The number of dwellings a site can take is set by the tightest of several planning controls, not by any one of them: permissibility in the zone, the minimum lot size per dwelling, floor space ratio, height, site coverage and landscaped area, parking, setbacks and private open space. On a typical 1,200 square metre R3 site in Western Sydney the FSR might allow six townhouses, the parking rate might allow five, and the deep soil control might allow four. The yield is four. Working out which control binds first is what planners call planning capacity, and it is the number every feasibility should start from.
Key takeaways
- Yield is a minimum function: the most restrictive control decides the number, so every control has to be tested, not just FSR.
- Minimum lot size clauses in the LEP can cap the dwelling count directly, especially for dual occupancies and multi dwelling housing.
- DCP controls such as site coverage, deep soil, private open space and parking usually bind before the LEP FSR does on low-rise sites.
- A secondary dwelling adds a dwelling without adding a lot, and the Housing SEPP caps it at 60 square metres or the LEP percentage, whichever is greater.
- Near nominated centres in the Six Cities Region, the Low and Mid-Rise Housing reforms add non-refusal standards that can lift capacity above the LEP figure.
The controls that cap yield, in the order we test them
- Permissibility. If the housing type is not permitted in the zone, the yield for that type is zero. R2 permits dual occupancies across most of NSW since July 2024, but multi dwelling housing in R2 depends on the LEP or on the reforms.
- Minimum lot size per dwelling. LEPs set a minimum lot size for a dual occupancy, and several set a minimum site area for multi dwelling housing or a minimum area per dwelling. This is a development standard and a shortfall needs a Clause 4.6 request.
- Floor space ratio. Gross floor area divided by site area. FSR caps total floor space, and the average dwelling size then converts that into a count.
- Height. Height caps storeys, and storeys cap how much of the FSR can actually be built inside the setbacks.
- Site coverage, landscaped area and deep soil. DCP controls that cap the ground floor footprint and the paved area, which on townhouse sites usually bind before FSR.
- Parking. DCP rates per dwelling plus visitor spaces, laid out to AS 2890.1:2004. Basement parking lifts yield but costs more per space than most low-rise projects can carry.
- Setbacks, private open space and solar access. These decide if the dwellings that fit on paper are ones a council will approve.
A worked example on a Western Sydney R3 site
Take a 1,200 square metre R3 site with a 20 metre frontage and a 60 metre depth in a council with an FSR of 0.75:1, a height of 9 metres, a DCP site coverage of 50 percent, a landscaped area requirement of 35 percent and a parking rate of one space per two-bedroom dwelling, two per three-bedroom dwelling, plus one visitor space per four dwellings. The figures below are illustrative; every council sets its own.
- FSR: 1,200 x 0.75 = 900 square metres of gross floor area. At an average townhouse of 150 square metres, that is six dwellings.
- Site coverage: 50 percent of 1,200 = 600 square metres of footprint. Six two-storey townhouses with 75 square metre ground floors use 450, leaving 150 for garages if they are not already counted. Tight but possible.
- Landscaped area: 35 percent of 1,200 = 420 square metres, which must be soft landscaping. A 5.5 metre wide driveway running 45 metres takes 248 square metres of hard stand. Add the building footprint and the paths, and 420 square metres of soft landscaping is very hard to reach with six dwellings.
- Parking: Six three-bedroom townhouses need 12 resident spaces plus two visitor spaces, 14 in all. With at-grade parking, 14 spaces plus manoeuvring consume around 350 to 400 square metres, which is what the landscaping needed.
- Result: FSR says six, landscaping and parking say four or five. The planning capacity is five three-bedroom townhouses, or six smaller two-bedroom dwellings if the market supports them.
This is the pattern on most R3 sites in Cumberland, Canterbury-Bankstown and Fairfield: the DCP binds before the LEP. A feasibility that uses FSR alone overstates yield by one or two dwellings, which on a small project is the entire margin.
Which control usually binds, by housing type
| Housing type | Usual binding control | Second most common |
|---|---|---|
| Dual occupancy in R2 | LEP minimum lot size | DCP site coverage and private open space |
| Secondary dwelling | Housing SEPP floor area cap | Rear setback and access |
| Townhouses in R3 | DCP landscaping and parking | FSR and deep soil |
| Manor house or terraces | Lot width and frontage | FSR and height |
| Apartments in R4 | Apartment Design Guide solar and ventilation | Height and FSR |
Dual occupancies and secondary dwellings: the small-site arithmetic
On R2 land the count is usually one, two or three. One dwelling house is the base. A dual occupancy takes it to two, provided the lot meets the LEP minimum, which varies by council and sometimes by attached or detached form. A secondary dwelling under Chapter 3 of the State Environmental Planning Policy (Housing) 2021 can be added to a dwelling house, but not to each half of a dual occupancy, and its floor area is capped at 60 square metres or the percentage the LEP allows, whichever is greater. So a 700 square metre R2 lot in a council with a 450 square metre dual occupancy minimum can carry two dwellings as a duplex, or two as a house plus a granny flat, but not four. Which pair is worth more depends on whether the duplex can be Torrens subdivided, which is a separate LEP question.
What the 2025 reforms add near town centres
Within 800 metres walking distance of nominated town centres and stations in the Six Cities Region, the Low and Mid-Rise Housing reforms that commenced on 28 February 2025 permit terraces, townhouses and manor houses in R2, and residential flat buildings in R3 and R4, with non-refusal standards for FSR, height and minimum lot size that apply in place of the LEP figures where they are more generous. On a qualifying site, capacity can rise well above the LEP calculation. The reforms do not switch off parking, deep soil or solar access tests, and heritage items and hazard-affected land are excluded. Check the Department’s maps for the catchment boundary before counting on the uplift.
Turning capacity into a real yield
Planning capacity is the ceiling. The yield you can build sits at or below it once three more questions are answered: does the market want that mix, can the site be serviced for that many dwellings, and does the design fit within the envelope with dwellings people want to buy. We test the first with a local agent, the second with a civil check on stormwater and sewer, and the third with a concept layout from our architectural colleagues at ARQI before anyone commits to a purchase price. You can read the controls yourself on the NSW Planning Portal Spatial Viewer and in the DCP, but the minimum function only works if every control is on the list.
Frequently asked questions
How do I calculate how many townhouses fit on my land?
Multiply site area by the FSR for total floor space and divide by the average dwelling size for a first count, then test that count against site coverage, landscaped area, deep soil, parking and private open space in the DCP. The lowest result is the planning capacity. On most Sydney R3 sites the DCP gives a lower number than FSR.
Does a granny flat count as a second dwelling for yield?
Yes, it is a second dwelling on the lot, but it cannot be subdivided from the main house and it is capped at 60 square metres or the LEP percentage, whichever is greater. A lot can have a house and a granny flat, or a dual occupancy, but a granny flat cannot be added to each dwelling of a duplex.
Can I exceed the FSR with a Clause 4.6 request to get one more dwelling?
A Clause 4.6 request can seek a variation to FSR, but the request must show the standard is unreasonable or unnecessary in the circumstances and that the proposal has sufficient environmental planning grounds. Councils rarely accept “one more dwelling” as a ground on its own.
Do the low and mid-rise housing reforms increase how many dwellings I can build?
On sites within 800 metres of a nominated centre in the Six Cities Region, often yes, because the non-refusal standards for FSR, height and lot size can exceed the LEP figures. Outside those catchments, or on heritage or hazard-affected land, the LEP and DCP still set the capacity.
URBA’s planners calculate planning capacity for every site we assess, testing each LEP and DCP control so the yield in your feasibility is one a council can approve. See our townhouse and multi dwelling planning service and our due diligence report page, or request a fee proposal with the address.