Background
The applicant, Equity Land Holdings Pty Ltd as trustee, sought development consent to demolish existing two- and three-storey commercial buildings at 38–48 Parramatta Road, Stanmore, and erect a five-storey mixed-use building containing 103 co-living rooms, ground-floor café, retail and business premises, and a single level of basement parking accessed from Corunna Lane. The 1,263.6 sqm site sits in a mixed-use zone on the southern side of Parramatta Road, with low-density residential properties fronting Corunna Lane to the rear. A development application was lodged with Inner West Council on 9 April 2025 and, following deemed refusal, the applicant appealed to the Land and Environment Court under s 8.7 of the Environmental Planning and Assessment Act 1979 (NSW). Amended plans were admitted in October 2025 and the application re-notified.
Inner West Council opposed consent on the ground that the proposal’s gross floor area, building form — particularly a central courtyard-atrium design that pushed built form to all site boundaries — and insufficient building separation would produce unacceptable amenity impacts: adverse visual and acoustic privacy to low-density dwellings on Corunna Lane, poor amenity for the co-living rooms within the building itself, and overshadowing and bulk impacts on the adjoining co-living development at 30–34 Parramatta Road. Council contended that these impacts meant the proposal was incompatible with the desired character of the area and did not achieve design excellence as required under the Inner West Local Environmental Plan 2022 (IWLEP 2022). The applicant also sought two clause 4.6 variations to development standards: one to the 14-metre height of buildings standard in cl 4.3 IWLEP 2022, and one to the floor space ratio (FSR) standard in cl 4.4 IWLEP 2022.
The hearing before Swan AC took place on 24–25 March 2026. Expert evidence was led by town planners and urban designers for both parties, along with traffic and stormwater engineers. One neighbouring resident gave oral evidence concerning overshadowing and privacy impacts to her property at 10 Corunna Road, Stanmore.
The Court’s Holding
Swan AC upheld both clause 4.6 variation requests, upheld the appeal, and granted development consent subject to conditions in Annexure A. On amenity and building separation, the court accepted that the parties’ experts had reached agreement on a detailed regime of privacy screens for the co-living rooms that addressed the ADG’s Objective 3F-1 requirement for reasonable visual privacy with respect to Corunna Lane properties, making any additional rear setback unnecessary. On overshadowing, the court found the proposal compliant with s 2.7.3 of the Marrickville Development Control Plan 2011 (MDCP), which requires a minimum of two hours’ solar access to principal private open space and living areas: the evidence demonstrated that the principal private open space of 10 Corunna Road — the area immediately adjacent to the dwelling’s windows — retained that access throughout the required window on 21 June.
On the eastern wing and internal amenity, the court rejected Council’s submission that the eastern bank of rooms must be removed to open up a shared courtyard with the adjoining property at 30–34 Parramatta Road. Swan AC accepted that zero side setbacks are a characteristic feature of mixed-use, high-street localities such as Parramatta Road, expressly contemplated by MDCP s 5.1.3.5, C19, and acknowledged as acceptable under the Apartment Design Guide where blank walls are involved. The court found that replacing one boundary wall with another of greater height did not give rise to an obligation to improve the existing amenity of the adjoining property, and that the central atrium was a deliberate design strategy — not a deficiency — that delivered light, outlook and spatial relief to co-living rooms internally. On the FSR and height variations, the court was satisfied the environmental planning grounds for the cl 4.6 variations had been made out and that the proposal’s modest breach of the 14-metre height limit and FSR non-compliance did not generate the amenity consequences Council alleged.
The court concluded that none of Council’s contentions — including permissibility, desired future character, design excellence, adequacy of communal living areas, and the public interest — warranted refusal, and that the development was not incompatible with the desired character of the area.
Key Takeaways
- Agreed privacy screens can satisfy ADG building-separation objectives for co-living housing abutting lower-density zones, obviating a need for additional rear setbacks, provided the screen design is sufficiently detailed and accepted by all expert parties.
- Zero side setbacks remain appropriate in mixed-use, high-street contexts under the MDCP and the Apartment Design Guide; there is no obligation to improve the existing amenity of an adjoining property simply because a new development will replace one boundary wall with a taller one.
- Clause 4.6 variations to both height and FSR standards in the IWLEP 2022 will be upheld where the applicant demonstrates that the development’s amenity impacts are acceptable and the environmental planning grounds for departure are made out, even over Council opposition.
- For co-living housing assessed under the State Environmental Planning Policy (Housing) 2021, the ADG building-separation distances are a mandatory consideration under s 69(2)(b) but not a non-discretionary standard; the court retains flexibility to approve departure where other design measures achieve the separation objectives.
Why It Matters
This decision provides practical guidance on how courts will evaluate co-living housing proposals in inner-urban, mixed-use corridors where sites are constrained and boundary-to-boundary construction is the established character. By affirming that expert-agreed privacy screens can substitute for additional physical setbacks, and that an atrium-based design is a legitimate — not deficient — amenity strategy, the judgment lowers a significant barrier to co-living approvals on tight inner-city lots. Councils contesting such proposals on amenity grounds will need to demonstrate concrete, quantified impacts rather than relying on preferred design alternatives.
The case also clarifies the interplay between the ADG’s building-separation guidance and the non-discretionary standards in the Housing SEPP for co-living housing: separation distances remain a consideration, not an absolute rule, and the consent authority must genuinely weigh them rather than treat departure as automatically fatal. At a time when Sydney faces acute housing supply pressure, the decision signals continued judicial willingness to approve well-designed co-living development even where it requires departure from standard development controls.