The Planning Amendment (Better Decisions Made Faster) Bill 2025 overhauls planning compensation rights and procedures. It introduces new rules, stricter timelines, and changes liability for councils, with additional amendments made to the Land Acquisition and Compensation Act 1986.
The Planning Amendment (Better Decisions Made Faster) Bill 2025 (Bill) was introduced to the Victorian Parliament for second reading on 29 October 2025.
The Bill proposes substantial changes to the compensation framework under the Planning and Environment Act 1987 (Act), alongside consequential amendments to the Land Acquisition and Compensation Act 1986 (LAC Act). The changes will affect how councils and landowners approach compensation for planning reservations, and mark a significant shift in the administration of planning compensation in Victoria.
Broadly, the Bill proposes significant amendments to Part 5 of the Act, which deals with compensation for planning reservations, and makes consequential changes to the LAC Act.
The reforms are intended to clarify the process for making and responding to compensation claims, introduce stricter timelines, and align planning compensation more closely with compulsory acquisition principles. Key features include new requirements for claim forms and supporting evidence, a two-year window for lodging claims, a ‘single-claim’ rule, and clearer guidelines around who is liable to pay compensation.
| Prescribed claim form and evidence | Claims must be made in a prescribed form, with supporting evidence as specified by the Minister. |
| Two-year time limit | Claims must be lodged within two years of the right to compensation arising (permit refusal or following ‘loss on sale’), with limited opportunities for extension by agreement or order. |
| Suspension of timeframes | If an authority (including Council) requests further information from a claimant, the 3 month period for the authority’s response (and offer) is paused until the information is provided. The bill does not specify any limitation on what information may be requested. |
| Single claims | Only one claim can be made for each reservation event by the owner or occupier at the relevant time. Exceptions may be prescribed by regulation. |
| Further claims | Additional claims are only permitted if subsequent planning controls impose more stringent restrictions or affect a different part of the land. |
| Permit refusal claims | Compensation following a permit refusal on public purpose grounds is only available if the planning scheme does not prohibit the proposed use or development. More generally, permit refusal claims will be based on the use or development that was sought and any other actual or potential grounds of refusal, apart from the reservation, must be taken into account. |
| Market value definition | For the purpose of the statutory cap on compensation (s104), “market value” is now explicitly defined by reference to the LAC Act, aligning planning compensation with compulsory acquisition principles. |
| Assessment rules | When assessing compensation, only the planning scheme provisions that would have applied but for the reservation are considered, and the zoning of adjoining land must be taken into account. |
| Actual financial loss | Compensation is limited to “actual financial loss” (previously just “financial loss”) suffered as the natural, direct and reasonable consequence of the reservation or refusal. |
| Responsibility for payment of compensation | The Bill changes when a Minister, public authority, or council is liable to pay compensation, particularly where the authority has requested the reservation or objected to a permit. |
| Title notations | The Bill amends the specific requirements to record compensation payments on title, which are to be reflected in future compensation for the compulsory acquisition of the land. |
| Professional expenses | Claimants can recover professional expenses incurred in responding to alternative offers of compensation, but not for responding to information requests. |
| Residential land | Compensation for the intangible effect of a reservation on a residence is now limited to land used as the claimant’s principal place of residence, and must be assessed by reference to the existing use. |
Interest will remain payable as of right in planning compensation matters but at a reduced (non-penalty) rate to be set by Ministerial regulation not yet available as of the date of this article. The Bill also provides new powers to the Court or Tribunal to pause the accrual of interest, or to reduce the interest rate set by the Minister, if good cause is shown, including where delays are attributable to the claimant.
Part 8 of the Bill delivers a comprehensive overhaul of the compensation regime for planning reservations in Victoria, with consequential amendments to the LAC Act.
The key changes are:
The new, highly regulated claims process, with strict forms, evidence requirements, and a two-year deadline, means that both landowners and planning authorities should seek legal advice as soon as a compensation issue arises to avoid missing out on entitlements or breaching obligations and minimizing exposure to cost and interest.
Compensation is limited to actual financial loss, assessed by reference to the planning scheme provisions and the zoning of adjoining land, and market value is now explicitly defined in line with the LAC Act.
The Bill specifies when councils, Ministers, or public authorities are liable for compensation, particularly where they have requested a reservation, objected to a permit, or sought a permit condition that leads to compensation. This change will likely influence how and when Public Acquisition Overlays are applied in planning schemes, as authorities will need to carefully consider the potential compensation consequences before initiating or supporting such controls.
As liability allocation becomes clearer, the State government will need to work closely with councils to ensure consistent application of the new rules and to manage shared responsibilities for compensation.
Developers should be aware that the new compensation framework may affect the timing and feasibility assumptions for projects involving land subject to planning reservations or Public Acquisition Overlays.
Collectively, these reforms mark a significant shift towards a more structured, deadline-driven, and transparent compensation framework.
The changes will require both landowners and authorities to act promptly and with greater procedural rigour, and their full impact will become clearer as the new regime is applied in practice and tested through the courts.
For now, authorities and landowners should closely monitor the Bill as it progresses through Parliament. These proposed reforms represent a major shift in the compensation framework, and their practical impact will become clearer over time.
If you have any questions, concerns, or require tailored advice, please contact us.
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Chris specialises in land valuation, compulsory acquisition and local government rating. His experience in valuation, compensation and rating provides deep insights in carrying out work and managing disputes on behalf of local government.
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