What has happened?
In LFD Homes Pty Ltd v The Council of the City of Sydney [2025] NSWLEC 145, Chief Judge Preston set aside a Commissioner's refusal to allow a 32-room boarding house in Paddington to be converted into four terrace houses.
Context
Part 3 of the State Environmental Planning Policy (Housing) 2021 (Housing SEPP) protects existing low-rental residential buildings, including boarding houses, in Greater Sydney. Consent is required to change the use of such a building. In deciding whether to grant consent, the consent authority must consider the Department's Guidelines for the Retention of Existing Affordable Rental Housing and a list of specified matters. These include matters going to whether the continued use of the existing building is financially viable.
The owner argued that the boarding house was no longer viable. The Commissioner refused consent, finding that "an upgraded boarding house should be viable and able to achieve a reasonable return".
The decision
The Chief Judge upheld all four grounds of appeal:
The Housing SEPP requires an assessment of the viability of the existing boarding house, using the criteria it prescribes. The Commissioner instead assessed a hypothetical upgraded boarding house, which was not the development proposed and not the building before the Court.
She did not apply the prescribed method of assessment.
There was no evidence to support her assessment of an upgraded boarding house.
The parties had not raised that issue, and the owner was given no opportunity to respond. This was a denial of procedural fairness.
The errors were material, and the matter was sent back to the Commissioner to be decided according to law. The Council was ordered to pay the costs of the appeal.
How will this affect you?
Applications to convert boarding houses and other low-rental buildings must address the Housing SEPP criteria directly, with evidence about the existing building.
Consent authorities cannot refuse such applications on the basis of a hypothetical alternative use or upgrade that has not been proposed.
Parties are entitled to be heard on any issue that is likely to be decisive.
Further information
For further information please contact Darren Bick, Director, on +61 416 167 556 or darren.bick@bicksteele.com.au.