With the crisp ocean air, the wineries tucked into the hills, or the slower pace that feels a world away from the city, it’s no surprise that more people are not only holidaying but also considering staying for good in the Mornington Peninsula.

But for those with careers, family ties, or other commitments in Melbourne or beyond, the question often becomes: Do I build a permanent residence, or invest in a holiday home? 

It’s a choice that affects everything from where you build and how you design, to which council regulations apply and how much ongoing maintenance you’ll face. And while both paths offer lifestyle rewards, they also come with unique considerations that many new owners don’t fully realise until they’re well into the build process.

In this guide, our builders Mornington Peninsula residents trust at TEMSEA will walk you through the essential factors to consider when deciding between building a holiday house or a permanent residence in the Mornington Peninsula, so you can move forward with clarity and confidence.

Purpose & Lifestyle: Occasional Escape or Everyday Living?

The decision between building a holiday home and a permanent residence in the Mornington Peninsula starts with purpose: how you plan to use the home, and what kind of lifestyle you want it to support.

Holiday home: A place to recharge

Holiday homes are typically designed for short stays, seasonal visits, or occasional retreats. With these homes, owners often prioritise leisure, low-maintenance living, and proximity to natural attractions like beaches, wineries, golf courses, or national parks. 

Because they’re not used year-round, the design leans toward easy maintenance and relaxed layouts. Open-plan spaces, for instance, encourage social connection, while minimalist kitchens, compact storage, and durable finishes make short-term stays effortless. Additionally, lock-and-leave features such as security systems or weather-resistant materials are often prioritised to support longer vacancies between visits.

Permanent residence: Built for comfort, stability & everyday demands

On the other hand, building a permanent home means designing for daily life, such as work routines, schooling, health services, and year-round comfort. 

These homes typically require:

• Higher thermal and acoustic insulation for comfortable living through all seasons.
• Storage space, functional kitchens, and designated rooms for work or study.
• Long-term energy efficiency strategies, such as solar integration or passive heating/cooling.
• More sophisticated stormwater and waste management systems to meet local council requirements for ongoing occupancy.

Where to Build: Holiday Suburbs vs Residential Communities in the Mornington Peninsula

Choosing where to build in the Mornington Peninsula is just as important as deciding what to build. Some suburbs are better suited to holiday homes, with a seasonal rhythm and a focus on leisure. Others cater more to full-time living, offering essential infrastructure, services, and community connectivity.

Holiday home hotspots

Suburbs like Rye, Blairgowrie, Portsea, Sorrento, and Tootgarook are often the first to come to mind when people think of a  “holiday home.” These areas are known for:

• Proximity to beaches and bushland, with many properties located just minutes from the shoreline or nestled among the dunes.
• A strong short-term rental market, especially during summer and holiday periods.
• A more transient population. You’ll find weekenders, holidaymakers, and seasonal visitors outnumbering long-term locals at certain times of the year.

While these suburbs offer an enviable lifestyle, they may lack certain conveniences that permanent residents need, such as large supermarkets, healthcare hubs, and regular public transport. Some areas also experience limited mobile reception and slower internet speeds, which can be a factor for those working remotely.

Suburbs designed for daily living

If you're considering full-time residence, suburbs like Mount Eliza, Mornington, Somerville, Baxter, and Hastings tend to offer stronger support for everyday life. These communities typically feature:

• Established infrastructure, including public and private schools, hospitals, shopping centres, and reliable public transport.
• More stable year-round populations, creating a stronger sense of community and ongoing services.
• Better access to the Mornington Peninsula Freeway and train lines, easing commutes to Melbourne or surrounding regions.

Residential zoning in these areas often supports larger dwellings, home offices, and family-oriented layouts. They're also more likely to be on town water and sewerage, which can simplify the build compared to more remote holiday zones that may rely on tanks and septic systems.

It’s worth noting that blocks in these residential suburbs are often smaller than the sprawling coastal lots seen in Rye or Red Hill, but they tend to be flatter, more connected, and easier to build on.

Council Regulations & Planning: What You Need to Know Before You Build

Building in the Mornington Peninsula comes with a range of planning and regulatory requirements, and they’re not always the same for both.

Zoning and land use: The first layer of planning

Every parcel of land on the Peninsula falls under a specific zone within the Mornington Peninsula Planning Scheme, such as:

• General Residential Zone (GRZ) - Suitable for most standard homes and dual occupancies
• Low Density Residential Zone (LDRZ) - Larger lots with limitations on development density
• Green Wedge Zone (GWZ) - Rural areas with stricter planning controls and limited residential use
• Rural Conservation Zone (RCZ) - Land with high environmental sensitivity; permits often required

Zoning influences everything from building setbacks to whether you can connect to town services and whether short-stay rentals are permitted by right.

Overlay controls: How they affect design and approval

Many properties also fall under overlays, which are used to protect environmental features, mitigate risks like bushfire, and maintain the Peninsula’s distinct character.

The most common overlays in the region include:

• Bushfire Management Overlay (BMO)
  These often apply in coastal and semi-rural areas such as Red Hill, Shoreham, and Blairgowrie. Requirements may include:
  
  
  • A Bushfire Management Statement
  • A BAL (Bushfire Attack Level) assessment
  • Use of fire-resistant materials and design elements (especially for BAL-29 or above)
    
    
• Environmental Significance Overlay (ESO)
  Applies in areas near bushland, creeks, wetlands, or wildlife corridors. It may:
  
  
  • Restrict tree clearing or excavation
  • Limit building footprints
  • Require assessment of ecological impacts
    
    
• Design and Development Overlay (DDO)
  This is common in Sorrento, Portsea, and other scenic zones. This overlay:
  
  
  • Regulates height, bulk, and setbacks
  • Aims to preserve views, vegetation, and coastal character
  • Often imposes stricter visual design standards for holiday homes

Understanding these overlays and factoring them into your design early can save you significant time and money in the approval process.

Short-stay vs Permanent living: Know the difference in approvals

If your goal is to build a holiday home that you plan to rent out when you're not using it, understanding short-stay accommodation rules is critical. In most residential zones, a planning permit isn’t required, but you must register the property under the Short Stay Rental Local Law. 

This registration is mandatory and helps the council manage noise, waste, and neighbourhood concerns, especially in popular tourist areas like Rye and Capel Sound.

However, if your land is in a Green Wedge or Rural Conservation Zone, a planning permit is generally required to operate any form of visitor accommodation, whether you're renting commercially or not.

Permanent homes, on the other hand, must comply with a broader set of regulations from the National Construction Code (NCC) to local infrastructure standards. This includes:

• All new homes in Victoria must meet a minimum 7-star NatHERS energy rating under the updated National Construction Code (as of 2023).
• If your property isn’t connected to a sewer system, you’ll need a compliant onsite wastewater system approved by council.
• Drainage, stormwater, and access requirements must also meet local infrastructure standards.

Design & Construction Differences: Tailoring a Home to How You’ll Use It

One of the most significant and often overlooked distinctions between a holiday home and a permanent residence is how each is designed and constructed to suit its day-to-day use. Here’s how they differ:

Permanent homes: Designed for daily life

A full-time residence needs to support the ebb and flow of daily life. These homes often accommodate growing families, home offices, or multi-generational living, which calls for more refined zoning and thoughtful space planning.

That means separate bedroom wings for privacy, generous storage such as walk-in pantries or linen closets, and functional utility areas like laundries and internal-access garages. More than that, acoustic insulation, orientation for passive solar gain, and energy-efficient systems also become expectations for permanent comfort.

Material selection also takes a different tone. Floors, benchtops, and joinery are chosen for durability and ease of maintenance across daily use. 

Every decision has to support a home that doesn’t just work now, but works well for years to come.

Holiday homes: Built for occasional use and effortless relaxation

By contrast, holiday homes are shaped by leisure. Since these properties are used occasionally, often for weekends, summer breaks, or seasonal escapes, the design tends to favour openness, lightness, and low maintenance.

You’ll typically see open-plan kitchen, living, and dining areas that bring people together, rather than spaces that separate them. Kitchens may be smaller and more streamlined, with less storage. But outdoor areas like decks, patios, or outdoor showers may carry just as much weight as the interior, especially when the beach is just down the road.

Because they may sit unoccupied for long stretches, materials are also chosen for their ability to endure the salt-laden air, moisture, and changing temperatures that are all part of the Peninsula climate. 

Ready to Build on the Mornington Peninsula? Let’s Make It Happen

Choosing between a holiday escape and a permanent home is just the beginning. How you build it makes all the difference. At TEMSEA, we bring deep regional experience, tailored design solutions, and craftsmanship that stands the test of time.

Connect with the builders Mornington Peninsula property owners trust and start building smarter, from the ground up.

Contact us today!