The NSW Government’s Low- and Mid-Rise Housing Policy (LMR Policy) represents one of the most significant changes to planning in recent years. From 28 February 2025, land within 800 metres of designated town centres and transport hubs can now support a wider range of housing types. For Sydney’s Eastern Suburbs, which include Bondi Junction, Rose Bay, Randwick, Double Bay, Paddington, Coogee, and Maroubra, the policy has the potential to reshape the property market by unlocking development opportunities where restrictive zoning previously applied.
What Has Changed and Where It Applies
The LMR Policy is part of the State Environmental Planning Policy (Housing) 2021 and was designed to increase housing diversity in well-serviced locations. Stage Two of the reforms, now in effect, allows for dual occupancies, terraces, townhouses, flats and shop-top housing on residential land that previously prohibited this scale of development.
The planning standards vary depending on proximity to centres. Within 400 metres of a designated hub, development can now extend up to six storeys or 22 metres, with shop-top housing permitted to reach 24 metres. Between 400 and 800 metres, the height limit is set at four storeys or 17.5 metres. Floor space ratios have been recalibrated to match these allowances, and minimum lot size requirements have been largely removed, making it easier to bring mid-scale projects to market.
Why the Eastern Suburbs Are in Focus
The Eastern Suburbs are among Sydney’s most tightly held and highly valued areas. The introduction of mid-rise opportunities here is already producing extraordinary value shifts. In Rose Bay, a group of sixteen neighbours collectively saw their properties double in value almost overnight, with a combined uplift of more than 200 million dollars. Individual homes that were valued at eight million dollars are now trading closer to sixteen million under the new rules.
Similar stories are emerging across Sydney, including Mosman, where land once considered unsellable has been purchased by developers at multiples of its previous asking price. For the East, the implications are clear: land that sits near transport nodes or within walking distance of centres is now among the most sought-after in the city.
Implications for Owners, Investors and Buyers
For landowners, the LMR Policy presents a unique opportunity to either hold and develop, or to sell into a rising market where developers are aggressively seeking eligible sites. The uplift in value is often far beyond what would have been achievable under previous planning controls.
For investors and developers, the policy delivers access to prime land in suburbs where supply has long been constrained. Townhouses, boutique apartments and shop-top housing can now be introduced in areas traditionally dominated by freestanding houses. This creates the potential for strong long-term returns given the Eastern Suburbs’ enduring lifestyle appeal.
For buyers, including first home purchasers and downsizers, the reforms introduce greater diversity of housing stock. Smaller, well-located dwellings are likely to become more available, which may soften entry points into suburbs that were previously out of reach. While affordability in the East will always be relative, the sheer increase in supply could create new opportunities for those seeking to enter the market.
Risks and Pushback
Not all stakeholders welcome the reforms. Local councils, including Woollahra, have raised concerns about infrastructure strain, particularly around stormwater, transport congestion and school capacity. Community groups have also questioned whether the policy will genuinely improve affordability, pointing out that “affordable housing” products in Bondi Junction are already being advertised for around $1,100 per week, consuming close to half of the eligible household income. The balance between development and livability will continue to be a key point of debate as implementation progresses.
RnJ Realty’s Perspective
At RnJ Realty, we see the LMR Policy as both an opportunity and a responsibility. For our clients, the changes unlock pathways to significantly increase the value of their holdings. But success requires careful strategy—knowing when to sell, when to consolidate, and when to redevelop. Our role is to provide clear advice grounded in the latest planning rules, market trends and buyer demand. We also understand the importance of navigating community sentiment and ensuring that development enhances, rather than undermines, the character of the Eastern Suburbs.
Conclusion
The Low- and Mid-Rise Housing Policy is reshaping the property landscape of Sydney’s East. For landowners, it offers extraordinary uplift. For investors and developers, it provides access to one of the most attractive markets in the country. And for buyers, it promises a new level of housing diversity in suburbs that have long been out of reach. The opportunity is significant, but timing and execution are critical.
If you own property in the Eastern Suburbs or are considering buying under the new rules, RnJ Realty can provide a tailored assessment of your options. Contact us today to understand how to make the most of this landmark policy.
