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Fantastic! Helen (planning manager) is very much pro-development and seems to be taking a pro-active approach here. More dwellings = more Council rates and more $$ for developers, everybody wins! :D

Bayswater certainly has one of the easier set of criteria for split density coding - the sticking point may be the existing dwelling i.e. what condition is it in and is it really worthy of retention or have any special character features? Even if it does, you should be able to incorporate those...