Australia: Victorian Planning zone reforms update

Last Updated: 22 July 2012
Article by Natalie Bannister

As we announced in our client bulletin on 11 July 2012, the Victorian Government has announced sweeping reforms to Victoria's planning zones which, if enacted, could have significant ramifications for all property owners. A draft form of these changes has since been released; detailing what has been labelled a "significant shake-up of Victoria's planning laws". With the potential to materially alter the evolution of our commercial, residential and rural areas, property owners should have full awareness of the proposed reforms.

Commercial Zones

Two new commercial zones are proposed to replace Business zones 1-5. The proposed Commercial zones 1 and 2 could have a momentous effect on competition by promoting existing small businesses as well as new entrants.

The Commercial 1 zone is to replace Business zones 1, 2 and 5 and as proposed will be similar in substance to the existing Business 1 zone. Key features of this proposed zone include –

  • Offices and dwellings with a frontage of less than two metres will no longer require planning permission;
  • Floor area restrictions will be removed; and
  • The range of activities that land may be used for without a planning permit will be broadened, including retail premises, offices, and minor utility installations.

The Commercial 2 zone is to replace Business zones 3 and 4, and has a number of noteworthy features:

  • Supermarkets not exceeding 2,000m2 will not require a planning permit within this zone, and shops adjoining to or on the same land as any supermarket will also be exempt from planning restrictions, provided the combined floor area for all adjoining shops does not exceed 500m2;
  • Supermarkets exceeding the 2,000m2 threshold may still proceed subject to planning approval;
  • Floor area restrictions for office and retail uses will be removed;
  • Food and drink premises, restricted retail uses, trade supplies, cinemas, and cinema-based entertainment facilities will all no longer require a permit; and
  • Accommodation (except for a dwelling) will be a permit required use rather than prohibited.

For retailers, these changes could dramatically increase competition, as they propose to remove many of the existing planning controls that have traditionally favoured the existing retail hierarchy.

The abolition of floor area restrictions creates new growth opportunities for office and retail uses, and the broader range of commercial uses that may proceed without planning permission has the potential to stimulate business investment and retail diversity.

Industrial Zones

There are two significant changes proposed to the Industrial 1, 2 and 3 zones.

The first is the removal of the existing 500m2 floor space cap on office development, with councils able to prescribe their own limits via a schedule to the zone. The second change, which applies specifically to the Industrial 3 zone, is that planning permission for small supermarkets (not exceeding 2000m2) will no longer be required.

These proposed amendments to the industrial zones respond to the emerging trends regarding the mix of industry and office uses. Allowing for more appropriately sized office spaces to be developed in industrial areas, the reforms aim to provide greater flexibility for businesses.

New opportunities for supermarket and associated shop development will also facilitate greater competition and commercial opportunities for smaller business to operate within these zones.

Residential Zones

The reforms propose three new Residential zones – the Neighbourhood Residential Zone (NRZ), Residential Growth Zone (RGZ) and General Residential Zone (GRZ). Significantly, it will be at council's discretion as to which zones will apply to which area in each municipality.

  • The NRZ will focus on urban preservation, with a default density of a maximum of two dwellings per lot, and default height controls of nine metres which may be further reduced by councils, and cannot be exceeded by a permit;
  • The RGZ aims to support housing growth and diversity; allowing for a mixture of townhouses and apartments with underground parking and with a discretionary three storey (12.5 metre) height control, and removing restrictions on non-residential land uses such as medical centres and convenience stores;
  • The GRZ will focus on modest urban growth. Key proposals include reduced restrictions on non-residential land uses such as medical centres and convenience stores, and the ability of councils to specify a mandatory maximum building height.

The planning permit threshold for single dwelling lots will also be decreased from 300m2 to 200m2.

Rural Zones

For Rural Zones, the proposed reforms are aimed predominantly at supporting local agricultural and farming uses, by removing the need for a planning permit for:

  • Most agricultural uses within Green Wedge zones;
  • Farming related development, such as crop support structures and netting;
  • The sale of farm produce and processed produce from the farm;
  • Complementary retail uses to rural properties (for example, landscape gardening supplies);
  • Many tourism uses, such as residential hotels; and
  • The alteration and numbers of permitted dwellings.


The proposed reforms are open for public comment until 5pm, 21 September 2012. Following the consultation period, the final reforms are due to be introduced into Victoria's planning system in October.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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