(VIC) Implement a Cost–Benefit Analysis for Heritage Listings
Author: Alex Faehrmann, Jemail Asani, Megan Yap & David Paterson | Publish date: 8/10/2026
P: In VIC, the economic impacts of preserving buildings for local heritage reasons are not formally considered in the planning process.
S: The VIC Minister for Planning should amend Clause 43.01-08 of the Victoria Planning Provisions Scheme to require planning authorities to consider a ‘cost–benefit analysis for … [heritage] listing decisions’ (see below).
E: Peter Tulip, Centre for Independent Studies (2026): ‘[This] paper recommends … mandatory cost–benefit analysis for all [heritage] listing decisions, including explicit consideration of forgone housing supply and effects on affordability’.
Problem Identification:
Section 6(2)(ha) of the Planning and Environment Act 1987 (VIC) allows for amendments to planning overlays under the Victorian Planning Provisions Scheme (VPPS). According to the Victorian Local Heritage Guidelines (VLHG), councils are ‘responsible for balancing the recommendations of [a] heritage consultant with other planning objectives … to decide whether the place should be included in the Heritage Overlay.’ However, there is no requirement to conduct a cost–benefit analysis, including explicit consideration of forgone housing supply and effects on affordability.
According to Peter Tulip of the Centre for Independent Studies (CIS), this means that planning authorities ‘do not have to formally recognise the impacts of heritage listing decisions, or consider alternative uses for land’. He also stated that this allowed the preservation of ‘too many unremarkable buildings … restricting housing density and exacerbating the housing crisis.’
Context:
The VLHG outlined local heritage places as sites of ‘scientific, aesthetic, architectural or historical significance.’ They refer to a heritage overlay as a ‘control applied in … planning schemes to … ensure [heritage places] are conserved and enhanced’.
The Grattan Institute estimated that ‘29 per cent of residential land within 10km of the CBD is covered by a heritage overlay.’
Arguments:
The CIS reported that heritage laws are ‘exacerbating the [housing] crisis by safeguarding numerous low-value buildings without considering the economic implications’. According to the Grattan Institute, ‘these controls are often imposed extensively with little acknowledgment of the consequences of stymieing the supply of housing’. They noted that from 2017 to 2022, ‘sites with heritage overlays were about 50 per cent less likely to have had significant infill development than those without’. An economic assessment by Ethos Urban shared the example of a student housing project at 253–259 Brunswick Rd which had ‘$3.1 million of heritage-related costs’. They argued that this represented ‘a significant cost … [that] would not be associated with a similar development of a non-heritage site.’ Mr Tulip added that these heritage restrictions come at ‘substantial costs both to [heritage-listed property] owners and society in general in the form of housing affordability'.
Housing commentator Katie Roberts-Hull stated that ‘once reserved only for our oldest buildings, heritage protections are now creeping over modern houses as well’. YIMBY Melbourne argued that heritage ‘consultants are moving towards classifying seemingly anything built pre-1970s as heritage-worthy.’ An ABC article revealed that in Ringwood East, ‘a local heritage review process was carried out over six years with a $242,700 spend on consultants’ despite ‘a local historical group … argu[ing] there was little evidence the homes were historically significant to the local area.’ An ABC article reported ‘many owners of potential heritage-listed homes have deep concerns about the way the homes were assessed.’
The Municipal Association of Victoria and the Heritage Council of Victoria argued that ‘communities expect their council to protect significant heritage places … and make good decisions about changes to heritage places.’ However, Mr Tulip noted that willingness to protect ‘seems to hinge on somebody else paying.’ He cited a report by SGS Economics and Planning which calculated that the ‘average willingness to pay is only $68’ to ‘preserve a nearby locally significant house’. He stated that ‘community willingness to pay to preserve ordinary buildings … [is] frequently dwarfed by costs’.
Advice/Solution Identification:
Peter Tulip and the CIS have called for implementing a ‘mandatory cost–benefit analysis for all listing decisions’. They have said that this could help ensure 'long-term ... rational decisions and unlocking more areas for housing'.
Precedent:
There is domestic precedent for economic appraisals of listing sites for conservation. Across Australia, the Minister for the Environment and Water may take into account economic considerations for conservation decisions.
Public Support of the Solution:
(This list reflects publicly stated positions and should not necessarily be taken as endorsement of this specific brief.)
Peter Tulip, Centre for Independent Studies (CIS) (see acknowledgments)
Katie Roberts-Hull (see acknowledgements)
Broad Support:
YIMBY Melbourne - They called for reforms to heritage protection ‘with an emphasis on preserving individual buildings of genuinely significant worth’. However, they have not explicitly called for the implementation of a cost–benefit analysis overlay for heritage listings.
Productivity Commission (PC) - They recommended ‘improving transparency about listing decisions, including assessing the benefits and costs of [a heritage] listing’. However, they have not explicitly called for the implementation of a cost–benefit analysis overlay for heritage listings.
Grattan Institute - They called for a ‘review [of] systems of heritage and character controls to allow more housing in high-demand areas.’ However, they have not explicitly called for mandating a cost–benefit analysis overlay of heritage listings.
News Coverage:
ABC News - “Australia’s first map of city zoning shows Melbourne streets ahead on density”. This article reported on a national zoning atlas which found heritage protections apply to 11% of Melbourne’s residential land. By: Tom Crowley | 12 July 2026 - Read the article here.
ABC News - “Melbourne homeowners fighting heritage listing push for 'average' former display homes”. This article reported on Ringwood East homeowners opposing a Maroondah City Council proposal to heritage-list their homes. By: Jesse Thompson | 18 March 2024 - Read the article here.
ABC News - “Melbourne’s heritage protections scrutinised as government scrambles to meet future housing needs”. This article examined the tension between Victoria’s local heritage overlays and the state’s housing targets. By: Jesse Thompson | 28 January 2024 - Read the article here.
ABC News - “Melbourne bayside residents fight heritage listing of their mid-century modern homes”. The article examined the response of residents of 160 homes who have had their properties heritage listed without consultation or due process. By: Andrea Nierhoff | 3 July 2022 - Read the article here.
Where to go to learn more:
(2026) REFORM OF HERITAGE LEGISLATION | Peter Tulip, Centre for Independent Studies - This paper argued that not requiring a comparison of the cost of listings with the benefits has resulted in low-value buildings being preserved and has worsened the housing crisis. It recommended amending heritage legislation to require a quantitative comparison of costs and benefits. Read the paper here.
(2025) What are heritage overlays and how do they affect renovations? | BY Projects Architecture - This article explained how heritage overlays operate under Clause 43.01 of the Victoria Planning Provisions. It also outlined the permit requirements imposed on owners of affected properties. Read the article here.
(2026) Victorian Local Heritage Guidelines | Department of Transport and Planning - This guideline provided a framework for assessing local heritage values and determining whether places meet the threshold of local heritage significance. Read the guidelines here.
(2025) Planning better cities | Grattan Institute - This article examined how restrictive planning controls limited housing supply in Australian cities. It reported that 29% of residential land within 10km of Melbourne’s CBD was covered by a heritage overlay. Such sites were about 50% less likely to have significant infill development than those without from 2017–2022. Read the article here.
Planning and Environment Act 1987 (VIC) - Read the Act here.
Victorian Planning Provisions Scheme (VPPS) - Read the full scheme here.
Human Perspective:
Patrick is a developer in Melbourne’s south-east suburbs. He is applying for approval for a multi-storey housing complex, including affordable housing, on a site with an existing heritage overlay. The site is a dilapidated building that will require extensive investment to restore it. Due to the heritage overlay, planning and construction costs will increase significantly to preserve it. The local heritage group has told him that they found no historical significance for the building and questions why it was ever listed. The heritage overlay does not prohibit the project happening but the extra costs have now put the viability of the project into question. Patrick has only two choices. He can either remove all the affordable housing within the project or decide to dispute the listing with an independent panel. Choosing to contest the site’s heritage value could mean months of delay and further costs. Everyone tells him there is a housing crisis, and it's easy to see why. He wished that when the heritage overlay was applied in the first place, they had conducted a cost–benefit analysis. That way, he thought, they may have considered the effects on housing supply and housing affordability for the community.
To protect the anonymity of those involved, this is a fictionalised account drawn from an amalgamation of real-life stories, experiences and testimonials gathered during the research process for this brief. Any resemblance to actual individuals is purely coincidental.
Conflict of interest/acknowledgment statement:
Peter Tulip (Chief Economist at the Centre for Independent Studies) confirmed his support for this recommendation and shared quotes for this brief in a meeting with FORE Good held on 21 July 2026. Shared with permission.
Katie Roberts-Hull (Secretary of YIMBY Melbourne) confirmed her support for this recommendation in an email received by FORE Good on 3 October 2026.
Support
If your organisation would like to add your support to this paper or suggest amendments, please email Info@foreaustralia.com.
Disclaimers
Please review all FORE disclaimers here.
Reference list:
Coates, B. (2025, November 10). Planning better cities. Grattan Institute. https://grattan.edu.au/news/planning-better-cities/
Department of Transportation and Planning. (2026). Victorian Local Heritage Guidelines. VIC Government. https://www.planning.vic.gov.au/__data/assets/pdf_file/0027/773181/victorian-local-heritage-guidelines.pdf
Environment Protection and Biodiversity Conservation Act 1999 (Cth). https://www.legislation.gov.au/C2004A00485/latest/versions
Ethos Urban. (2025). Former Cable Tram Engine House 253-259 Brunswick Road, Brunswick. https://www.heritage.vic.gov.au/__data/assets/pdf_file/0035/749933/Economic-Use-Assessment.pdf
Municipal Association of Victoria, & Heritage Council of Victoria. (2023). Local government’s role in heritage protection – An introduction for councillors. https://www.mav.asn.au/__data/assets/pdf_file/0012/32151/Local-Governments-Role-In-Heritage-Protection-An-Introduction-for-Councillors.pdf
Nierhoff, A. (2022, July 3). Melbourne bayside residents fight heritage listing of their mid-century modern homes. ABC News. https://www.abc.net.au/news/2022-07-03/melbourne-bayside-mid-century-modern-heritage-row/101199804
Planning and Environment Act 1987 (VIC). https://content.legislation.vic.gov.au/sites/default/files/2026-08/87-45aa167-authorised.pdf
Productivity Commission. (2026). Housing supply regulation: Interim report. https://assets.pc.gov.au/2026-07/housing-supply-interim.pdf?VersionId=jcCTe3ztH8OtVerAHQi!p9F4w0P9bBNTy&
Roberts-Hull, K. (2023, May 6). Our cities are not museums. We must stop nimbys weaponising heritage laws to block affordable housing. The Guardian. https://www.theguardian.com/commentisfree/2023/may/07/our-cities-are-not-museums-we-must-stop-nimbys-weaponising-heritage-laws-to-block-affordable-housing
Thompson, J. (2024, March 18). Melbourne homeowners fighting heritage listing push for ‘average’ former display homes. ABC News. https://www.abc.net.au/news/2024-03-18/heritage-listing-homes-maroondah-council/10359466
Tulip, P. (2026). Reform of heritage legislation. Centre for Independent Studies. https://apo.org.au/node/333686
YIMBY Melbourne. (n.d.). Why does YIMBY Melbourne have such a problem with heritage overlays? https://yimby.melbourne/faq/why-does-yimby-melbourne-have-such-a-problem-with-heritage-overlays?topic=planning-heritage
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