What changes can we anticipate within Melbourne’s new Activity Centres?

Understanding Victoria’s Housing Choice and Transport Zone & Built Form Overlays in Activity Centres

When buying property in Melbourne—especially in inner or middle-ring suburbs—planning zones and overlays can make or break a purchase. Whether we are assisting a seasoned investor or a first homebuyer, understanding the implications of Activity Centres, and specifically the Housing Choice and Transport Zone (HCTZ) and Built Form Overlays (BFOs) is important. These two overlays influence what can be built, how high, and the type of neighbourhood our clients are buying into.

“The State Government has announced that 10 existing activity centres will be used as pilots for the new provisions, being Broadmeadows, Camberwell Junction, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston (High Street), and Ringwood.” (Source here)

Interestingly, the zone above (HCTZ2) allows for a maximum building height of 13.5m, (4 storeys) if – If the site is 1000sqm+, otherwise 11m, (3 storeys).

What is the Housing Choice and Transport Zone (HCTZ)?

The HCTZ is part of a broader reform of Victoria’s planning system aimed at supporting medium-density housing near public transport and services. It’s being rolled out progressively across municipalities with the aim of improving housing supply in well-located, amenity-rich areas.

Put simply, if a property is in the HCTZ, it’s in a location where more housing diversity is being encouraged. They are likely to include a blend of townhouses, low-rise apartments, and duplexes. These zones are carefully chosen based on proximity to:

• Train stations and tram routes
• Shops and services
• Schools and parks

The government’s goal is to ease the pressure on urban sprawl and make better use of existing infrastructure. For buyers, this means two key things:

1. A high likelihood of higher-density development than current levels,
2. More diverse housing types, including affordable housing and social housing.

“HCTZ1 will act as the “core” of the activity centre allowing buildings up to 13.5 metres/four storeys or 21.5 metres/6 storeys depending on the size of the site and HCTZ2 will act as the “walkable catchment” of the activity centre with lower maximum building height limits.

A “large site” is defined as a lot, or two or more contiguous lots combined, greater than 1000 square metres in area and with a frontage of at least 20 metres.

Of note, the new zone provisions do not require a mandatory minimum “Garden Area” requirement which is part of the Neighbourhood Residential Zone and the General Residential Zone.” (Source here)

This new HCTZ replaces older residential zoning in some areas, offering clarity and consistency in planning decisions.

What About Built Form Overlays (BFOs)?

While HCTZ tells us where we can build more housing, the Built Form Overlay (BFO) tells us what it should look like. In other words, BFO contains a set of design rules focused on the appearance and scale of buildings, particularly in and around activity centres.

Activity centres include places like shopping strips, high streets, or town centres. They are likely to affect where we see a mix of retail, services, and residential.

The BFO sets clear parameters around:

• Building heights and setbacks
• Street wall and upper-level design
• Shading, pedestrian experience, and visual bulk

For developers or those planning extensions or rebuilds, the BFO gives more certainty than vague design guidelines. It has also aimed at streamlining the development approval process in order for the State Government to meet their housing targets.

Why This Matters for Homebuyers and Investors

Understanding how the HCTZ and BFOs interact is important for those purchasing in or near an activity centre. If we consider an older house with development potential for example, these overlays could either enhance the possibilities and future uses, or place limits on it. Engaging a town planner in this instance would be highly advisable.

It is also vital for buyers to understand the potential impact of these zoning changes on their future streetscape and neighbourhood.

Zoning and overlays aren’t the most exciting part of a property search—but they’re often the most important. The HCTZ and BFOs are reshaping some of our established suburbs, especially around activity centres. For homebuyers and investors, recognising the changes in store for these areas means fewer surprises and informed decisions.