A Victorian parliamentary inquiry tabled in December 2025 has called for an immediate pause on the state government’s plan to demolish and redevelop 44 public housing towers across Melbourne — and the ripple effects for private apartment developers are more significant than many may realise. While the inquiry focused on social housing policy, its findings touch directly on planning policy direction, medium-density development pipelines, and the broader trajectory of apartment development in Melbourne’s inner and middle-ring suburbs.
For property developers actively pursuing or planning apartment projects in Melbourne’s Eastern Suburbs and beyond, this inquiry represents a meaningful shift in the political and planning environment. The pause on tower demolitions may redirect development activity, alter the competitive landscape for mixed-tenure sites, and signal a more cautious approach from the state government toward large-scale residential redevelopment. Understanding what changed, who is affected, and what action to take now is essential for protecting your development pipeline.
This article outlines the key findings of the Legislative Council Legal and Social Issues Committee inquiry, the immediate planning implications for private developers, and the practical steps you may consider as the government formulates its formal response.
What the Inquiry Found — and What It Recommends
The Legislative Council Legal and Social Issues Committee tabled its final report on 2 December 2025, following more than 800 public submissions and five days of hearings held at or near tower sites in Flemington, North Melbourne, South Yarra, and Richmond. The committee made 36 findings and 21 recommendations, with the central recommendation being a pause on all redevelopment activities until the government releases detailed condition reports, feasibility studies, and site-specific cost-benefit analyses for each of the 44 towers.
The inquiry found that the government had failed to provide key documents to justify demolition over alternatives such as refurbishment. Critically, when the Legislative Council ordered the production of all relevant documents in November 2023, the government produced only 12 of those documents and claimed Executive Privilege over 146 others. Committee Chair Joe McCracken stated that this position was constitutionally untenable, noting that the Victorian Constitution gives Parliament the power to demand documents.
The committee also found that Homes Victoria had engaged in practices that caused significant distress to residents, with inadequate communication about relocation rights and the right of return. A separate heritage nomination for the Hotham Estate in North Melbourne — accepted by Heritage Victoria in late 2025 — has added a further layer of complexity, with any construction at that site now delayed pending a heritage assessment.
In February 2026, a coalition of built environment professionals known as Building Action Now (BAN) published an open letter urging the Minister for Housing and Building to halt demolitions immediately. The group cited the potential to save significant costs through retrofit and refurbishment, and pointed to the inquiry’s findings as evidence that the demolition programme had proceeded without adequate justification.
The Planning Policy Context: How This Intersects With Recent Reforms
The inquiry’s findings sit in an interesting tension with the broader direction of Victorian planning reform. The Planning Amendment (Better Decisions Made Faster) Bill 2025 and the Plan for Victoria — released in February 2025 — both establish housing supply as a central statutory objective. A new mandatory objective added to Section 4 of the Planning and Environment Act 1987 now requires the planning system to increase housing supply, diversity, and affordability. This may prevent the Responsible Authority from using neighbourhood character as a sole basis for refusal where housing targets are not being met.
At the same time, the Activity Centres Programme has expanded to 50 train and tram zones, with the new Housing Choice and Transport Zone (HCTZ — Clause 32.10) and Built Form Overlay (BFO — Clause 43.06) enabling heights of up to 20 storeys in core areas with streamlined planning permit pathways. Councils including City of Whitehorse — covering Blackburn and Nunawading — have already seen the BFO applied, with third-party appeal rights at VCAT significantly limited for compliant applications.
The inquiry’s call for a pause on public tower demolitions does not directly override these reforms. However, it may create political hesitation around large-scale residential redevelopment more broadly, particularly where community consultation processes are perceived as inadequate. Developers pursuing medium-density and high-density apartment projects should be aware that the political environment around community engagement has shifted — and that the Responsible Authority may apply greater scrutiny to consultation processes as a result.
Who Is Affected: Private Developers and the Mixed-Tenure Pipeline
The most directly affected private developers are those who had been exploring government-backed ground lease models on public housing tower sites. The inquiry’s findings create a significant bottleneck for this pipeline. Developers previously eyeing these sites for mixed-tenure development — where private apartments are delivered alongside social and community housing under a ground lease arrangement — should expect delays while the government is required to produce site-specific cost-benefit analyses and respond formally to the committee’s 21 recommendations.
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The government has continued to proceed with works at several sites, including Elgin Street in Carlton, Holland Court in Flemington, and Simmons Street in South Yarra, and announced further towers for redevelopment across Prahran, Flemington, Kensington, St Kilda, Albert Park, and North Melbourne in early 2026. However, the political and legal environment around these sites is now considerably more complex, with a class action filed by residents in North Melbourne and Flemington still unresolved.
For developers not directly involved in the public housing tower programme, the inquiry’s findings may still have indirect implications. The broader policy debate around demolition versus refurbishment, and the scrutiny applied to large-scale residential redevelopment, may influence how the Responsible Authority approaches planning permit applications for apartment developments in established residential areas — particularly where existing community infrastructure or heritage values are present.
Timeline: Where Things Stand as of Early 2026
- September 2023: Victorian Government announces plan to demolish and redevelop all 44 public housing towers by 2051, targeting accommodation for up to 30,000 people.
- November 2023: Legislative Council orders production of all relevant government documents. Government produces 12 of 158 documents, claiming Executive Privilege over 146.
- March–April 2025: Planning Amendment VC267 introduces the new Clause 55 (Townhouse and Low-Rise Code) and Clause 57 (Four-Storey Apartments), reshaping the medium-density planning permit pathway.
- February 2025: Plan for Victoria released, setting a target of 2.24 million homes by 2051 and expanding the Activity Centres Programme to 50 zones.
- 2 December 2025: Legislative Council Legal and Social Issues Committee tables its final report, recommending an immediate pause on all tower demolition and redevelopment activities.
- Late December 2025: Heritage Victoria accepts the Hotham Estate nomination, delaying construction at the North Melbourne site pending heritage assessment.
- February 2026: Building Action Now publishes open letter urging the Minister to halt all demolitions. Government yet to formally respond to the inquiry’s 21 recommendations.
- Ongoing: Class action by North Melbourne and Flemington residents against Homes Victoria remains unresolved. Government continues works at selected sites.
What Developers Should Do Now
The inquiry’s findings do not change the fundamental planning framework for private apartment development in Victoria. The new three-tier planning permit classification system, the expanded Activity Centres Programme, and the "deemed to comply" pathways under the updated Clause 55 (Townhouse and Low-Rise Code) and new Clause 57 remain in place. For developers pursuing medium-density projects in Melbourne’s Eastern Suburbs, these reforms continue to offer meaningful opportunities to streamline approvals and reduce VCAT exposure.
That said, the current environment warrants a more considered approach to several aspects of project planning. Developers may wish to consider the following actions:
- Review your community engagement strategy. The inquiry’s findings have elevated political sensitivity around consultation processes. Developers pursuing larger apartment projects — particularly those classified as Type 3 under the new permit system — may benefit from more robust pre-application engagement with neighbours and local stakeholders, even where the planning scheme does not strictly require it.
- Assess mixed-tenure site exposure. If your pipeline includes sites adjacent to or associated with public housing tower redevelopment precincts, seek updated advice on likely programme timelines and the impact of any heritage nominations or legal proceedings on surrounding land values and development feasibility.
- Prioritise "deemed to comply" design outcomes. Under the updated Clause 55 and new Clause 57, meeting the numerical standards for townhouse and low-rise apartment development significantly limits the grounds on which third-party objectors may pursue VCAT appeals. Designing to these standards from the outset may reduce approval risk in the current environment.
- Monitor the government’s formal response to the inquiry. The Victorian Government has not yet formally responded to the committee’s 21 recommendations. Any policy changes arising from that response — including revised requirements for cost-benefit analysis, community consultation, or affordable housing contributions — could affect planning permit conditions for private apartment developments.
- Consider the affordable housing fast-track pathway. Under the Development Facilitation Programme, developers who provide 10% affordable housing (sold at a 30% discount) or gift 3% to a registered housing agency may currently be eligible for expedited planning permit processing — though programme terms are subject to change. In the current political environment, this pathway may also offer reputational benefits.
SQM Architects has delivered a wide range of projects across Melbourne’s Eastern Suburbs and has navigated multiple rounds of planning reform. Our team can help you assess how the current policy environment may affect your specific site and development programme.
Frequently Asked Questions
Does the parliamentary inquiry’s recommendation affect planning permits for private apartment developments?
Not directly. The inquiry’s recommendations are directed at the Victorian Government’s public housing tower programme, not at private development applications. However, the broader policy debate may influence how the Responsible Authority approaches community consultation requirements and planning permit conditions for larger apartment projects, particularly in areas near affected tower sites.
Are the Activity Centres Programme and new planning permit pathways still available to developers?
Yes. The Housing Choice and Transport Zone (HCTZ — Clause 32.10), Built Form Overlay (BFO — Clause 43.06), and the three-tier planning permit classification system introduced by the Planning Amendment (Better Decisions Made Faster) Bill 2025 remain in place. These reforms continue to offer streamlined pathways for medium-density and high-density apartment development in designated activity centres, including zones within City of Whitehorse and other Eastern Suburbs councils.
What is the ground lease model, and should I be considering it for my project?
The ground lease model is a financial and legal structure used in the public housing tower redevelopment programme, where a developer builds on government-owned land under a long-term lease rather than purchasing the land outright. The inquiry has raised questions about the efficacy of this model. Developers who had been exploring ground lease arrangements on public housing sites should seek updated legal and financial advice given the current uncertainty around programme timelines.
How does the heritage nomination of the Hotham Estate affect nearby development sites?
Heritage Victoria’s acceptance of the Hotham Estate nomination means that any construction at the North Melbourne site is delayed pending a heritage assessment. Developers with sites in proximity to the estate may wish to seek advice on whether the heritage nomination could affect planning permit applications for nearby projects, particularly where the planning scheme includes heritage overlays or neighbourhood character provisions.
What is the "deemed to comply" pathway, and how does it reduce my planning risk?
Under the updated Clause 55 (Townhouse and Low-Rise Code) and new Clause 57 (Four-Storey Apartments), developments that meet the specified numerical standards — including setbacks, heights, overlooking, and overshadowing — are considered to comply with ResCode. This significantly limits the grounds on which third-party objectors may pursue VCAT appeals against the planning permit. Designing to these standards from the outset is one of the most effective ways to reduce approval risk and timeline uncertainty in the current environment.
Will the inquiry’s findings affect affordable housing requirements for private developers?
The inquiry’s recommendations focus on the public housing tower programme rather than private development obligations. However, the broader policy debate around social housing supply may influence future planning scheme amendments. Developers should monitor the government’s formal response to the inquiry’s 21 recommendations, as any changes to affordable housing contribution requirements could affect development feasibility modelling.
How long will it take for the government to formally respond to the inquiry?
The Victorian Government has not yet provided a formal response to the committee’s recommendations as of early 2026. Government responses to parliamentary committee reports typically take several months, though politically sensitive inquiries can take longer. Developers should plan for ongoing uncertainty around the public housing tower programme through at least mid-2026.
Conclusion
The December 2025 parliamentary inquiry into Melbourne’s public housing towers has introduced a layer of policy uncertainty that private apartment developers cannot afford to ignore. While the inquiry’s recommendations are directed at the government’s public housing programme, the findings reflect a broader shift in political sentiment around large-scale residential redevelopment, community consultation, and the balance between housing supply and social impact. For developers operating in Melbourne’s Eastern Suburbs and inner-ring precincts, the practical response is to design for compliance, invest in genuine community engagement, and monitor the government’s formal response to the inquiry’s 21 recommendations closely.
The fundamentals of the Victorian planning system remain favourable for well-prepared developers. The new "deemed to comply" pathways under Clause 55 and Clause 57, the expanded Activity Centres Programme, and the three-tier planning permit classification system all continue to offer meaningful opportunities to reduce approval timelines and VCAT exposure. With extensive experience in Melbourne’s Eastern Suburbs, SQM Architects may be well-placed to help you navigate this evolving environment and explore options for your project in the current planning context.
Book a Free Strategy Session — contact SQM Architects on (03) 9005 6588 to discuss how the current planning environment may affect your development pipeline.
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 for a complimentary site assessment.
