Case Study: Redevelopment and Strata Subdivision of a Property in Lilyfield Road, Lilyfield

Introduction

Across Sydney’s Inner West, many older mixed-use buildings are being transformed to meet the housing needs of today’s community.

One property we assessed, located in Lilyfield Road, Lilyfield, demonstrates both the opportunities and the hurdles that can arise when reimagining a building with a mix of residential and commercial uses.

The owner sought to turn this property into multiple strata-titled residences. Their ambitions included converting an existing commercial shopfront into residential space, undertaking significant internal renovations, adding separate entries, and ultimately subdividing the building.

What seemed on the surface to be a straightforward project quickly revealed itself to be complex.

This case study unpacks the key planning challenges, approval pathways, and strategic considerations involved in this project.

It provides a clear picture for anyone thinking of redeveloping a mixed-use building in Sydney and offers practical lessons on how to navigate the planning system.

Site and Context

The property in Lilyfield Road is a substantial terrace-style building with three levels plus a rooftop terrace. It includes a commercial unit at street level and residential spaces on the lower ground and upper floors.

The site is zoned R1 General Residential under the Inner West Local Environmental Plan (LEP) 2022. This zoning prohibits commercial premises but allows residential flat buildings and shop top housing with consent.

The property is close to Leichhardt North Light Rail Station, only a short walk from key transport and community amenities.

However, its proximity to Sydney Airport meant that aircraft noise also played a role in shaping what could and could not be approved.

From the outset, three things stood out:

1. The property still contained a commercial shopfront, making it a non-conforming use.

2. The proposed works involved multiple interdependent approvals (change of use, internal works, subdivision).

3. The site was potentially subject to aircraft noise exposure that could rule out fast-track pathways.

Planning Challenges

Strata Subdivision and Zoning Conflict

The owner’s ultimate goal was to create separate strata-titled dwellings. However, strata subdivision can only occur if each lot aligns with planning controls.

• The R1 zone prohibits commercial premises.

• Retaining the shopfront as commercial meant it would continue as a non-conforming use.

• Subdividing it into a separate commercial lot would be seen as formalising and extending a prohibited use, which Council would not support.

The only viable pathway was to first convert the shopfront into a residential unit through a Development Application (DA). Without this change of use, subdivision could not proceed.

Aircraft Noise Exposure (ANEF)

Sydney Airport’s aircraft noise contours reach into the Inner West, including Lilyfield.

Under the Australian Noise Exposure Forecast (ANEF) system, land within an ANEF 25 contour or higher cannot be redeveloped for new housing via complying development.

• If within ANEF 25 or above, complying development is not permitted, and a DA with an acoustic report is mandatory.

• If between ANEF 20–25, complying development may be possible but only if strict noise insulation standards (AS 2021:2015) are met.

• Outside ANEF 20, there are fewer restrictions, though aircraft noise still needs to be considered in design.

Given the property’s location, it was almost certain that a DA process would be needed for any substantial works, particularly the change of use and subdivision.

Internal Works and Heritage Considerations

The proposal included updating kitchens and bathrooms, altering staircases, and moving internal walls. Some of these works could qualify as exempt development:

• Replacing fixtures and fittings in kitchens and bathrooms.

• Repairing deteriorated stairs.

• Installing new insulation.

However, other elements such as moving walls or staircases went beyond exempt development.

They would either require a Complying Development Certificate (CDC) or a full DA, depending on whether they affected the building’s structure.

Heritage was another consideration. While initial checks suggested the property was not a heritage item, confirmation from Council’s heritage maps and a Section 10.7 certificate was required. If it turned out to be a heritage item or within a conservation area, even minor works could trigger the need for a Heritage Impact Statement and full DA.

Service Separation and Road Opening Permits

Strata subdivision requires that each lot has separate utility connections. For this property, that meant creating new service lines for water, sewer, gas, and electricity. Achieving this usually requires excavation in the public footpath or roadway.

• A Road Opening Permit under the Roads Act 1993 would be needed.

• Because Lilyfield Road is a classified road, Transport for NSW approval may also be required.

• The site was mapped as Acid Sulfate Soils Class 5, which meant excavation could disturb nearby soils. If so, an Acid Sulfate Soil Management Plan would be required.

Service separation is often underestimated, but in reality it can add considerable cost and time to projects of this type.

New Front Access and Streetscape Impacts

To provide independent entries, the owner wanted to add an extra front door. While this sounds like a simple modification, it was classed as an external alteration with clear planning implications.

• External works on prominent street frontages are rarely exempt.

• Even if not heritage, Council is likely to assess the design for its impact on the streetscape.

• A DA with architectural drawings, a Statement of Environmental Effects, and possibly a Heritage Impact Statement would be needed.

This reinforced the theme of the project: while some works might seem minor, their location and context pushed them into DA territory.

Change of Use - Commercial to Residential

The conversion of the commercial shopfront into residential space was a pivotal step.

• In the R1 zone, commercial premises are prohibited.

• Converting to residential aligned with zoning objectives and would remove the non-conforming use.

• However, this change required a full DA supported by:

  • A Statement of Environmental Effects explaining the impacts.

  • Existing and proposed floor plans.

  • A BASIX certificate showing compliance with energy and water efficiency targets.

  • An acoustic report if within an ANEF 20+ contour.

This DA was the foundation of the project. Without approval for this change of use, the subdivision and other works could not move forward.

Design and Building Practitioners Act (DBP Act)

If the building was reclassified as a Class 2 residential flat building, the DBP Act 2020 applied. This legislation imposes strict obligations on design and construction for multi-unit residential buildings.

• Registered practitioners must prepare and declare designs.

• Building practitioners must lodge compliance declarations.

• The process adds regulatory oversight, cost, and time.

Only very minor exempt works, such as simple fixture replacements, would avoid DBP obligations. For this project, the Act was another layer of compliance.

Strategic Planning Pathway

The assessment showed that most of the proposed works could not proceed under fast-track CDC or exempt development. Instead, a multi-stage DA pathway was required:

1. Confirm Constraints: Obtain a Section 10.7 Planning Certificate to lock in zoning, heritage, and ANEF data.

2. Lodge DA for Change of Use: Convert the commercial shopfront into residential, supported by BASIX, acoustic, and structural documentation.

3. Lodge DA for Strata Subdivision: Once the property is fully residential, pursue subdivision into separate titles.

4. Resolve Service Separation: Coordinate with utilities, apply for Road Opening Permits, and prepare Acid Sulfate Soil assessments if required.

5. Lodge DA for External Alterations: Add the new front access point and ensure design responds to streetscape character.

6. Undertake Internal Works: Proceed via DA or CDC depending on whether works are structural or minor.

This staged strategy reduced risk and ensured each approval logically supported the next.

Comparable Case Studies

Shopfront Conversion in Marrickville

A terrace in Marrickville with a ground-floor retail unit faced a similar issue. The site was zoned R1, making commercial use prohibited. The owners lodged a DA to convert the shopfront to residential. Council required an acoustic report due to aircraft noise and a BASIX certificate. Approval was granted, but conditions required upgraded glazing and insulation.

Strata Subdivision in Leichhardt

Another Inner West property involved strata subdivision of a multi-level dwelling. Like Lilyfield, it required service separation and a Road Opening Permit. Excavation revealed potential acid sulfate soils, triggering an additional management plan. Despite higher costs, the subdivision was eventually approved, allowing separate sales of the units and unlocking additional value.

Dual-Use Redevelopment in Ashfield

A property in Ashfield with both residential and storage uses was reconfigured into two separate residences. While not a full strata subdivision, it required similar approvals for change of use and service separation. The project demonstrated how converting non-conforming uses into residential often makes the difference between an unworkable site and a viable redevelopment.

These examples highlight a key theme: while challenging, such projects are achievable with the right strategy and expert support.

Lessons Learned

This Lilyfield Road property shows that even small-scale projects can face complex planning hurdles. Key lessons include:

1. Always resolve non-conforming uses first. Subdivision cannot proceed if prohibited uses remain.

2. Confirm constraints early. A Section 10.7 Planning Certificate is essential to identify zoning, heritage, ANEF contours, and acid sulfate soils.

3. Service separation is not optional. Factor in Road Opening Permits, excavation costs, and possible soil management plans from the outset.

4. Don’t underestimate “minor” works. Adding a new front door or moving a staircase can require a full DA.

5. Prepare for multiple approvals. For mixed-use conversions, expect a staged DA process.

6. Engage experts early. Town planners, architects, engineers, and acoustic consultants are crucial for navigating these layers.

7. Budget for compliance. The DBP Act, BASIX requirements, and consultant reports all add cost and time.

For homeowners and small developers, the takeaway is simple: projects like these can succeed, but only with careful sequencing and professional support.

The property in Lilyfield Road illustrates the complexity of redeveloping older mixed-use buildings in Sydney’s Inner West.

The owner’s vision of strata-titled residences was viable, but only through a carefully staged DA pathway that addressed zoning conflicts, aircraft noise, service separation, and design impacts.

For others considering similar projects, the lessons are clear: confirm constraints early, resolve non-conforming uses, expect interdependent approvals, and engage the right professionals to guide the process.

With the right approach, even the most complex property can be transformed into a valuable residential asset.