Master Builders is optimistic that some of the recently introduced changes to the Residential Zones will have a positive impact on building and development in Melbourne, although we urge the government to closely monitor the roll-out of the changes to measure whether they are having the intended effect of increasing housing development, particularly in established areas. These changes were formally gazetted on 27 March 2017, and a series of transitional arrangements is in place.

The Neighbourhood Residential Zone (NRZ), which is intended to restrict growth, has been amended as part of the reforms. The zone has been applied mainly to residential areas that are argued to have high environmental, heritage and/or built form value. The NRZ applies to varying degrees across municipalities, and has been a source of concern for Master Builders. Some councils in established areas have used the zone designation used to ‘lock down’ certain areas from development, such as Glen Eira, where 80.8 per cent of residential land is zoned NRZ.

The reformed residential zones remove the mandatory limit of two houses per lot, which we welcome as it could make way for high-density development in the NRZ. However, we are cautiously optimistic about whether this change will increase development.

One of the main reasons for our concern is language in the published information states that:

Neighbourhood character is what makes many areas distinct. Councils can now define neighbourhood character and design objectives in schedules to the zones to strengthen the protection for neighbourhoods.(Page 8)

This could make way for excessive schedules that further exclude suburbs from development.

On a positive note, the maximum building height has been increased from eight metres to nine metres with a new two-story height limit. Councils will have the option to set an alternative maximum height, but it must be more than nine metres.

Changes have also been introduced for the General Residential Zone (GRZ), which is intended to promote moderate growth. The discretionary maximum building height of nine metres will be increased to 11 metres, with a new three-storey height limit.

A new minimum garden area requirement will be introduced to land zoned NRZ and GRZ. A minimum percentage of land must be set aside for ground-level garden areas on land that is 400 square metres or more. Although existing requirements arguably already address garden space, such as site coverage and setbacks, Master Builders is concerned that the proposed changes may further reduce the scope for development, and we are in discussions with the government about how this will be applied.
The Residential Growth Zone (RGZ) has a new requirement for relevant design objectives to be specified in the schedule of the zone. Master Builders is cautious about the effect this will have on development – whether it will again lead to councils creating schedules that reduce the scope for development, or make it too onerous.

While we await the detail, we are concerned that the changes won’t prevent councils from locking down areas with zoning and scheduling tools. This is a well-founded concern; when the current residential zones were introduced in 2013, councils were able to amend their own planning schemes to implement the new zones. This meant that as long as the council could justify their proposed application of zones – be it through existing housing strategies or a combination of character, heritage and activity centre policy – they ultimately were able to decide their own zone. This process led to ad hoc application of zones across councils.

In the past, schedules have also been used as a tool for individual councils to dilute the purpose of zones, which has led to the introduction of excessive schedules. In fact, by 2015, 75,000 pages made up Victorian planning schemes, there were 1,700 local schedules to zones and 2,650 local schedules to overlays.

We are encouraged by the monitoring and continuous improvement outlined in the Government’s Action Plan, to prepare regular State of Play reports on an ongoing basis to assist councils with strategic planning work. In particular, Master Builders is anticipating the Housing Development data report that is expected to be released in April 2017, followed by ongoing monitoring and publication.

We hope that the Metropolitan Housing Strategies (mentioned below in relation to Plan Melbourne) will set some development targets to be achieved by Councils so that we can track performance against some benchmark measures.