The Townhouse Code unlocks city-wide, code-assessed upzoning
Victoria undertook the most substantial overhaul of its residential development standards since 2001, codifying approval standards, removing neighbourhood character as a discretionary blocker, and eliminating third-party appeals for compliant two- and three-storey housing.
For over two decades, ResCode—the set of standards at Clause 55 of every Victorian planning scheme — governed how townhouses and low-rise apartments were assessed. In theory, it set objective standards for setbacks, overshadowing, overlooking, and open space. In practice, it gave councils enormous discretion to refuse projects on subjective grounds.
The core issue was neighbourhood character. ResCode required developments to "respect the existing neighbourhood character"—a standard so vague that it could mean almost anything. Councils used it to refuse well-designed townhouses on the basis that they didn't look like the detached houses next door. Objectors used it to justify VCAT appeals against any form of change. The result was a planning system where building a townhouse required not just meeting measurable standards, but convincing elected councillors and their officers—and potentially a VCAT member—that your project was subjectively acceptable to a neighbourhood defined by the housing happened to already be there.
This discretion was expensive. Victorian residential planning applications took hundreds of days to assess. Our research showed that metropolitan Melbourne councils approved less than three-quarters of permits for new dwellings. VCAT appeals added months or years. And the system's subjectivity meant that identical projects could be approved in one municipality and refused in the next.
Meanwhile, other Australian jurisdictions had already moved toward codified, as-of-right pathways for low-rise housing. Queensland's code assessment had been in place for years. Victoria's own Small Lot Housing Code, operating since 2011, showed that codification worked. But the bulk of medium-density housing—the townhouses and walk-up apartments that define Melbourne's most liveable inner suburbs—remained trapped in the discretionary system.
Amendment VC267, gazetted on 6 March 2025 and in operation from 31 March 2025, replaced ResCode with the Townhouse and Low-Rise Code—the most significant reform to Clause 55 since its introduction in 2001. The changes apply to every planning scheme in Victoria.
The reform introduces deemed-to-comply standards for residential development up to three storeys. Where a proposal meets a standard, the corresponding objective is automatically satisfied — the council cannot refuse on discretionary grounds, cannot consider neighbourhood character policies elsewhere in the scheme, and cannot apply the subjective decision guidelines that previously gave them room to say no. The council must grant the permit.
The neighbourhood character standard has been deleted entirely from Clause 55. Character is now addressed solely through the measurable, codified standards themselves—setbacks, heights, site coverage, tree canopy—rather than through subjective assessment of whether a building “fits in”. The government estimates this will cut average assessment times by up to 60%. Early data on this looks promising.
The specific standards within the new code are also more permissive. Minimum front setbacks drop from 9 metres to 6 metres. Maximum site coverage increases to 60% in Neighbourhood Residential Zones and up to 70% in Residential Growth Zones. Minimum private open space drops from 40 square metres to 25 square metres. New tree canopy requirements (10% of site area for lots up to 1,000 square metres, 20% above) replace the old garden area rules — prioritising urban greening over blank lawn.
Built-form analysis by Ratio Consultants found the new standards will enable “housing developments of greater scale and diversity in more locations… irrespective of the site constraints, neighbourhood character, policy settings and/or local political influence”. For the first time, Victoria's planning system treats townhouses and low-rise apartments as a normal, expected part of every suburb—rather than as something that requires a subjective argument to justify.
From our earliest days, YIMBY Melbourne has argued that discretion is the enemy of housing supply. Our founding insight — the reason we exist — is that Melbourne's planning system uses subjective standards to give a veto to those who oppose change, at the expense of those who need homes. Neighbourhood character was always the most potent weapon in that arsenal: a standard so flexible it could be used to block anything.
Our Missing Middle report (October 2023) proposed replacing Victoria's restrictive residential zones with a new Missing Middle Zone that would enable six-storey mixed-use development as of right — eliminating the discretionary assessment that blocked gentle density. The report called explicitly for codified standards and the removal of the Neighbourhood Residential Zone across metropolitan Melbourne, updating a system that was wasting planners’ time on endless subjective assessments.
When the Townhouse Code was referred to the Legislative Council Select Committee in April 2025, we appeared at public hearings and lodged a detailed submission defending the Code specifically.
We argued that the reforms furthered all 21 objectives of the Planning and Environment Act and laid out international examples of codification that had led to a short-term supply increase of up to 25% through reduced delays and greater certainty. We created a public submissions guide, mobilising our members to submit in support.
The Select Committee received evidence from across the planning sector, made 20 findings and 12 recommendations, and did not recommend revoking the amendment. A disallowance motion was defeated.
The Townhouse and Low-Rise Code turns our core argument into law: that clear rules produce better outcomes than subjective discretion, and that the right to object to your neighbour's townhouse should not outweigh the right of a family to find a home.