Understanding Victoria’s Land Purchase and Development Framework
Buying a block of land with the intention to build later represents a strategic approach for property developers in Victoria’s Eastern Suburbs. This method allows you to secure sites in growth corridors like Whitehorse, Boroondara, and Manningham while planning development at your own pace. The Victorian planning system underwent substantial changes in 2025, fundamentally altering how developers approach land acquisition and subsequent development applications.
When you purchase land now with plans to develop later, you gain flexibility to design projects according to market conditions and financial readiness. However, the regulatory landscape in Victoria differs substantially from other states. Understanding Victorian planning scheme provisions, zoning controls, and the new deemed-to-comply pathways introduced in March 2025 becomes critical for developers evaluating medium-density opportunities across Melbourne’s Eastern Suburbs.
This guide examines the current framework for buying land and building later in Victoria as of 2026, including recent planning reforms, holding costs, council requirements, and practical considerations for developers working across Whitehorse, Boroondara, Manningham, Monash, Knox, and Maroondah municipalities.
Victoria’s 2025-26 Planning Reforms: What Changed for Developers
The Victorian Government introduced the most significant planning system overhaul in decades through the Planning Amendment (Better Decisions Made Faster) Bill 2025, which passed Parliament in October 2025. These changes fundamentally altered how planning permits are assessed and approved across Victoria, with direct implications for developers purchasing land for future development.
The reforms created three separate assessment pathways based on development scale. Stand-alone homes and duplexes now receive decisions within 10 days under the streamlined pathway. Townhouses and low-rise developments (up to three storeys) receive decisions within 30 days, while larger apartment buildings receive decisions within 60 days. These timeframes represent substantial improvements from the previous average of 140 days for standard applications and over 300 days for applications with objections.
The Townhouse and Low-Rise Code, which became operational on 31 March 2025, introduced deemed-to-comply standards under Clause 55 of all planning schemes. Developments that meet all applicable standards receive automatic approval without subjective neighbourhood character assessments. This change particularly benefits developers in the General Residential Zone and Residential Growth Zone across Eastern Suburbs municipalities.
Third-party appeal rights were substantially modified under the reforms. Developments meeting deemed-to-comply standards for homes, duplexes, townhouses, and low-rise apartments no longer require notice to neighbours and have no third-party appeal rights. For higher-density apartments, only directly impacted neighbours receive notice and appeal rights, eliminating objections from people living outside the immediate area.
Selecting Your Development Site: Zoning and Planning Scheme Analysis
Identifying the appropriate block requires understanding how Victorian planning schemes regulate land use and development potential. Each of the six Eastern Suburbs councils maintains its own planning scheme, though all schemes follow the Victoria Planning Provisions (VPP) structure established by the State Government.
Zoning determines what you can build and under what conditions. The General Residential Zone (GRZ) applies to most established residential areas across Whitehorse, Boroondara, and Manningham. This zone permits townhouse development with a planning permit, subject to ResCode standards or the new deemed-to-comply pathway. The Residential Growth Zone (RGZ) provides greater flexibility for medium-density housing and typically applies to areas near activity centres and transport corridors.
The Neighbourhood Residential Zone (NRZ) imposes stricter limitations on dwelling numbers and building height, generally restricting development to one or two dwellings per lot. Developers should verify zoning before purchasing land, as rezoning applications involve lengthy processes with uncertain outcomes. The City of Whitehorse, City of Boroondara, and Manningham City Council each apply these zones differently based on their Municipal Planning Strategies.
Planning overlays add additional controls beyond base zoning requirements. Heritage Overlays restrict alterations to buildings and require planning permits for demolition. Design and Development Overlays (DDO) impose specific built form requirements for building height, setbacks, and site coverage. Vegetation Protection Overlays (VPO) protect significant trees and may limit development footprints. Environmental Significance Overlays (ESO) apply to environmentally sensitive areas and may restrict development entirely.
Developers should obtain a planning property report from the relevant council before purchasing land. These reports identify all applicable zones, overlays, and planning scheme provisions affecting the site. The City of Monash, Knox City Council, and Maroondah City Council each provide these reports through their planning departments, typically within 5-10 business days.
Financial Considerations: Holding Costs and Development Funding
Purchasing land for future development involves ongoing holding costs that accumulate until construction commences. Understanding these costs helps developers evaluate project feasibility and determine optimal development timing.
Council rates apply to all land in Victoria, regardless of development status. Rates vary significantly between municipalities, with the City of Boroondara generally charging higher rates than Knox City Council or Maroondah City Council. Vacant land typically receives lower rates than improved properties, but developers should budget $2,000-$5,000 annually for standard residential lots in Eastern Suburbs municipalities.
Land tax applies to Victorian landholdings with total taxable value exceeding $50,000 (for individuals) or $25,000 (for trusts and companies). The State Revenue Office calculates land tax based on site value as determined by the Valuer-General Victoria. Developers holding multiple properties may face substantial land tax liabilities, particularly in high-value areas like Boroondara and Whitehorse. The 2026 land tax rates range from 0.2% to 2.25% depending on total landholding value.
Stamp duty (land transfer duty) represents a significant upfront cost when purchasing land in Victoria. The duty rate varies based on purchase price, ranging from 1.4% for properties under $25,000 to 5.5% for properties over $960,000, plus additional duty on amounts exceeding this threshold. A $800,000 land purchase in Manningham or Whitehorse typically incurs approximately $43,000 in stamp duty.
The Victorian Government extended its off-the-plan stamp duty concession until 1 October 2026, allowing buyers of new apartments and townhouses to calculate duty on land value plus completed construction at contract date rather than final settlement. This concession may reduce dutiable value to 60-70% of purchase price, potentially saving developers over $28,000 on a $620,000 off-the-plan purchase.
Loan establishment fees, legal fees, and conveyancing costs add $3,000-$8,000 to acquisition costs. Developers should also budget for soil testing ($1,500-$3,000), surveying ($2,000-$5,000), and town planning consultancy fees ($3,000-$8,000) when evaluating sites for future development.
Site Assessment: Technical Due Diligence for Development Sites
Conducting thorough site assessment before purchasing land helps developers identify constraints that may affect development feasibility or construction costs. Victorian planning schemes require consideration of site characteristics when assessing planning permit applications.
Soil testing determines land suitability for building by assessing composition, stability, and bearing capacity. Reactive clay soils common across Eastern Suburbs municipalities may require expensive pier and beam foundations rather than standard concrete slabs. A geotechnical investigation typically costs $1,500-$3,000 but may identify soil conditions that add $30,000-$80,000 to construction costs.
Developers should make contracts subject to satisfactory soil test results or conduct testing before signing. The City of Whitehorse and Manningham City Council planning schemes include provisions requiring consideration of site conditions when assessing development applications. Poor soil conditions may necessitate design modifications that reduce development yield or increase costs beyond project feasibility.
Site dimensions and topography affect development potential under ResCode standards and the Townhouse and Low-Rise Code. Minimum lot sizes vary between zones and municipalities. The City of Boroondara generally requires larger minimum lot sizes than Knox City Council or Maroondah City Council. Sloping sites may require cut and fill earthworks, retaining walls, and modified building designs that increase construction costs.
Drainage and stormwater management represent critical considerations under Victorian planning schemes. Sites in flood-prone areas may require Land Subject to Inundation Overlays (LSIO) or Special Building Overlays (SBO) that restrict development or impose specific design requirements. Melbourne Water and council drainage departments provide flood mapping and stormwater requirements for specific sites.
Easements and restrictive covenants may limit development potential. Drainage easements typically prohibit building within specified distances of underground pipes. Electricity easements may restrict building heights. Restrictive covenants from previous subdivisions may limit dwelling numbers, building materials, or design elements. A Section 32 Vendor Statement discloses easements and covenants, but developers should verify these through title searches before purchasing.
Planning Permit Requirements and Assessment Pathways
Understanding which planning permit pathway applies to your proposed development helps developers evaluate project timelines and approval probability. The 2025 planning reforms created distinct assessment processes based on development type and compliance with deemed-to-comply standards.
A planning permit is always required for two or more dwellings on a lot in residential zones across Victoria. This requirement applies regardless of whether you build immediately or years after purchasing land. The Responsible Authority (typically the municipal council) assesses permit applications against planning scheme provisions, including zone requirements, overlay controls, and ResCode standards.
The VicSmart process applies to certain development types, including second dwellings and two-lot subdivisions. VicSmart applications receive decisions within 10 business days and involve simplified assessment criteria. The City of Whitehorse, City of Boroondara, and other Eastern Suburbs councils process VicSmart applications for eligible projects, though not all development types qualify.
The deemed-to-comply pathway under the Townhouse and Low-Rise Code provides the fastest approval route for townhouses and apartments up to three storeys. Developments meeting all applicable standards under Clause 55 receive automatic approval without extended consultation or appeal processes. Standards cover street setbacks, building height, side and rear setbacks, walls on boundaries, site coverage, access, daylight to existing windows, overshadowing, and overlooking.
Projects that don’t meet deemed-to-comply standards undergo standard assessment against planning scheme objectives and decision guidelines. This pathway involves longer timeframes and potential third-party appeals. Developers should engage town planning consultants early to determine which pathway applies and whether design modifications could achieve deemed-to-comply status.
Council-Specific Requirements Across Eastern Suburbs Municipalities
Each Eastern Suburbs council applies planning scheme provisions differently based on local policies and Municipal Planning Strategies. Understanding council-specific requirements helps developers evaluate sites and prepare permit applications that align with local priorities.
The City of Whitehorse emphasises neighbourhood character protection in established residential areas while supporting increased density near activity centres and transport corridors. The council’s planning scheme includes numerous Neighbourhood Character Overlays and Design and Development Overlays that impose specific built form requirements. Developers should review the Whitehorse Housing Strategy when evaluating sites, as it identifies preferred locations for medium-density development.
The City of Boroondara maintains strict heritage and neighbourhood character controls across much of the municipality. Approximately 25% of properties fall within Heritage Overlays, requiring planning permits for demolition and imposing design requirements for new development. The council’s planning scheme includes detailed local policies on residential development that supplement state-level ResCode standards.
Manningham City Council applies a mix of residential zones with particular focus on protecting the Green Wedge and environmentally sensitive areas along the Yarra River corridor. The council’s planning scheme includes Environmental Significance Overlays and Vegetation Protection Overlays that may restrict development on certain sites. Developers should verify overlay controls before purchasing land in Manningham.
The City of Monash supports medium-density development near activity centres and the Monash National Employment and Innovation Cluster. The council’s planning scheme includes Activity Centre Zone provisions that encourage mixed-use development and higher-density residential projects in designated locations. Sites outside these areas face more restrictive controls under residential zones.
Knox City Council and Maroondah City Council generally apply less restrictive planning controls than inner Eastern Suburbs municipalities. Both councils support medium-density development in appropriate locations, though neighbourhood character considerations still apply in established residential areas. Developers may find greater development potential per dollar of land cost in these outer Eastern Suburbs municipalities.
Timing Considerations: When to Build After Purchasing Land
Determining optimal timing for development after land purchase involves balancing holding costs, market conditions, and regulatory requirements. Victorian planning schemes and estate covenants may impose timeframes for commencing construction.
Some land estates include covenants requiring building commencement within specified periods, typically 12-24 months from settlement. These covenants aim to encourage community development and prevent land banking. Developers should review covenant terms before purchasing, as failure to commence construction within required timeframes may result in penalties or forced sale provisions.
Council planning schemes generally don’t impose mandatory building timeframes for individual lots, though planning permits include expiry provisions. Standard planning permits expire if development doesn’t commence within two years of issue. Developers can apply for permit extensions before expiry, though councils may require updated plans or impose new conditions reflecting changed planning scheme provisions.
Market timing considerations affect development feasibility and potential returns. Purchasing land during market downturns may provide acquisition cost savings, but developers must fund holding costs until market conditions support profitable development. The Eastern Suburbs property market experiences cyclical fluctuations, with median land values in Whitehorse and Boroondara generally appreciating 4-7% annually over long-term periods.
Construction cost inflation represents a significant consideration for developers holding land long-term. Victorian building costs increased approximately 15-20% between 2020-2024 due to material shortages and labour constraints. Developers should factor potential cost increases when evaluating extended holding periods, as construction budgets prepared at land purchase may prove inadequate years later.
Development Approvals: Building Permits and Compliance
Securing a planning permit represents only the first approval stage for development projects. Building permits and compliance with Victorian building regulations apply to all construction work regardless of when you purchased the land.
A building permit is always required before commencing construction in Victoria. The Building and Plumbing Commission regulates building permits through registered building surveyors who assess compliance with the Building Code of Australia and Victorian building regulations. Building permit applications require detailed construction drawings, engineering specifications, and energy efficiency documentation.
The building permit process operates separately from planning permit processes, though both must be satisfied before construction commences. Developers should engage building surveyors early to identify potential compliance issues that may affect design or construction methodology. Building permit timeframes typically range from 4-8 weeks for standard residential projects.
Statement of Compliance requirements apply to subdivision projects creating separate titles for townhouses or units. Developers must obtain a Statement of Compliance from the relevant council before the Registrar of Titles issues new certificates of title. This process involves demonstrating completion of all subdivision works, including roads, drainage, services, and common property improvements.
Owners corporation establishment applies to subdivisions creating common property or shared facilities. Victorian legislation requires registration of owners corporations before settlement of individual lots. Developers should budget for legal fees, surveying costs, and initial owners corporation funding when planning subdivision projects.
GST Implications for Land Purchase and Development
Understanding Goods and Services Tax (GST) implications helps developers structure land purchases and development projects tax-efficiently. GST treatment varies depending on property type, vendor status, and intended use.
Vacant land sales may be GST-inclusive or GST-exclusive depending on vendor circumstances. Registered vendors selling land as part of enterprise activities must charge GST on the sale price. Developers purchasing GST-inclusive land may claim input tax credits if registered for GST and using the land for taxable supplies (such as selling completed dwellings).
The contract of sale should clearly specify whether the purchase price includes GST. Developers should verify vendor GST registration status and confirm GST treatment before exchanging contracts. Incorrect GST assumptions may result in unexpected costs of 10% of purchase price.
The margin scheme provides an alternative GST calculation method for property development. Under the margin scheme, GST applies only to the profit margin (sale price minus cost base) rather than the full sale price. This scheme may reduce GST liability on development projects, though strict eligibility criteria and documentation requirements apply.
Developers should engage tax advisors before purchasing land to determine optimal GST treatment and structure. The Australian Taxation Office provides detailed guidance on property development GST obligations, though professional advice remains essential for complex projects.
For related information on finding and assessing development sites in Victoria, you may also find these resources helpful: How to Find Development Sites, Soil Classification Guide, and Easement on Property.
Frequently Asked Questions
What costs should I budget for when buying land and building later in Victoria?
Budget for stamp duty (1.4-5.5% of purchase price), legal and conveyancing fees ($2,000-$5,000), soil testing ($1,500-$3,000), and surveying ($2,000-$5,000). Ongoing holding costs include council rates ($2,000-$5,000 annually), land tax (if total landholdings exceed thresholds), and loan interest if financing the purchase. Planning permit applications cost $1,500-$3,000 for standard residential projects, with additional town planning consultant fees of $3,000-$8,000 for complex sites.
Can I purchase land in Victoria without building immediately?
Yes, you can purchase land in Victoria and delay construction indefinitely, subject to any estate covenants requiring building commencement within specified timeframes. Council planning schemes don’t impose mandatory building timeframes for individual lots, though planning permits expire if development doesn’t commence within two years. Developers should verify covenant terms before purchasing and budget for ongoing holding costs including rates and land tax.
How long does it take to get a planning permit in Victoria under the new 2025 reforms?
Planning permit timeframes vary by development type under the 2025 reforms. Stand-alone homes and duplexes receive decisions within 10 days under the streamlined pathway. Townhouses and low-rise developments receive decisions within 30 days. Larger apartment buildings receive decisions within 60 days. These timeframes apply to straightforward applications; complex projects or those requiring additional information may take longer.
What zoning is best for townhouse development in Eastern Suburbs municipalities?
The Residential Growth Zone (RGZ) provides the most flexibility for townhouse development, typically allowing higher densities and reduced setback requirements. The General Residential Zone (GRZ) permits townhouse development with planning permits subject to ResCode standards or deemed-to-comply pathways. The Neighbourhood Residential Zone (NRZ) restricts development to one or two dwellings per lot. Developers should verify zoning before purchasing, as rezoning involves lengthy processes with uncertain outcomes.
Do I need a planning permit if I’m only subdividing land without building?
Yes, subdivision requires a planning permit in Victoria regardless of whether you build immediately. The permit process involves assessment against planning scheme provisions, including minimum lot sizes, access requirements, and service provision. VicSmart processes apply to two-lot subdivisions meeting eligibility criteria, providing 10-day decisions. Larger subdivisions undergo standard assessment with longer timeframes.
How do the 2025 planning reforms affect third-party appeals?
Developments meeting deemed-to-comply standards for homes, duplexes, townhouses, and low-rise apartments have no third-party appeal rights under the 2025 reforms. For higher-density apartments, only directly impacted neighbours receive notice and appeal rights. This change eliminates objections from people living outside the immediate area, potentially reducing approval timeframes and increasing development certainty.
What restrictions apply to landowners who buy land in Victoria for investment rather than immediate development?
Landowners may face planning overlays restricting future development, including Heritage Overlays, Design and Development Overlays, and Environmental Significance Overlays. Estate covenants may require building commencement within specified timeframes. Undeveloped land incurs ongoing holding costs including council rates and land tax. Developers should conduct thorough due diligence before purchasing to identify restrictions that may affect development feasibility or timing.
Need Professional Guidance?
If you’re looking to buy land in Victoria with plans to develop later, understanding the planning framework and conducting thorough due diligence are important first steps. Contact SQM Architects to discuss how we can assist with site assessment, feasibility analysis, and navigating the planning permit process for your development project.
This article provides general information about Victorian planning for property developers. It does not constitute professional advice. For specific guidance on your project, contact SQM Architects (ARBV Reg. No. 51498) for a complimentary site assessment.
