In Case You Missed It: Housing Week Wrap Up

Today’s release of the long-awaited strategic plan for the state, Plan for Victoria, was the planning crescendo at the end of an already big week of announcements. The Plan replaces the out-dated Plan Melbourne 2017-2050 and suite regional growth plans. There will inevitably be much discussion across the industry in relation to the publication of Plan for Victoria and we look forward to the ensuing debate. Our immediate observations include the following:

• The main body of the Plan is high level, with the details and actions included across the appendices. The Plan has deviated from the usual formatting of strategic documents, with no numbered objectives, making referencing the Plan in permit applications and evidence difficult.
• The Plan sets a requirement for all planning schemes to be amended to implement Council housing targets in all other relevant actions in all future decisions.
• The Plan identifies the 60 activity centres to which the new planning controls will be applied, and flattens the distinction between Major Activity Centres and Neighbourhood Activity Centres, assigning all Activity Centres to either Metropolitan Activity Centres, a centre within the Activity Centre Program or ‘Other’ Activity Centre.
• National Employment and Innovation Clusters (NEICs) and health and education precincts are identified, but there is limited strategic direction for them compared to the previous Plan Melbourne.
• There is no reference at all to 20-minute neighbourhoods, which was previously a key strategic priority. How will Plan for Victoria guide the future development of retail and other services outside of activity centres?

Key elements of Plan for Victoria were drip fed to us throughout the week, in a series of announcements that are summarised below.  

Revised housing targets scale back the initial 2 million dwelling target to 2051, with a new target of 1.78 million dwellings. Key changes include Melbourne’s outer and growth areas (as defined by the Department) where the target has been scaled back by -145,000 dwellings, broadly equivalent to the current size of Geelong.

A quarter of homes will be in regional Victoria by 2051, including 128,600 in Greater Geelong, 46,900 in Ballarat and 37,000 in Bendigo.

While the housing targets have been scaled back, the State Government continues to express a strong commitment to holding Councils accountable to the targets; and this should give the development sector more confidence that housing projects will move efficiently through the planning process.

Activity centres (ACs) across Melbourne have been earmarked by the Government as places to focus development and accommodate new homes in locations that have great access to public transport. The Activity Centre Program (ACP) that was announced last year includes 60 centres across Melbourne.

This week, more detail was provided on how the ACs will be structured, how the planning controls will work, and the complete list of included centres.

Structure of Activity Centres

The ACs will be structured with a central core, surrounded by a walkable precinct. Heights in core precincts will range from 10 to 20-storeys across a number of precincts within the centre, while the walkable catchments will range from 3 to 4-storeys, with the potential to go to 6-storeys depending on the lot size.

A new Built Form Overlay (BFO) has been announced which will set out the expectations of built form in ACs, while the Housing Choice and Transport Zone (HCTZ) will apply to areas around the ACs [see commentary below].

Activity centres have been ranked across the network on their ability to provide access to jobs, services and dwellings with a hierarchy of density attributed to these factors. Height expectations across the different AC types is also coupled with best practice built form outcomes to deliver great places for people. This approach is a positive step forward as it ensures balanced and strategic development of ACs. A streamlined policy approach should promote development, optimise currently underutilised land, boosting capacity of sites in these locations.

We note that there have been no additional details announced in relation to the development contributions overhaul that was flagged at the end of 2024. We understand that a new development charge is expected to be rolled out from January 2027.

Introduction of the Housing Choice and Transport Zone & Built Form Overlay

The new HCTZ and BFO were gazetted on 25 February under Amendment VC267. While further details about their practical application are yet to be provided, the key takeaways so far are set out below.

• The Housing Choice and Transport Zone:
• Will apply to land around identified ACs and other locations with convenient access to jobs, public transport and services.
• Supports increased building heights and allows a range of non-residential uses having regard to site context and lot size.

The rezoning may trigger Windfall Gains Tax (WGT). Our experience in WGT has proven that a rezoning does not automatically translate to a value uplift. While the rezoning event may improve the density or height, the market may not recognise any value uplift in a higher density project. We recommend that our clients have any WGT notice issued reviewed by our Specialist Valuations team. We can also advise if residential exemptions are available.

• The Built Form Overlay:
• Will apply to the core of the identified ACs
• Includes design and built form requirements so applications can undergo a fast-tracked ‘deemed to comply’ pathway which means applications that meet the building height, street wall height, and setback requirements cannot be refused on the basis of those requirements
• Switches off notice and review requirements
• Schedules to the overlay may vary built form controls, incorporate requirements master plans, and switch on notice and review

Detail is yet to be provided on how the BFO will interact with local schedules to the existing zones. We understand that the zone schedules will not be able to include any existing variations that are considered to limit development, however controls that look to encourage or guide development may be retained.

New Activity Centres Announced

The next 25 ACs to be included in the ACP have been announced, meaning that we now know the full list of 60 ACs, as graphically illustrated on the map below. Here’s what else we now know:

• Activity centres have been selected for their location along public transport corridors and in areas where there has already been investment in increasing accessibility to jobs and services.
• Dubbed ‘train and tram zones’, there are aims to accommodate 300,000 homes in the ACs by 2051. They are expected to have a ‘gentle density’, with taller buildings in the core transitioning down to lower densities in the surrounding catchments.
• Two ‘city-wide’ activity centres in City of Melbourne and City of Yarra have been identified in a strategy to unlock under-utilised and under-zoned pockets. The approach to the ‘city-wide’ activity centre will be different to the other ACs, with a focus on upzoning strategic sites, and fast-tracking specific site developments.

The new announcements and identification of the next 25 ACs presents an opportunity for landowners and developers to revisit feasibility testing of existing sites and to consider strategic acquisitions in these areas.

Looking at the AC map, there is a clear skew towards locations in the eastern and southeastern suburbs, with the government doubling down on transport infrastructure investments through the Level Crossing Removal Project, Metro Tunnel Project and Suburban Rail Loop East. Established residential markets and higher land values in these suburbs will help support development feasibility in the short-to-medium term, making the implementation of the ACP more feasible in these areas.

The new Townhouse and Low-Rise Code is expected to be gazetted in early March as Amendment VC267. The amendment aims to fast track approvals, amending Clause 55 of all Victorian planning schemes. There are a number of positive changes within the standards which reflect an expanding city and a recognised need to better utilise land, including allowing greater site coverage and reducing front setbacks. Our key takeaways are:

• The code will apply to multi-residential developments of three storeys or less.
• Planning permit applications will be assessed against ‘deemed to comply’ standards including neighbourhood character, liveability, external amenity and sustainability. An application that is ‘deemed to comply’ will not require any further assessment and will be exempt from third-party appeals at VCAT.
• A design book will be prepared to provide guidance to support council, planners and practitioners to work with the new Code and standards.
• 4-Storey Apartment Standards will also be introduced at Clause 57, applying to multi-residential developments of four storeys.
• We understand that DTP intends to develop a new ‘mid-rise’ code later this year.

We eagerly await the details of the controls and transitional provisions for their implementation. We will also be looking to understand the impact of the amendment on existing local controls, with an expectation that the more onerous controls may be removed.

• The amendment is expected to be gazetted in early March, but we understand it will not be operational until the end of March. For our clients with permit applications currently being assessed, we are currently seeking clarification from DTP on whether it will be possible to lodge an amendment to enable an existing application to benefit from the new code provisions.

The new Precinct Zone was quietly gazetted as Amendment VC274 on 28 February. The zone will be applied to priority precincts including Suburban Rail Loop (SRL) precincts. Here’s what we know so far:

• A schedule to the zone must contain a ‘use and development framework plan’ that provides a spatial illustration of the precinct. For some sites a master plan must be prepared prior to any permit being granted.
• Standards included in a schedule to the zone will be either discretionary or mandatory. Deemed to comply standards may also be included.
• Notice and review exemptions will apply
• A public benefit uplift scheme may be included for precincts, meaning that a specific limit or standard (e.g. maximum building height) may be exceeded in exchange for delivery of public benefits such as affordable housing, public realm works and public open spaces.

There has so far been no formal commentary from the Government on the gazettal of the Precinct Zone, however the timing may indicate that we can expect the release of the Draft Structure Plans for the SRL East stations imminently.