Developer Red Panda Property withdrew its rezoning application of the development, which would have bought up to 390 houses to the area, after a disagreement over the project's stormwater disbursement.

Northern Midlands Council wholly rejected the claim by the developer that they were "flouting" their responsibilities as a planning authority.

"We totally reject allegations of flouting our responsibilities as a planning authority and allowing personal issues to get in the way of decision-making," Northern Midlands Council mayor Mary Knowles OAM said.

"The exact opposite is true. Council has strictly followed due process and its officers have worked with the proponent to resolve many of our concerns with the proposal, but we remain at an impasse over management of stormwater drainage."

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The council claimed that they had yet to receive a compliant rezoning application for the development.

"As a council we are not prepared to risk inundation of residents and other landowners and we will not be bullied into taking shortcuts," Cr Knowles said.

RPP director Andrew McCullagh had previously indicated the issue was "more personal" than a disagreement of stormwater disbursement.

The state government is aware of the situation but it is outside their jurisdiction to intervene in the matter.

"The Tasmanian government is aware of the developer's concerns with the Northern Midlands Council," Local Government and Planning Minister Roger Jaensch said.

"This is a matter between the developer and the council as part of the standard statutory process for rezoning land, and the State Government has no capacity to intervene in these matters.

"I understand that the Planning Policy Unit of the Department of Justice has contacted the council to clarify what the issues are."

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One property group has suggested an alternative way to handle planning processes across all local councils in Tasmania.

Real Estate Institute of Tasmania chief executive Mark Berry said their long-standing view was that planning authority should rest with one independent body.

"It is the REIT's position that all planning is taken away from councils and placed in a statute body," he said.

"That provides consistency across the board of what the planning scheme is, how it should be run and more importantly, how it's viewed.

"It takes away the individual view between the different councils that we have around the state."

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Property Council of Tasmania executive director Rebecca Ellston said the need was clear for a simpler planning approvals process.

"What is clear, as illustrated by this case, is that the frustration levels of investors, developers, planners, architects, and engineers, just to name a few, has increased over time, and the need for a more efficient housing approval system is crucial to ensuring that a key barrier to further investment and a stronger economy is removed," she said.

"It should be noted that in recent years there has been a move to enhance uniformity with the introduction of the statewide Tasmanian Planning Scheme.

"While this process has delivered some improvement, local and statutory authority approvals continue to be problematic to achieve in a timely and consistent way for any developments other than the most basic."

Labor spokesperson for Local Government Anita Dow said that the issue was in the government's planning reform.

"The state government should be working closely with local government to plan for future housing growth and infrastructure investment," she said.

"The government's planning reform has not made planning simpler, faster, fairer, cheaper or developments less complex across our state."

Ms Ellston had a similar view, expressing the need for constant review of the planning scheme to ensure it was working optimally.

"State government need to continually critically review the Planning Scheme provisions refine their operation," she said.

"The performance based planning scheme approach does not work if 99% of development applications cannot meet the acceptable solutions and need to be advertised, assessed at a council meeting etc."

Mr McCullagh has indicated he will look at sitting on the land or potentially building a "big box" development in its place.

He echoed the thoughts of Ms Dow when expressing his desire to see a change to government policy.

"The shortage of residential land should be of concern to the government given the exceedingly strong demand and lack of activity in the rezoning space and councils that are ignoring their duties," he said

"The government overcame the same problem for its own land a few years back , by changing the legislation, and now it needs to follow suit for private development before prices exceed the reach of the average person."

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