Loophole Allows More than Two Dwellings in NRZ

Two recent VCAT cases have looked closely at the implications of the restrictions contained in the Neighbourhood Residential Zone (NRZ) that specify the maximum number of dwellings per lot (usually capped at two). The outcome of those cases opens up an opportunity for applicants to develop land in the NRZ with more than the maximum number of dwellings specified in the zone at Clause 32.09-3.

The ‘loophole’ is opened as a result of the ‘Subdivision’ provisions in Clause 32.09-5 containing no restriction on the number of lots that a parcel of land can be divided into.

In both, Auslong Development Management Pty Ltd v Whitehorse CC [2016] VCAT 121 and Wilson v Yarra Ranges SC [2015] VCAT 1142, The Tribunal found that the two dwelling restriction contained in the Neighbourhood Residential Zone did not prohibit the ‘subdivision’ of a lot into more than two lots.

The take-away message for permit applicants is that, when an appropriately structured application for subdivision and development is lodged it may be possible to achieve a yield higher than the maximum number of dwellings specified in the NRZ.

In Wilson the Tribunal provided an interpretation from a legal Member. Although the permit to develop the land with three dwellings was refused on its merits the Tribunal found that it was not prohibited under the NRZ, and noted:

  1. In summary then, there are four ways to achieve approval for a medium density development. The first, and most common option, is an application for the construction of two dwellings on a lot. Such applications are primarily assessed using Clause 55.
  1. The second option is an application for both the construction of two dwellings on a lot (Clause 55) and the subdivision of land to create a lot for each dwelling (Clause 56).
  1. The third option is an application for both the subdivision of the land into lots (Clause 56) and then construction of a separate dwelling on each of the newly created lots (Clause 54). That is the application made by Mr Wilson.
  1. The fourth option is an application for both the subdivision of the land into lots (Clause 56) and then construction of two dwellings on each of the newly created lots (Clause 55).
  1. Whilst options 2 and 3/4 may appear the same, the order in which the application is assessed is significant in terms of the particular provisions that are used and of critical importance in the NRZ where it is not possible to construct more than two dwellings on each lot.
  1. I earlier mentioned the confusion that was caused because of the way Council assessed the application. Under option 3, the assessment of the subdivision should have been firstly against Clause 56 and then the individual dwellings should have been assessed against Clause 54.
  1. I accept that in practice the two assessments are interrelated because both have to be considered having regard to the zone purposes, decision guidelines and relevant State and local policies. However in this case, the Council officer’s report made reference to Clauses 55 and 56, nothing about Clause 54 and did not take into account the order in which the application should have been assessed. Although it may not have changed the eventual decision to refuse the application, it did lead to the erroneous conclusion that the application was prohibited. (Emphasis added)

 In Auslong the Tribunal reinforced this position when it noted:

  1. The Council written submissions include the following:

At one level, this dispute plays out at a theoretical level. Tension (if not a basis to argue orderly and proper planning processes are circumvented) lies between:

  • assessing the merits of a three lot subdivision by reference to development plans for three dwellings;

in circumstances where:

  • no permit could even be made for three dwellings (by reason of clause 32.09-3 of the Neighbourhood Residential Zone).
  1. I find this submission is misguided. The Neighbourhood Residential Zone allows a permit to be sought to subdivide land. Schedule 1 to the Zone sets no minimum lot size. Separately, it restricts any development on a lot to no more than two dwellings. (Emphasis added)
  1. These are clearly separate permissions. The Zone’s provisions cannot be read as saying three dwellings are prohibited on this land. The Applicants’ proposal to subdivide the land and remove vegetation is contemplated by the Planning Scheme and must be assessed on its merits. (Emphasis added)

In summary, these cases confirm that it is not prohibited to subdivide a lot in a NRZ into more than two lots, even if the zone restricts the maximum number of dwellings per lot to two.

Clause 1 is hopeful that this interpretation will assist in addressing some of the imbalance caused by the over-application of the Neighbourhood Residential  Zone in some well serviced metropolitan areas and that the Government doesn’t move to close off this loophole.

Applicants should be aware that the NRZ can also restrict lot sizes and that any application to subdivide and develop a lot with more than the maximum number of dwellings specified in the NRZ zone will need to meet the objectives and neighbourhood character tests of the zone and Local Policy Provisions.

If you would like more information on this issue please contact Clause 1 Planning.

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