The New South Wales government’s Low and Mid-Rise Housing Policy (LMR) has become one of the most talked-about planning changes in years, and Mosman is at the centre of the debate.
The policy aims to increase housing diversity and supply across well-connected suburbs, but it also raises questions for property owners about local character, infrastructure and how new planning rules could affect selling or developing their property.
What is the Low and Mid-Rise Housing Policy?
The Low and Mid-Rise Housing Policy forms part of the State Environmental Planning Policy (Housing) 2021. It aims to fill the housing gap between traditional freestanding homes and high-rise apartment buildings by encouraging more dual occupancies, terraces, townhouses and low- to mid-rise apartment buildings (typically 1–6 storeys) within 800 metres of nominated town centres and transport hubs.
In Mosman, the policy primarily applies to land zoned for low- and medium-density residential use that falls within 800 metres of centres like Cremorne and Spit Junction/Military Road.
The policy is split into two stages:
- Stage 1 of the policy, introduced in July 2024, allowed dual occupancies and semi-detached homes in low-density zones across NSW.
- Stage 2, which took effect in February 2025, expanded this by encouraging higher-density housing in areas like Mosman, Cremorne and Neutral Bay – all within reach of public transport and key services.
The NSW government expects the changes to deliver up to 112,000 new homes across the state within five years.
Importantly, the policy introduces mandatory rules for building height and floor space that can override Mosman Council’s local controls if they are more generous.
In simple terms:
- Properties within about 400 metres of a town centre could be developed up to six storeys high (roughly 22 metres).
- Properties between 400 and 800 metres from a centre could reach four storeys (around 17.5 metres).
This means that, in certain areas, new development could be taller and denser than what the council previously allowed.
Mosman’s concerns
Mosman Council has been one of the most vocal opponents of a blanket approach to rezoning. The council and many long-term residents believe the one-size-fits-all approach of the state government doesn’t take into account the suburb’s unique circumstances, heritage character and existing infrastructure strain.
Over the past 18 months, the council has hosted town hall forums, lodged formal submissions and written to the Premier and Planning Minister requesting a more tailored approach.
Key concerns include:
- Taller, denser development that could "irrevocably alter the character" of the area.
- Pressure on local infrastructure and services, with no additional state investment to address it.
In September 2025, councillors resolved to explore an “Alternative Plan” that would meet housing targets while preserving Mosman’s heritage and village atmosphere.
What vendors need to consider before selling
For homeowners and vendors, the new policy may increase interest from developers, often in the form of developer option agreements.
A developer option can secure a potential sale price, but it also locks you into a contractual agreement – typically for a lengthy period – while the developer seeks planning approval, designs the project, and lodges a Development Application (DA). The developer usually pays a small, non-refundable option fee, but this comes with important trade-offs for you as a vendor.
Before entering such an agreement, you should consider:
- Limited flexibility: During the option period, your ability to make changes is restricted. Life circumstances can change – for example, you may need to relocate sooner than expected – but the option agreement will tie you to the property.
- Market growth vs. option price: While the option fee secures a sale, you could miss out if the property market rises. If property values grow significantly, the locked-in price – even if higher than the current market value – could mean you have missed the opportunity for higher returns.
While a developer option can help guarantee a future sale, it comes with trade-offs. Expert advice is essential to balance the benefit of the non-refundable option fee against the lengthy commitment, reduced flexibility and potential future property value growth. Both homeowners and buyers should stay informed before making any major property decisions in areas affected by zoning changes.
Mosman’s housing market is changing – are you ready? Whether you’re upsizing, downsizing or buying your first apartment, R&W Mosman/Neutral Bay can help you understand your options and find the right property. Reach out today to explore what’s available.