond engineering, the architecture, landscape design and 3D visualisation for projects like these are delivered by ARQI within our group.

Frequently Asked Questions

What lot size do I need for a dual occupancy now?

Within the Stage 2 areas — 800 metres walking distance of a nominated centre or station — the state non-refusal standards allow a dual occupancy on a lot of at least 450 square metres with 12 metres of frontage, at a maximum FSR of 0.65:1 and height of 9.5 metres. Outside those areas, Stage 1 makes dual occupancies permissible with consent in nearly all R2 zones, but the lot size and other numerical controls in the council’s own plans generally continue to apply, so the answer varies by LGA.

Does the 800 metre rule apply everywhere?

No. It applies only around the 171 nominated town centres and train, metro and light rail stations across Greater Sydney, the Central Coast, the Illawarra-Shoalhaven and the Hunter — and it is measured as walking distance along the street network, not a straight-line radius. Two houses in the same street can fall on different sides of the boundary, so check the current mapping for the specific address before you buy or price a site.

Do these reforms change stormwater requirements?

No. The reforms change what housing types are permissible and set planning standards like lot size, FSR and height. Council drainage requirements — on-site detention, water quality measures, and a lawful point of discharge — still apply through the DCP and assessment process. In practice, stormwater becomes a bigger issue under these reforms, because more dwellings and hardstand are going onto smaller lots. A drainage feasibility check before purchase remains the cheapest risk insurance available.

Can I do a terrace project in an R2 zone?

Within the Stage 2 catchments, yes — terraces are permissible in R1, R2, R3 and R4 zones, with non-refusal standards of at least 500 square metres, 18 metres frontage, 0.7:1 FSR and 9.5 metres height for three or more dwellings. Outside the mapped catchments, terrace permissibility in R2 depends on the local plans, so confirm the position for your site before committing.

Get the drainage answer before you buy the lot

Contrive Consultants are civil and stormwater engineers based in Rouse Hill, working with builders and developers on dual occupancy, terrace and townhouse projects across Greater Sydney. We provide pre-purchase drainage feasibility checks — fall, legal point of discharge, OSD and easement risk — plus DA and CC-stage stormwater and civil design. See our services for the full scope, or contact us on +61 497 848 111 or info@contriveconsultants.com.au to talk through your next site.