Section 173 Agreements Victoria: Property Developer Guide

Section 173 agreements are one of the quieter but more consequential instruments in Victorian planning law. They typically appear on a title as a short notation — “Agreement under s173 of the Planning and Environment Act 1987” — and most consumer-side commentary treats them as something to be aware of at conveyancing settlement. For a property developer, they are something quite different: a binding, registered contract with the responsible authority that runs with the land, survives every future sale, and can shape the feasibility of a site for decades.

This guide is written for developers — acquiring, holding, or exiting land in Victoria — who need to understand what a section 173 agreement may oblige them to do, what it could prevent them from doing, what it might cost to put in place or take off, and how it interacts with the 2024–26 wave of Victorian planning reform under the Plan for Victoria, Development Facilitation Program (DFP), and the affordable housing model agreements now published by the Department of Transport and Planning. We have covered the statutory mechanics in detail, the realistic 2025–26 cost stack, and the procedural distinction between an “in-principle” refusal under section 178A and a post-advertising decision under section 178F — a distinction that determines whether a refusal can be challenged at VCAT or only by judicial review in the Supreme Court of Victoria.

What a section 173 agreement is, in plain developer terms

The legislative head of power is section 173 of the Planning and Environment Act 1987 (Vic). It is short, and the operative subsection (1) is worth reading in full: a responsible authority “may enter into an agreement with an owner of land in the area covered by a planning scheme for which it is a responsible authority”. Subsection (1A) expressly extends the power to “an agreement for the development or provision of land in relation to affordable housing”, and subsection (2) allows the authority to “enter into the agreement on its own behalf or jointly with any other person or body”. Subsection (3) is the one that catches developers most often: an authority “may enter into an agreement under subsection (1) or (1A) with a person in anticipation of that person becoming the owner of the land”, which is the mechanism used when a permit is granted to a purchaser before settlement.

The substantive content of an agreement is governed by section 174. The Act allows the agreement to provide for “the prohibition, restriction or regulation of the use or development of land”, “any condition or requirement subject to which the land may be used or developed for specified purposes”, and “any matter intended to achieve or advance the objectives of planning in Victoria, the objectives of the planning scheme or an amendment proposed by the planning authority”. The Department of Transport and Planning’s Chapter 8: Agreements in the Guide to Victoria’s Planning System is the canonical operational reference.

What makes the instrument unusual — and what shapes every developer decision around it — is the combination of sections 181 and 182. Section 181 requires the responsible authority to apply to the Registrar of Titles to record the agreement on the folio, and section 182 makes the recorded agreement binding on the owner and “every person deriving title to the land from the owner”. In practical terms this means that once the agreement is on title, every future purchaser, mortgagee, tenant, and adverse possessor is bound by the obligations, even if they never see the agreement before contract. It is the run-with-the-land character that makes section 173 the planning tool councils reach for whenever they want to secure an outcome that needs to outlast the current owner — which is most of the outcomes that matter to a developer.

Enforcement runs through section 183. A failure to comply is treated in the same way as a breach of a permit condition: the responsible authority may prosecute or seek an enforcement order. In other words, the agreement is not a private contract that a developer can quietly let slide; it is enforced through the same statutory mechanism as the rest of the Planning and Environment Act, and it sits on the same evidentiary footing as a planning permit condition for the purposes of a Magistrates’ Court or VCAT enforcement application.

Why councils use them — and why that matters to your feasibility

Section 173 agreements typically arise in one of three contexts. The most common is as a condition of a planning permit: the council requires that, before the permit is acted on or before a Statement of Compliance is issued, the landowner enters into a section 173 agreement securing some matter that the permit alone cannot adequately deal with. The second is at the planning scheme amendment stage, where a planning authority secures contributions, design controls, or staging commitments as a condition of a rezoning. The third — increasingly common under the DFP and affordable housing reforms — is as a stand-alone agreement entered into voluntarily to lock in an outcome the developer is offering in exchange for an expedited or upgraded planning pathway.

From a feasibility perspective the question is rarely “will there be a section 173 agreement” — for any subdivision or staged development in Victoria, the answer is generally yes — but “what does this agreement actually oblige us to do, and what does it stop us doing”. The most common substantive obligations sit across the following categories, drawn from the published examples and council guidance in Wellington, Nillumbik, Moorabool, and Cardinia:

Subdivision staging and “build first then split” arrangements, where the agreement allows the lots to be created on title before the buildings are completed, with the agreement carrying the obligation to build out in accordance with the endorsed plans. This is operationally indispensable for medium-density developments because it lets you separately title units, achieve presales settlement, and discharge construction debt without waiting for the entire project to reach occupation.

Developer contributions for infrastructure where a Development Contributions Plan, Infrastructure Contributions Plan, or negotiated contribution sits outside the permit fee structure. The agreement secures the contribution as a charge on the land. The companion piece here is our developer contributions and infrastructure levies guide, which works through the underlying contribution frameworks in more detail.

Coordination between adjoining landowners, particularly where access, drainage, or shared infrastructure crosses lot boundaries. The agreement makes the obligation enforceable against successors even where the original commercial arrangement between neighbours has long since unwound.

Off-site works obligations, where the developer is required to undertake or fund works on land outside the permit area — typically intersection upgrades, drainage easements, or public open space embellishment. Without a section 173 agreement, the council has no good mechanism to compel the off-site works after the permit is acted on.

Design controls and restrictions on further subdivision, common in dual-occupancy approvals and in rural living estates. The Nillumbik framework expressly contemplates “restricting development to within an approved building envelope” and “preventing further subdivision of a lot” as standard agreement content.

Affordable housing obligations, where the section 173 secures either dwellings at a discount to market, a cash contribution, or land gifted to a Registered Housing Association or Homes Victoria. Section 173(1A), inserted by the Planning and Environment Amendment (Public Land Contributions) Act 2018, was the legislative scaffold for what has since become the dominant form of inclusionary obligation under the DFP fast-track pathway.

Heritage and environmental protection — covenanting native vegetation retention, compensatory planting, view-line protection, or maintenance regimes for retained heritage fabric.

Bushfire management and wastewater asset obligations, common in regional and peri-urban applications where the planning scheme requires ongoing maintenance commitments that a one-off permit condition cannot adequately secure.

Slab-height and flood indemnity provisions, which appear in flood-prone areas where the council needs to be indemnified against future claims arising from filling, slab elevation, or basement protection works.

The scope limits — what a section 173 cannot do

A common error among first-time applicants is to treat section 173 as a freely negotiable contract that can cover anything the parties agree on. It cannot. The Act and the Department of Transport and Planning’s Chapter 8 guidance make clear that the agreement must be tied to the planning scheme or to the objectives of planning in Victoria, and that the agreement may not require or allow anything that would breach a planning scheme or permit, cannot oblige the council to exercise a statutory discretion in a particular way, cannot extend council powers beyond those conferred by the Planning and Environment Act, and cannot replace a permit where a permit is the appropriate instrument.

This last point matters. Councils sometimes propose to deal with a matter via section 173 because it is easier to negotiate than to enforce as a condition. If the matter could properly be a permit condition, the LC Lawyers commentary in their elibrary section 173 piece makes the point that it should be — the agreement is meant for matters that go beyond the natural reach of a permit, not as a substitute for one. From a developer perspective, pushing back on this distinction is often the easier negotiation because it aligns with the statutory limits the council is bound by.

The agreement also cannot be used to fetter the responsible authority’s discretion on a future planning matter — it cannot, for example, commit a council to grant a future permit. This is sometimes attempted in indemnity and “best endeavours” drafting and is reliably unenforceable.

How an agreement is created — the operational sequence

Once a permit condition or DFP arrangement triggers a section 173, the operational sequence is fairly consistent across Victorian councils, though the price points and turnaround times vary materially. The Cardinia 15-step process information sheet is the most explicit published walkthrough and is a reasonable proxy for what to expect in most metropolitan growth-area councils.

The applicant — typically the developer through their planning lawyer or conveyancer — initiates a request, providing a Register Search Statement, a copy of any endorsed planning permit, the title plan, and a third-party costs disclosure statement acknowledging that the council’s external solicitor will charge for drafting and review. The council nominates the drafting firm: in Moorabool every agreement is drafted or reviewed by Harwood Andrews; in South Gippsland it is Planology or Jackson Lane Legal; in Cardinia, Marcus Lane Group; in Wellington the council offers in-house drafting at fee-only cost. The agreement is then drafted, circulated for owner and council approval, signed under power of attorney or by the directors of the corporate owner, and lodged with Land Use Victoria for recording on title.

Mortgagee consent is the single most common point of delay. Section 173 agreements rank ahead of subsequent dealings recorded against the land, and any existing mortgagee will need to consent to the agreement being recorded before its mortgage. The major banks have a reasonably standard process for this, but the queue can run two to six weeks depending on the lender and the complexity of the agreement. Specialist non-bank construction lenders typically move faster. The Subdivide-Land summary flags mortgagee consent as the frequent stumbling block, and our experience aligns: developers who treat mortgagee consent as a pre-lodgement item rather than a parallel workstream consistently underestimate the timeline by a month.

Realistic end-to-end timing from instruction to title recording is generally eight to twelve weeks where parties move promptly and there is no mortgagee complication. With mortgagee consent it tends to extend to twelve to sixteen weeks. The Manningham council page puts its own typical turnaround at “over two months”, which is on the optimistic end.

For projects relying on a Statement of Compliance to register the plan of subdivision, the section 173 generally needs to be recorded before SoC is issued. This is the binding feasibility constraint that often surprises developers used to other jurisdictions: a registered section 173 is a gate item to title issuance, and you cannot settle the new lots until it is on title. Planning ahead for this in the construction and finance program — particularly when private credit construction funding has interest rolling up against undischarged debt — is materially cheaper than discovering the constraint at SoC.

The cost stack — what to budget in 2025–26

There are four distinct cost components, and the published numbers are scattered across council fee schedules, conveyancer fixed-fee pages, and the Land Use Victoria fees register. Numerical figures here are indicative and may change; always confirm against current council and Land Use Victoria schedules at the time of application.

The first component is the applicant’s own legal fees. A planning lawyer or experienced conveyancer drafting a straightforward agreement against a council template typically charges in the $1,800–$3,500 range. Reviewing and negotiating amendments to a council-drafted agreement may be cheaper at the simple end but can climb materially where multi-party signing, mortgagee consent, or staged contribution mechanics need to be negotiated. Haitch Convey publishes an additional $440/hr rate (inclusive of GST) for section 173 work beyond a standard conveyance. Specialist subdivision lawyers will often quote $2,500–$5,000 inclusive for a single-owner, single-restriction agreement.

The second component is the council’s external solicitor review fee, almost always charged through to the applicant. This is generally in the same order of magnitude as the applicant’s own legal cost — typically $1,500–$4,000 for a standard agreement. Complex multi-party or staged-contribution agreements push higher. Some councils, such as Wellington, offer in-house drafting at the cost of council fees only.

The third component is the Land Use Victoria lodgement fee for recording the agreement on title. This is set in the Land Use Victoria 2025–26 fees schedule and is typically several hundred AUD per recording.

The fourth — relevant only when amending or ending an existing agreement — is the prescribed planning fee for an application under section 178A. The Hume City Council 2025/26 planning fee schedule lists this at $748 for a fee aligned with the State-set regulation 9 fee. Councils set their own application fee in line with the Department’s planning fees schedule, so check the current figure at the time of application.

A reasonable working assumption for feasibility modelling is $4,000–$8,000 all-in for a standard single-restriction or staging agreement on a small-to-mid residential project, and $10,000–$25,000+ where the agreement secures developer contributions, affordable housing obligations, multi-party drafting, or complex staging mechanics. For a multi-stage greenfield project with separate agreements per stage, the cumulative cost across the project can run into six figures, and this is rarely captured in early-stage cost lines.

For feasibility purposes the cost typically sits as a discrete line item under legal and consultancy costs rather than rolled into general professional fees, because the timing impact on the construction interest line is often a larger feasibility hit than the legal cost itself. Modelling the agreement separately allows for sensitivity analysis on settlement delay scenarios, which is where the real money is. Our sensitivity analysis guide works through how to structure those scenarios.

Amending or ending a section 173 agreement

This is the area where most published commentary is thinnest and where the developer-side stakes are highest. Once an agreement is on title, removing it is more involved than the typical conveyancing explainer suggests, and there is no automatic right to do so. The procedure sits across sections 178 to 178I of the Planning and Environment Act, and the procedural distinctions matter.

The simplest route, under section 178, is an amendment or ending by agreement between the responsible authority and “all persons who are bound by any covenant in the agreement”. This is straightforward in concept but quickly impractical in any agreement that binds successors in title — every current owner of every burdened lot must consent, plus any mortgagee, plus any other party named in the original agreement. For an agreement on a single-owner site with no mortgage, this can move quickly. For anything more complex, the formal procedure under 178A is usually the only practical pathway.

Under section 178A, the applicant lodges a written proposal with the responsible authority requesting the amendment or ending of the agreement, with the prescribed fee and the regulation 55 information requirements. The council must then consider the matters set out in section 178B — including the purpose of the original agreement, the reasons the responsible authority entered into it, the relevant planning scheme, and any other prescribed matters — and notify the applicant and owner of whether it agrees “in principle” to the proposal.

This in-principle decision is the first critical decision point. If the responsible authority does not agree in principle, that is the end of the matter under the section 178A process. Critically, the Department’s own guidance and the Cardinia process sheet confirm that an in-principle refusal under section 178A is not subject to VCAT merits review. The applicant cannot apply to VCAT to overturn an in-principle refusal.

What the applicant can do — and this is where the Supreme Court of Victoria has clarified the position — was set out in Kinchington Estate Pty Ltd v Wodonga City Council [2019] VSC 745. The Court (Quigley J) held that an in-principle decision under section 178A(3) is a statutory decision attracting natural justice obligations, that the responsible authority must give written reasons on request, and that the decision is amenable to judicial review even though it is not merits-reviewable at VCAT. The case is summarised in Equipe Lawyers’ case note and is reported at Jade.io. The companion VCAT decision is reported at VCAT 1246. The practical takeaway for developers is that an in-principle refusal can be challenged, but only on administrative law grounds in the Supreme Court — a process that is typically slower, more expensive, and more uncertain than a VCAT merits review. The implication for negotiation is straightforward: get the in-principle decision right the first time, because the appeal economics are unfavourable.

If the council does agree in principle, the proposal then goes to advertising under sections 178D and 178E, with notice given to all parties to the agreement and to any other person to whom the council considers the decision may cause material detriment. Submissions are received, the council considers them alongside the section 178B matters, and a final decision is made under section 178F. The section 178F decision is subject to VCAT merits review. Applicants who are confident of their grounds will sometimes structure their initial proposal explicitly to maximise the chance of an in-principle agreement, even at the cost of carrying more conditions through to advertising, because the post-advertising decision sits within VCAT’s jurisdiction.

There is also a separate VCAT pathway under section 178I, where a party can apply to VCAT to be removed from the agreement — or to have the agreement varied as it applies to a particular parcel — on the grounds that the party is no longer subject to any liability under it, or that it is no longer appropriate that the agreement continues. This is used most often after a partial subdivision where the original agreement’s purpose has been extinguished as to a particular lot.

Where the council agrees to the amendment or ending — whether by section 178 unanimity or after the section 178A/178F process — the agreement is varied or ended by a deed of variation or deed of release, lodged with Land Use Victoria for recording. The lodgement uses the standard Land Use Victoria forms for amending or removing a recorded dealing; the practical process is described in the Cardinia 15-step sheet and the Manningham process page.

For a developer acquiring a site with an unwanted historical agreement, the realistic budget is significantly higher than the cost of a new agreement. A simple ending where the council readily agrees may resolve for $5,000–$10,000 and four to six months. A contested removal involving multi-party consent or a judicial review challenge to an in-principle refusal can run $50,000–$150,000+ and twelve to twenty-four months. This should be modelled as a discrete pre-acquisition cost line and reflected in the offer price, not absorbed into general legal contingency.

The Vendor Statement and section 32 disclosure dimension

Section 173 agreements are required to be disclosed in the Vendor Statement under section 32 of the Sale of Land Act 1962. For a developer selling lots — whether off-the-plan or completed — the obligation is to attach a copy of any recorded section 173 agreement to the Vendor Statement or to refer to it in a way that gives the purchaser fair notice. Failure to do so gives the purchaser a right to rescind the contract under section 32K, generally up to the time settlement actually occurs.

For developers acquiring sites this is the practical due diligence anchor: if the section 173 is not adequately disclosed in the Vendor Statement, you may have grounds to rescind. The practical advice is to perform a fresh Register Search Statement before signing rather than relying on the Vendor Statement search, because section 173 agreements can be recorded between Vendor Statement preparation and contract execution. This sits within the broader pre-acquisition due diligence workflow covered in our property due diligence guide for developers.

For developers selling lots into an off-the-plan structure, the section 173 needs to be reflected in the marketing material as well as the contract. Buyer-side conveyancers reliably raise it as a question during the cooling-off period, and unclear marketing typically translates into a higher proportion of buyers using the cooling-off right, which directly impacts settlement risk in the feasibility model. A clean disclosure approach is generally cheaper than rebound from a perceived non-disclosure.

Section 173 and the Development Facilitation Program

The Plan for Victoria and the expanded Development Facilitation Program have meaningfully changed how section 173 agreements are being used in the metropolitan market since 2024. Under the DFP fast-track pathway — described on the DTP page for expedited planning pathways and analysed in Norton Rose Fulbright’s update — eligible medium and high density residential projects with an affordable housing component may access a four-month assessment timeframe and no VCAT third-party appeals, in exchange for an affordable housing contribution.

The contribution is generally secured by a section 173 agreement. The Department has published an example Affordable Housing Section 173 Agreement as a model for the inclusionary obligation. The typical contribution structure is 10% of dwellings sold at a 30% discount to a Registered Housing Association or Homes Victoria, or 3% of dwellings transferred at no cost, or a cash equivalent to the Social Housing Growth Fund. The exact terms are negotiated and reflected in the agreement.

For a developer modelling a DFP project, the section 173 is not a peripheral cost — it is the consideration paid for the four-month timeframe and the absence of third-party appeal risk. The affordable housing contribution itself can be the single largest cost on the project after construction, and the section 173 drafting and negotiation cost can easily reach $30,000–$80,000 because the agreement needs to handle the discount mechanism, the dwelling allocation procedure, the dwelling transfer mechanics, the marketing restrictions, and the long-tail compliance and reporting obligations.

In Feasly, modelling a DFP project requires the affordable housing contribution to be carried as a separate cost line with its own funding source (either reduced revenue from discounted dwellings, a cash payment, or land gifted off the contribution-bearing lots), and the section 173 cost should sit within the legal and consultancy block with its own line. The feasibility uplift from DFP — typically four to nine months of construction interest saved versus a standard planning timeframe, plus the value of removed VCAT appeal risk — usually justifies the contribution, but the agreement complexity is not trivial and the negotiation timeframes need to be reflected in the program. Our property development feasibility guide covers the broader feasibility modelling framework that this kind of agreement fits within.

How section 173 agreements interact with other planning instruments

A section 173 agreement is one of several instruments a council can use to bind landowners to obligations, and developers regularly encounter the question of which instrument the council intends to deploy. The instruments overlap but are not interchangeable.

Restrictive covenants — recorded on title under the Subdivision Act 1988 — are the closest cousin. They bind successors in title in the same run-with-the-land way, but they are typically created by the subdivider for the benefit of other lots in the subdivision and are easier (in principle) to remove or vary because the consent of the benefited lots is the operative trigger rather than a council decision. The restrictive covenants guide covers the developer-side considerations in more depth; the practical distinction is that section 173 is the right instrument when the council needs to be the enforcing party, and a covenant is generally the right instrument when the obligation is between owners of lots in a subdivision.

Permit conditions can secure many of the same outcomes a section 173 might, but they generally bind only the person acting on the permit and the works themselves, not future owners. Where the obligation needs to outlast the construction phase — ongoing maintenance, staging coordination, design control, or restrictions on use — the section 173 is the correct tool. Where the obligation is a one-off act discharged during construction, a permit condition is usually adequate and the section 173 is redundant. Developers should push back on a council that proposes a section 173 for matters that could be handled as a permit condition; the LC Lawyers commentary at LC Lawyers is useful supporting reference in this negotiation.

Memoranda of common provisions (MCPs) registered under section 91A of the Transfer of Land Act 1958 are sometimes used in conjunction with section 173 agreements to standardise long-form provisions across a multi-stage estate. The section 173 incorporates the MCP by reference, which keeps the title recording manageable.

Easements are not substitutes for section 173 agreements but interact with them: an agreement may oblige the landowner to create or accept an easement at a future point, with the section 173 binding the obligation until the easement is recorded.

For a subdivision under the Subdivision Act 1988 a section 173 agreement is often a condition precedent to Statement of Compliance, and the timing interaction with SPEAR — the Streamlined Planning through Electronic Applications and Referrals system used for subdivision certification in Victoria — matters. The section 173 needs to be recorded before SPEAR can move the plan to Statement of Compliance. Building the section 173 timeline into the SPEAR program is a routine source of timeline slippage for first-time developers; the land subdivision guide covers SPEAR sequencing in more detail.

What to look for when acquiring a Victorian site

A section 173 agreement is a title encumbrance and is disclosed in the Vendor Statement and in any subsequent Register Search Statement. A developer’s pre-acquisition due diligence on a Victorian site should always include obtaining and reading a current copy of any recorded section 173 agreement — not just noting that it exists. The notation on title is short and gives no indication of what the obligations actually are.

The agreement should be read for the following:

The duration and trigger for ending. Some agreements end automatically on a specific event — practical completion of a development, registration of a particular plan of subdivision, expiry of a permit — and others run indefinitely until formally removed. The former is much cheaper to deal with than the latter.

The substantive obligations and any unfulfilled obligations of the previous owner. Where the agreement carries staging, contribution, or works obligations that the previous owner did not complete, the obligation transfers to you on settlement, and the council is generally entitled to enforce them against you. The negotiating leverage here is the price; the obligation itself is fixed by the agreement.

Any payment, contribution, or works trigger tied to a future event — typically a planning permit grant, a subdivision certification, an occupancy permit, or a particular date. These may be material cost line items that need to be reflected in the feasibility model.

Any restriction on use, further subdivision, building envelope, or development that may impact your intended yield. This is the most common point of post-acquisition surprise, particularly on sites previously developed as low-density dual-occupancy where a single-dwelling-per-lot restriction was placed on title.

Any clause requiring council consent before specified actions. Where the agreement requires consent for matters that your development plan necessarily triggers — further subdivision, demolition of a retained structure, removal of a planted asset — the consent process can be a material gating item.

The parties to the agreement. Where the agreement was struck with parties other than the council that has current planning authority, the amendment process may need to involve those other parties as well, which complicates the timeline.

This pre-acquisition reading should sit alongside the broader title and planning due diligence work — Register Search Statement, planning property report, search of overlays, planning permit history, and section 32 statement review. For most projects this is work that the developer’s solicitor will undertake as part of the standard due diligence checklist, but the section 173 review is the one item most likely to surface an unpriced obligation, and it justifies the developer’s own engagement with the actual agreement text rather than relying on a solicitor’s summary.

What to negotiate when an agreement is being put on your land

When a council is proposing a section 173 agreement as a permit condition or as a DFP affordable housing instrument, there is meaningful scope for negotiation on terms — and the agreement, once recorded, will run with the land for as long as the obligations endure. The drafting decisions made at the negotiation phase typically have a longer cash-flow tail than any other phase of the planning process.

The first negotiation point is the ending or expiry trigger. Where the substantive obligation is a one-time event — payment of a contribution, completion of off-site works, certification of a subdivision — the agreement should expressly end on that event, not continue indefinitely. An agreement that ends automatically on a defined trigger removes the cost and risk of a future formal removal process. This is sometimes pushed back on by council, but it is a position generally supportable on the statutory text — section 173 agreements are not required to be perpetual.

The second is the geographic scope. Where the development is on part of a larger title or will be subdivided into multiple lots, the agreement should be drafted to attach to specific lots rather than to the entire parent title where possible. This avoids the situation where the obligation continues to encumber lots that have no functional relationship to the underlying purpose.

The third is the mechanism for transfer of obligation on sale. The standard drafting binds all successors in title, which is the statutory default, but the agreement can sensibly include a clause requiring the original developer to notify the council on disposal and pass through specific obligations to successors via contract. This protects both the council’s enforcement position and the developer’s exit position by making the obligation clearly visible to purchasers.

The fourth is the indexation and review of any monetary contributions. Where the agreement secures a contribution payable at a future event, the indexation clause should reference a published index (CPI, ABS construction cost index) rather than leave the figure exposed to renegotiation at the point of payment.

The fifth — particularly relevant for DFP affordable housing agreements — is the dwelling allocation and discount mechanism. The DTP model agreement is a useful starting point but is drafted from a planning authority perspective; developer-side amendments can usefully clarify the timing of the discount calculation (typically against final approved sale price, with provision for market-condition adjustment), the dwelling selection mechanism (developer-led against a market-tested mix), and the council/RHA acceptance timeframe to avoid a Registered Housing Association becoming a de facto blocker on settlement.

The sixth is the dispute resolution clause. The Act provides the section 178 amendment/ending procedure but does not regulate dispute resolution between the parties during the life of the agreement. Including a tiered dispute resolution clause — notice, negotiation, mediation, then Supreme Court — is generally beneficial because it offers an off-ramp from the formal amendment procedure for matters that arise between the parties.

The seventh, less often raised, is the indemnity drafting. Council-drafted agreements typically include broad indemnities running from the owner to the council. These should be reviewed by your solicitor; the breadth of the indemnity is often broader than the underlying obligation justifies and is regularly accepted by inexperienced applicants without amendment.

State and territory context — why this is a Victorian instrument

A reader unfamiliar with Victorian planning law sometimes asks whether other jurisdictions have an equivalent of the section 173 agreement. They do — broadly — but the instruments are not interchangeable, and a developer working across Victorian and interstate sites needs to be aware of the distinctions.

In New South Wales the equivalent is the planning agreement under sections 7.4–7.7 of the Environmental Planning and Assessment Act 1979, formerly known as a voluntary planning agreement (VPA). The instrument is structurally similar — a registered agreement that runs with the land and secures planning outcomes — but the process for entering into and varying one is governed by NSW planning law and runs in parallel with the Section 10.7 Planning Certificate disclosure regime. The NSW system is more heavily oriented towards monetary contributions and infrastructure delivery than the Victorian model.

In Queensland the equivalent is the infrastructure agreement under the Planning Act 2016, dealt with primarily as a vehicle for development contributions and infrastructure delivery, with broader application to other planning outcomes through site-specific conditions of approval. The Queensland model leans heavily on the body corporate framework for ongoing obligations within community title schemes.

In Western Australia, South Australia, Tasmania, the ACT, and the Northern Territory the equivalent instruments are spread across the planning, subdivision, and conveyancing legislation in each jurisdiction. The practical outcome — a registered agreement running with the land — is achievable in all states, but the procedural mechanics, cost stack, and amendment processes vary materially. The Victorian section 173 framework is generally considered one of the more developed and litigated, which means the case law and council practice are reasonably mature, but the procedure is also more rigid than, for example, the NSW planning agreement framework.

For a developer working across multiple Australian jurisdictions the practical guidance is: do not assume the section 173 procedure will be mirrored elsewhere, treat each jurisdiction’s instrument as a separate regulatory item in the feasibility model, and where the project is in Victoria, factor in the relatively well-defined but slow amendment process under sections 178A–178I.

Modelling section 173 obligations in feasibility

The feasibility implications of a section 173 agreement fall into three buckets that are best modelled separately: the agreement creation cost (legal, council review, lodgement), the substantive obligation cost (contribution, works, affordable housing dwellings), and the timing impact (settlement delay, holding cost impact, construction interest impact).

The first bucket is almost always carried as a one-off legal and consultancy cost line. The second varies by obligation type — a cash contribution sits on the cost side, an affordable housing obligation reduces revenue and may also affect the funding mix, an off-site works obligation sits in construction cost — and the third is a knock-on effect that runs through every interest-bearing line item in the model. For developments funded with construction debt at typical 2025–26 specialist non-bank rates of 8–12% per annum, a four-month settlement delay caused by section 173 mortgagee consent friction can be a more material feasibility hit than the legal cost itself.

Feasly’s feasibility modelling supports carrying the section 173 cost as a separate line item with its own timing trigger, and sensitivity analysis on the settlement delay scenario can be modelled by toggling the SoC date and observing the construction interest impact. For affordable housing obligations the dwelling-level model can carry separate price points for the discounted units and a separate cost line for the dwellings gifted to the Registered Housing Association. The point is to model the agreement explicitly rather than absorbing it into a general contingency, because the agreement is typically larger, longer-lived, and more visible to the equity return than the contingency line that it would otherwise hide within.

When you might consider not entering into a section 173 — pushing back

Not every council request for a section 173 is appropriate, and not every requested clause is enforceable. The grounds on which a developer might reasonably push back include:

The matter sought to be covered by the agreement could be adequately handled as a permit condition. The Act and the DTP guidance are clear that the agreement is for matters that go beyond permit conditions. Where the obligation is a one-off act discharged during construction, a permit condition is generally the appropriate instrument and the agreement is redundant.

The clause sought to be included would breach the planning scheme, fetter the council’s discretion, or extend council powers beyond the Planning and Environment Act. These are statutory limits that the council cannot override by contract.

The agreement seeks to secure a contribution that is not properly demanded under the planning scheme or an adopted Development Contributions Plan. Negotiated contributions are permissible but should be tied to identified infrastructure needs reasonably attributable to the development.

The drafting of the indemnity, default, and dispute resolution clauses is materially broader than the underlying obligation. Standard council templates often include drafting that is poorly calibrated to the actual obligation; sensible amendments are usually accepted by council legal once raised.

The duration is open-ended where the substantive obligation is discharged on a defined event. Pushing for a defined end-trigger is generally supportable and reduces long-tail cost.

The agreement is being used to lock in an outcome that the council has authority to deliver through the planning scheme amendment process. This is sometimes attempted in the negotiated context of a planning scheme amendment and is a reasonable point of resistance where the outcome could be properly secured through the more transparent amendment process.

Where the council is firm on a particular clause that the developer is unwilling to accept, the practical options are limited: accept the clause, withdraw the permit application, or appeal the condition requiring the agreement to VCAT. Appealing to VCAT to remove a condition requiring a section 173 agreement is procedurally available but is generally a hostile move that may affect the broader permit process; it is a tool of last resort.

Practical pre-execution checklist

Before signing an agreement, a developer-side review should confirm the following:

The agreement is consistent with the permit (where it is a permit-trigger agreement) and does not require or allow anything inconsistent with the planning scheme. The drafting captures all parties who need to consent for amendment, and additional parties beyond the responsible authority are necessary for the obligation rather than nominal. The geographic scope is properly tied to the development land and does not over-include adjacent parent title. The duration and ending trigger are defined where the obligation can be tied to a discrete event. The substantive obligations are clearly defined, costed, and timed against the development program. Any monetary contribution is indexed against a published reference. Mortgagee consent is in process or in hand. The council’s external solicitor cost has been quoted and is contained against the developer’s reasonable expectations. The signing process accommodates the corporate structure of the owner (power of attorney, common seal, director-signing). The Land Use Victoria lodgement timing is built into the construction and finance program with adequate buffer for SoC. The Vendor Statement disclosure framework for any future on-sale of lots accommodates the agreement.

Most of this is standard solicitor work, but the developer needs to be sufficiently across the agreement to ask the right questions. The cost of getting this wrong at execution is generally an order of magnitude larger than the cost of getting it right.

The 2024–26 reform horizon

The Plan for Victoria, the expanded Development Facilitation Program, the Housing Statement Reform Act 2025 (which took effect from 15 October 2025 and amended the Planning and Environment Act and the VCAT Act), and the broader DTP modernisation of the Planning and Environment Act program all have practical knock-on effects for section 173 agreements.

The most visible effect to date is the proliferation of affordable housing section 173 agreements under the DFP fast-track pathway. The Department’s published example agreement provides a useful template, but the practical experience to date suggests that the drafting is being worked through case by case in the negotiation, particularly around dwelling allocation, marketing restrictions, and the long-tail compliance obligations. Practitioners working on DFP projects in 2025 and 2026 should expect this drafting to continue evolving and should not assume the model agreement is the final position.

The Housing Statement Reform Act 2025 changes to VCAT case management — particularly the active case management of objector matters and the grouping of objector submissions — affect any contested section 178F decision that proceeds to VCAT review. The procedural changes are generally helpful to applicants, accelerating the merits review process for amend/end decisions that survive the in-principle stage.

The broader PE Act modernisation program is consulting on a range of issues, and practitioner submissions have consistently flagged the section 178A–178I amend/end machinery as a target for reform. The current procedure — particularly the absence of VCAT merits review on the in-principle decision — is widely viewed as outdated, and incremental reform over the next several years is possible. Developers managing long-tail sites with historical agreements may want to track this consultation, because future reform could materially change the cost-benefit of attempting to remove an unwanted agreement.

Quick reference — the key statutory sections

The following list collates the key Planning and Environment Act 1987 sections that govern the lifecycle of a section 173 agreement, for quick reference:

The companion regulatory instruments are the Planning and Environment Regulations 2015, particularly regulation 55, which sets out the information requirements for an amend/end application under section 178A.

Closing — the developer’s posture toward section 173 agreements

A section 173 agreement is neither a routine conveyancing item nor an exotic legal instrument. It is a register-binding contract with the planning authority that, for any meaningful Victorian development, will shape what can be done with the land for as long as the agreement remains on title. The developer-side posture that consistently produces the best outcomes is to treat the agreement as a material commercial document rather than a procedural formality — to engage actively in the drafting, to push back on inappropriate scope, to define the ending trigger clearly where possible, to budget realistically for the cost and timing impact, and to maintain a clear-eyed view of the relative leverage available to amend or remove the agreement after it is recorded.

The amend/end procedure under sections 178A to 178I is not designed to be easy. The absence of VCAT merits review on the in-principle decision means that the negotiation phase, when the agreement is first being put in place, is also generally the only phase in which the developer has any real leverage to shape the terms. Once the agreement is recorded, the cost and timeframe of changing it are usually higher than the cost and timeframe of drafting it well in the first place.

For developers acquiring sites with historical agreements, the pre-acquisition due diligence on the actual agreement text — not just the title notation — is one of the highest-leverage items in the diligence process, and unpriced section 173 obligations are one of the most common categories of post-settlement surprise on Victorian sites. Engaging a planning lawyer with explicit section 173 experience for the diligence read is usually money well spent, and the relevant practitioner pool is reasonably concentrated across a small number of Victorian planning firms.

The instrument is well understood, well litigated, and reasonably stable. The procedure for using it is rigid but predictable. The economics work out where the developer engages with the document as a commercial reality rather than as a council request to be processed. For most Victorian projects of any meaningful scale, a section 173 agreement is going to be part of the project. Treating it accordingly is the difference between a feasibility model that holds up against actual project conditions and one that doesn’t.