Why the Property Development Process Starts Long Before You Buy
Melbourne’s property development landscape has shifted considerably over the past two years. A wave of legislative reform — including the Consumer and Planning Legislation Amendment (Housing Statement Reform) Act 2025 and the landmark Planning Amendment (Better Decisions Made Faster) Act 2026 — has reshaped how planning permits are assessed, how long approvals take, and what financial obligations developers now carry. For investors getting started in Melbourne’s Eastern Suburbs, understanding this reformed environment is no longer optional — it is foundational to project viability.
Victoria’s population is projected to grow from approximately 7.2 million residents in 2025 to 10.3 million by 2050. That sustained demand creates genuine opportunity for well-prepared developers. But the same growth pressure that creates opportunity also drives regulatory complexity. Planning permit processing times currently average approximately 140 days — more than double the statutory timeframe — costing the Victorian economy an estimated $1 billion annually in delays. Knowing how to navigate this environment efficiently may be the single greatest determinant of whether a project delivers its potential development outcome.
This article walks through the key stages of the property development process in Melbourne, with particular focus on the Eastern Suburbs councils — City of Whitehorse, City of Boroondara, Manningham City Council, City of Monash, Knox City Council, and Maroondah City Council. It reflects the current regulatory environment as at 2025–26, including recent reforms that are already affecting how applications are assessed. SQM Architects has delivered 210+ projects across these councils, and the guidance below draws on that accumulated experience.
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Step 1: Site Identification and Due Diligence
The development process begins well before any design work is commissioned. Identifying a site with genuine development potential requires a structured due diligence process that examines zoning, overlays, title constraints, and financial feasibility in parallel — not sequentially.
Zoning determines what can be built and at what density. In Melbourne’s Eastern Suburbs, the most common residential zones for multi-dwelling development are the General Residential Zone (GRZ), the Neighbourhood Residential Zone (NRZ), and the Residential Growth Zone (RGZ). Each carries different density expectations and ResCode requirements. The RGZ typically supports higher-density outcomes but commands a price premium on land acquisition. The NRZ, while more restrictive, still offers viable dual occupancy and small townhouse opportunities in the right circumstances.
Overlays add a further layer of complexity. Heritage overlays, Neighbourhood Character Overlays, Design and Development Overlays, and flood or vegetation overlays can each impose additional requirements — or constrain development altogether. Missing an overlay at the due diligence stage is one of the most common and costly mistakes developers make. For a detailed look at how overlay and zone requirements interact, see our guide to common mistakes in Victoria land subdivision. A thorough planning report, overlay summary, and referral check should be completed before any site is unconditionally purchased.
Title searches may also reveal restrictive covenants that limit dwelling numbers or building types. Importantly, the Better Decisions Made Faster Act 2026 introduces new flexibility around how restrictive covenants are treated in planning permit decisions — a change that may be particularly relevant for established Eastern Suburbs neighbourhoods where single-dwelling covenants have historically constrained medium-density development. Understanding how these changes apply to a specific site may require early legal and planning advice.
Step 2: Project Feasibility — Getting the Numbers Right
A site that looks attractive on paper may not stack up financially once all costs are properly accounted for. A rigorous feasibility assessment is essential before committing to purchase, and it needs to reflect current market conditions, construction costs, financing requirements, and the full range of holding costs — including taxes that have become more significant in recent years. For a worked example of how feasibility modelling is structured in practice, see The Anatomy of a Property Development Feasibility Study.
Many lenders and feasibility practitioners use a minimum profit-on-cost margin — often cited in the range of 15–20% — as an indicative threshold for residential development viability, though this varies by project type, location, and lender requirements. These figures are indicative only and should be verified with your finance broker and quantity surveyor. Lenders typically require developers to contribute equity of around 35% of total project costs before providing construction finance, though requirements vary by lender and project profile.
Two tax obligations that have materially affected feasibility calculations in recent years deserve particular attention:
- Windfall Gains Tax (WGT): As of July 2023, landowners whose property is rezoned may pay up to 50% tax on the land value uplift. For sites being acquired with rezoning upside factored into the purchase price, this tax may significantly affect the financial case for acquisition.
- Vacant Residential Land Tax (VRLT): From 1 January 2026, certain undeveloped land in metropolitan Melbourne that has remained undeveloped for five or more continuous years may attract VRLT — even if the five-year period commenced before 2026. Developers holding sites without active development progress may need to factor this ongoing tax into their holding cost calculations.
Feasibility modelling should be prepared with input from your architect, a quantity surveyor, a town planner, and a finance broker. Each brings a different lens to the numbers, and gaps in any one area can produce a feasibility that looks viable on paper but fails in practice.
Step 3: Design and Planning Permit Preparation
Once a site has been acquired and feasibility confirmed, the design and planning permit preparation phase begins. This is where the quality of your professional team has the most direct impact on project outcomes. A well-prepared planning permit application — one that addresses council requirements proactively and presents a clear, consistent body of evidence — is significantly more likely to achieve approval without costly redesigns or extended delays.
Your architect will prepare architectural drawings showing the proposed development’s layout, height, setbacks, external appearance, and landscaping. These drawings must comply with the relevant planning scheme provisions, including ResCode standards for multi-dwelling developments, and any applicable overlay requirements. Since 2024–25, new residential codes for townhouses, low-rise apartments, and single dwellings have introduced updated measurable standards around daylight, cross-ventilation, functional room dimensions, storage, and noise — all of which need to be addressed in the design from the outset. For a detailed breakdown of current ResCode requirements, see our ResCode Victoria 2026 Developer’s Reference.
Supporting documentation typically required for a planning permit application includes:
- A design response statement addressing the planning scheme and any applicable codes
- Shadow diagrams and solar access analysis
- Landscape and canopy plans
- Stormwater and water-sensitive urban design (WSUD) documentation
- Traffic and car parking assessments (where required)
- Cultural heritage screening checks — and a Cultural Heritage Management Plan if triggered
- Referral authority responses (e.g., Melbourne Water, CFA, heritage bodies)
Applications that arrive at council with incomplete or inconsistent documentation are a primary cause of delays. Engaging all relevant consultants early and coordinating their reports into a single, coherent submission may meaningfully reduce the risk of further information requests and extended assessment timelines. For guidance on how architects and town planners collaborate on permit preparation, see Do I Need an Architect if I’ve Hired a Town Planner in Victoria?
Step 4: The Planning Permit Process — What to Expect in 2025–26
After lodgement, the planning permit application enters the assessment phase managed by the responsible authority — typically the relevant council. Understanding what happens during this phase, and how the reformed legislative environment affects it, helps developers plan their project timelines more accurately.
Victoria’s planning system is currently transitioning toward a three-stream assessment framework introduced by the Better Decisions Made Faster Act 2026. While the full framework has a default commencement date of 29 October 2027, the direction of reform is already influencing how applications are assessed. The three streams are broadly:
- Type 1: Low-complexity applications with streamlined assessment and limited third-party notification requirements.
- Type 2: Moderate-impact developments — expected to include townhouses and low-rise apartments — with a 30-day approval timeframe target, provided the proposal complies with applicable codes.
- Type 3: Larger, more complex, or higher-impact developments with a 60-day approval timeframe and full public consultation and third-party appeal rights.
Under the current system, public notification is required for most multi-dwelling applications. Neighbouring properties receive notice, and objections may be lodged. Where objections arise, council may request design amendments to address concerns around overlooking, overshadowing, neighbourhood character, or traffic. Multiple rounds of revision are not uncommon. Having an experienced architect and town planner manage the council liaison process — responding to issues promptly and constructively — may reduce the time spent in this phase considerably. For council-by-council timing data, see our Planning Permit Timeline Melbourne by Council guide.
If a planning permit is granted, it will typically include conditions that must be satisfied before construction commences or during construction. These conditions may relate to materials, landscaping, drainage, car parking, or other matters. Permit conditions must be read carefully and addressed in full — failing to comply with conditions can invalidate a permit.
Where a responsible authority fails to make a decision within the statutory timeframe, a developer may apply to VCAT for a deemed refusal review. The Better Decisions Made Faster Act 2026 also strengthens VCAT case management powers, which may assist in resolving disputes more efficiently once the reforms are fully implemented.
One meaningful improvement already in effect: the Housing Statement Reform Act 2025 extended default planning permit expiry timeframes. Where a permit does not specify its own timeframe, the new defaults are three years to commence a use or development (previously two years) and five years to complete a development (previously four years). These extended timeframes apply to permits issued both before and after the Act commenced, provided the permit had not already expired — a useful buffer for developers managing staged or complex projects.
Step 5: Building Permit and Pre-Construction
Obtaining a planning permit is a necessary but not sufficient step before construction can begin. A separate building permit is also required, issued by a registered building surveyor — either private or council-appointed. The building permit confirms that the proposed construction complies with the National Construction Code (NCC) and relevant Australian Standards.
Once a planning permit is granted, your architect will prepare a more detailed set of working drawings — sometimes called construction documentation — that forms the basis for both the building permit application and builder tender process. This documentation is more detailed than the planning drawings and addresses structural, hydraulic, electrical, and energy efficiency requirements.
The pre-construction phase also involves:
- Obtaining builder quotes and selecting a head contractor
- Finalising construction finance arrangements with your lender
- Satisfying any pre-commencement planning permit conditions
- Completing any required referral authority approvals
- Arranging site-specific insurances
Builder selection deserves careful attention. The period between 2022 and 2024 saw a significant number of construction businesses collapse across Australia, with Victoria particularly affected. Selecting a builder based solely on the lowest tender price carries material risk. Assessing a builder’s financial stability, track record on comparable projects, and contractual terms — including progress payment structures and defect liability provisions — may reduce the risk of project disruption during construction. For more on the tendering process, see our guide to Tender in Construction: 5 Things You Need to Know.
Step 6: Construction and Project Management
During the construction phase, the builder completes work in stages, with progress payments made at agreed milestones. Your building surveyor will conduct mandatory inspections at key stages — including footings, framing, and completion — to verify compliance with the building permit and NCC requirements. Failing or skipping these inspections can halt a project and create significant additional costs.
Active project management during construction is essential. Scope changes, material substitutions, and programme delays are common on development projects, and each carries cost and time implications. Having your architect engaged during construction — to administer the contract, review progress claims, and manage variations — provides an important layer of quality control and cost oversight.
For multi-dwelling developments that will be subdivided and sold as separate titles, the subdivision process runs in parallel with construction. A licensed land surveyor prepares the plan of subdivision, which must be approved by the responsible authority and relevant referral authorities before a Statement of Compliance can be issued. The Statement of Compliance is the Victorian equivalent of a subdivision certificate and is required before separate titles can be created.
Step 7: Completion, Occupancy, and Settlement
The final stage of the development process involves obtaining an occupancy permit (or certificate of final inspection) from your building surveyor, confirming that the completed building is suitable for occupation and complies with the building permit. For subdivided developments, the Statement of Compliance must also be obtained before individual titles are issued and settlements can proceed.
For off-the-plan sales, the sunset clause provisions introduced by the Sale of Land Amendment Act 2019 remain in effect. Developers cannot cancel off-the-plan contracts using sunset clauses without purchaser consent or a Supreme Court order — a constraint that underscores the importance of realistic project timelines in sales contracts.
Post-completion obligations may also include defect liability periods under the building contract, owners corporation establishment for multi-dwelling developments, and ongoing compliance with any planning permit conditions that apply to the ongoing use of the development.
2025–26 Regulatory Reforms: What Developers Need to Know Now
The volume of legislative change affecting Melbourne developers over the past two years is substantial. The following reforms are either already in effect or staged for implementation and may affect projects currently in planning or construction:
- Housing Statement Reform Act 2025: Extended permit expiry timeframes, strengthened VCAT case management, and amendments to planning scheme amendment processes. Most provisions commenced by 25 November 2025.
- Better Decisions Made Faster Act 2026: Received Royal Assent on 17 February 2026. Introduces three-stream planning permit assessment, tiered planning scheme amendment categories, affordable housing contribution mechanisms, and new restrictive covenant flexibility. Default commencement 29 October 2027, with supporting regulations to follow.
- New residential codes: Updated townhouse, low-rise apartment, and single dwelling codes are already in effect, introducing stronger deemed-to-comply pathways and measurable liveability standards.
- Vacant Residential Land Tax expansion: From 1 January 2026, certain undeveloped metropolitan land held for five or more years may attract VRLT. Developers holding sites without active development progress may need to seek advice on their exposure and what exemptions may apply.
- Plan for Victoria: The state’s strategic planning framework targets 70% of new dwellings in established suburbs near transport, jobs, and services. Projects aligned with these strategic directions may be better positioned for planning permit approval.
Staying across these changes — and understanding how they apply to specific sites and project types — is increasingly important context for development feasibility assessments and project planning. For a focused guide to the fast-track permit pathways introduced under recent reforms, see our Melbourne Developer’s Guide to Accelerated Permit Pathways in 2026.
Frequently Asked Questions
How long does the planning permit process typically take in Melbourne’s Eastern Suburbs?
Current average processing times across Victoria are approximately 140 days, though outcomes vary significantly by council, application complexity, and whether objections are lodged. Well-prepared applications for straightforward townhouse developments may achieve approval more quickly, while complex or contested applications can extend well beyond this average. The Better Decisions Made Faster Act 2026 targets 30-day timeframes for Type 2 applications (expected to include townhouses and low-rise apartments) once the framework is fully implemented from October 2027.
What is the difference between a planning permit and a building permit in Victoria?
A planning permit is issued by the responsible authority (typically the relevant council) and addresses land use, development form, and compliance with the planning scheme. A building permit is issued by a registered building surveyor and confirms compliance with the National Construction Code and structural requirements. Both are generally required for multi-dwelling developments, and they are obtained at different stages of the project.
What residential zones are most suitable for multi-dwelling development in the Eastern Suburbs?
The General Residential Zone (GRZ) and Residential Growth Zone (RGZ) are typically the most development-friendly zones for multi-dwelling projects. The Neighbourhood Residential Zone (NRZ) is more restrictive but may still support dual occupancy or small townhouse developments depending on the council’s local schedule. Zoning should always be assessed alongside applicable overlays, which can significantly affect what is achievable on a given site.
What is the Vacant Residential Land Tax and how might it affect my development site?
From 1 January 2026, certain undeveloped residential land in metropolitan Melbourne that has remained undeveloped for five or more continuous years may attract the Vacant Residential Land Tax (VRLT). The five-year period can include time before 2026, meaning long-held sites may already meet the threshold. Developers holding sites without active development progress may need to seek specific advice on their exposure and what exemptions may apply.
Can restrictive covenants prevent multi-dwelling development in established suburbs?
Restrictive covenants — particularly single-dwelling covenants — have historically constrained medium-density development in established Eastern Suburbs neighbourhoods. The Better Decisions Made Faster Act 2026 introduces new flexibility around how restrictive covenants are treated in planning permit decisions, which may open up previously constrained sites. The practical application of these changes will depend on the specific covenant wording and site circumstances, and early legal and planning advice is recommended.
What is a Statement of Compliance and when is it required?
A Statement of Compliance is the document issued by the responsible authority confirming that all conditions of a subdivision permit have been satisfied. It is required before a plan of subdivision can be registered with Land Use Victoria and before separate titles can be created for individual dwellings. For multi-dwelling developments being sold as separate lots, obtaining the Statement of Compliance is a critical step in the settlement process.
How does the Windfall Gains Tax affect development feasibility?
The Windfall Gains Tax, which took effect in July 2023, may apply where a rezoning increases the value of land — with a tax rate of up to 50% on the value uplift. For developers acquiring sites with rezoning upside factored into the purchase price, this tax may materially affect the financial viability of the project. It is important to factor WGT into feasibility assessments before committing to site acquisition.
Getting Started: Key Takeaways for Melbourne Developers
The property development process in Melbourne involves considerably more complexity in 2025–26 than it did even two or three years ago. Legislative reform, new residential codes, expanded tax obligations, and evolving council requirements all affect how projects are planned, assessed, and delivered. The developers who navigate this environment most effectively tend to share a common approach: they invest in thorough due diligence before purchase, engage experienced professionals early, and treat planning permit preparation as a strategic exercise rather than an administrative one.
SQM Architects has worked across 210+ projects in Melbourne’s Eastern Suburbs, with extensive experience across planning permit applications and a strong repeat client rate that reflects the value of getting the process right from the outset. Whether you are getting started on your first development or expanding an existing portfolio, understanding the current regulatory environment — and how it applies to your specific site — is the most important investment you can make before breaking ground.
Get Your Free Site Assessment from SQM Architects and find out what your site may achieve under Melbourne’s current planning framework.
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.
