The New South Wales, Department of Planning and Environment (DPE) brought the State Environmental Planning Policy (Sustainable Buildings) 2022 (Sustainable Buildings SEPP) into effect on 1 October 2023 for the purpose of implementing greater sustainability measures in new and substantially altered Residential and Non-Residential buildings.

Who Does this Policy Affect?

This policy affects both residential and non-residential development applications lodged across the State of New South Wales. For non-residential development in particular, the policy affects developments comprising:

• the erection of a new building, if the development has a capital investment value of $5 million or more, or
• alterations, enlargement, or extension of an existing building, if the development has a capital investment value of $10 million or more.

The only exceptions to these triggers are where any of the following items are satisfied:

• Development that is permitted with or without consent or is exempt or complying development under the following policies:
  • State Environmental Planning Policy (Exempt and Complying Development Codes) 2008, or
  • State Environmental Planning Policy (Resources and Energy) 2021, Chapter 2, or
  • State Environmental Planning Policy (Transport and Infrastructure) 2021, Chapter 5,
    • For context, Chapter 5 of the Transport and Infrastructure SEPP refers to the now superseded Three Ports SEPP, which covers land within the application areas of Port Botany, Port Kembla and Port of Newcastle.
  • Development undertaken wholly in any of the following zones
    • Rural Urban Zones (RU1, RU2 or RU3)
    • Heavy Industry Zones (E5 or IN3)
    • Conservation Zones (C1, C2 or C3)
    • Waterway Zones (W1, W2, W3 or W4)
  • Development for the purpose of a residential care facility

What are the Assessment Requirements of this SEPP?

For non-residential developments that trigger assessment against this policy, councils will need to consider certain sustainable design measures prior to giving development consent, including:

• the minimisation of waste from associated demolition and construction, including by the choice and reuse of building materials,
• a reduction in peak demand for electricity, including through the use of energy efficient technology,
• a reduction in the reliance on artificial lighting and mechanical heating and cooling through passive design,
• the generation and storage of renewable energy,
• the metering and monitoring of energy consumption,
• the minimisation of the consumption of potable water.

Additionally, council will not be able to grant development consent unless the embodied emissions attributable to the proposed development have been quantified.

Referring to a recent DPE Technical Note on Embodied Emissions, the methodology for calculating the embodied emissions for projects that trigger assessment against this policy is through the use of the following:

• NABERS Embodied Emissions Materials Form – Up until Mid-2024; and
• NABERS Embodied Emissions Tool – From Mid-2024 onwards.

The content of the NABERS Embodied Emissions Materials Form requires determination of the quantity and type of materials required for a project at development application stage (where these specific details would have otherwise unlikely been determined as part of a project). It will be required that all new non-residential development applications submit a completed copy of the Embodied Emissions Materials Form, as councils will not be able to issue consent without this. Please refer to Embodies Emissions Material Form for further information: https://nabers.gov.au/embodied-emissions-materials-form-nsw

Additional Considerations for Large Commercial Development

Under the Sustainable Buildings SEPP a Large Commercial Development is defined as follows:

large commercial development means non-residential development that involves—

• the erection of new prescribed office premises, prescribed hotel or motel accommodation or prescribed serviced apartments, or
• alterations, enlargement or extension of prescribed office premises, prescribed hotel or motel accommodation or prescribed serviced apartments, if the development has a capital investment value of $10 million or more.

Per above, the development types outlined under item (a) are defined as follows:

• Prescribed Office Premises – Office Premises with a Net Lettable area of at least 1,000m²;
• Prescribed Hotel or Motel Accommodation – Hotel or Motel Accommodation with at least 100 rooms;
• Prescribed Service Apartments – Building comprising at least 100 Serviced Apartments.

For development assessed as a Large Commercial Development, the consent standards include demonstrating reduced reliance on fossil fuels in alignment with the NSW 2050 Net Zero Strategy. It is additionally noted that the development would need to achieve the minimum efficiency standards outlined below:

• Energy use
  • The standard for energy use for development for the purposes of prescribed office premises is a 5.5 star NABERS energy rating.
  • The standard for energy use for development for the purposes of prescribed hotel or motel accommodation is a 4 star NABERS energy rating.
  • The standard for energy use for development for the purposes of prescribed serviced apartments is a 4 star NABERS energy rating.
• Water use
  • The standard for water use for large commercial development is a 3 star NABERS water rating.

Additional Considerations for State Significant Development

Similar to Large Commercial Development, the requirement where assessing state significant development is to outline measures for the reduction of use of fossil fuels, in alignment with the NSW 2050 Net Zero strategy.

However, this does not apply to all state significant development applications, only those identified under schedule 1, items 13-15 of the Planning Systems SEPP, as outlined below for reference:

• 13 Cultural, recreation and tourist facilities
• 14 Hospitals, medical centres and health research facilities
• 15 Educational establishments

Industry Example

Service Stations with CIV Exceeding $5 Million

The DPE’s arbitrary capital investment value (CIV) threshold of $5m would, in today’s era of escalated construction costs, apply to many new-to-industry and knockdown/rebuild commercial service station projects in NSW.  The minimal zoning exemptions under the policy would also leave limited exemption where the project exceeds the capital investment value threshold.

When assessing service station developments, the assessment benchmarks would be confined to the minimum standards under the policy. When reviewing these benchmarks against recent service station designs completed, the following is noted:

• Construction and demolition waste minimisation is generally conditioned for contractors to implement when commencing construction. This may require the preparation of more detailed construction and demolition waste management plans, providing clear strategies for waste reduction;
• Service station buildings, like many commercial buildings, are designed and built with limited natural ventilation, which may result in councils starting to request how this provision is achieved in the design.
• In order to maximise surveillance of the forecourt, the retail buildings are generally designed with a high level of glazing along the front façade, achieving natural lighting to the front of house areas; limited change is anticipated here, maintaining that the back of house areas are not required to be provided with natural lighting;
• Generation and storage of renewable energy is expected to see councils requesting the implementation of on-site batteries and solar panels. While achievable by way of implementing battery storage within the service yard and establishing solar on the roof, this will add additional build cost to projects;
• While reduced water and energy consumption is expected to be capable of being addressed by confirming the implementation of high efficiency fixtures and appliances, this is anticipated to add additional build cost to projects.

Further, the preparation of the NABERS Embodied Emissions Form / Tool will comprise a new minimum lodgement benchmark for all developments triggering this SEPP. Given the level of detail required under this form, it is considered that in order to determine the material types and quantity, a certain portion of detailed design may need to commence prior to lodgement of the development application.

However, one benefit for the majority of service station developments is that the building design is generally standardised, so the material types and quantity may be able to be quantified based on historic projects for similar builds or company design standards, particularly for the purpose of a development application. This could be developed into a standardised form / template which could be applied to the bulk of new projects.

TFA’s Response – Key Issues

The key issues that we see with this policy in principle are as follows:

• There is limited actual direction within the policy, implementing generalised standards that are to be enforced to the ‘satisfaction of the consent authority’.
  • Ultimately this could see increased difficultly in the approval process and provides too much leverage for councils to interpret the policy as they see fit;
• Some level of detailed design consideration may be required at Development Application stage to demonstrate compliance with the NABERS Embodied Emissions Materials Form / Tool;
• With development applications in NSW currently taking significantly longer than other states and territories in Australia, it is foreseen that additional benchmarks will provide councils with grounds to further delay the processing of applications;
• The requirements for solar panels and batteries as well as higher efficiency appliances and fixtures will add to already elevated project construction costs.

We note that whilst the triggers for the Large Commercial Development and State Significant Development are currently limited with respect to potential for considerations for our clients, DPE have confirmed that they intend on reviewing this policy in 2025 and every 3 years following. TFA Project Group (TFA) are committed to reviewing the potential policy updates proposed by DPE during this period and will report back with amendments that directly impact our clients.

How TFA can Assist?

Given TFA’s expansive background across a broad range of development types from approvals to delivery, we have an expansive catalogue of projects and a wealth of technical experience that makes us equipped to assist in navigating this policy.

TFA are able to assist in the following in responding to the requirements of this policy for any new non-residential development applications with a capital investment value exceeding $5 Million:

• Preparing the Embodied Emissions Materials Forms as part of the DA lodgement package;
  • This can be prepared as a standardised or project specific basis, depending on the specific project needs.
  • This will involve quantifying the anticipated materials to be utilised for a proposed development.
• Assisting in the development of sustainability / net zero statements;
• Assisting in the development of new and amended design standards that provide options to respond sustainability considerations anticipated to be requested by councils.

Any queries in relation to this matter, please contact the TFA Town Planning Team who would be happy to discuss further, phone 1300 794 300 or email enquiry@tfa.com.au.