Plans to build five units at Campbell Town were knocked back by the Northern Midlands Council, after councillors deemed the lack of a footpath a safety risk.
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A development application for the development at 7 Bedford Street was rejected by the council on the grounds the property did not have adequate pedestrian access.
This required discretionary approval and was the only such issue identified by town planners, however councillors used that as justification to overwhelmingly reject the application.
Bedford Street does not have a footpath.
An 11-unit development at Youl Street, Perth also required discretionary approval due to it lacking a footpath, however this was approved by councillors at the same meeting.
The Bedford Street proposal - which was initially submitted as a six-unit development and revised to five units - was not popular around the council table.
Councillor Alison Andrews said it would "stand out like a sore toe" although she noted councillors could not vote it down based on appearances.
"The appearance of this subdivision is going to stand out like a sore toe in Campbell Town," Cr Andrews said.
"It's going to be something very different.
"It's within the planning regulations and as a planning authority, it meets all the criteria. So unfortunately we can't vote it out because of the way it looks."
Councillor Paul Terrett said approving the development would set a precedent that "could have a detrimental effect" on the semi-rural Campbell Town.
"There's nothing stopping this type of development going all over that area," he said.
"I know we have virtually no way of ending this, because if we do knock it back it'll probably get up in TASCAT.
"If this is the way of getting low-cost accommodation to people who really can't afford much as far as a mortgage, to give them something like this is terrible."
Councillor Matthew Brooks likened the oblong units to shipping containers.
Only mayor Mary Knowles and councillor Richard Goss voted in line with town planning officers' recommendation to approve the application.
An alternate motion put forward by Cr Brooks, which recommended rejecting the application as the lack of a footpath was "a safety concern to residents and visitors", passed.
Cr Terrett also suggested wording about the development being out of character for the town, which was included as a note on the motion.