John Weretka and his partner Paul O'Halloran have lived in their Sydney Road home for three years and objected to plans for the adjoining block, which was subdivided into two smaller lots.

Three two-storey dwellings are planned for one half of the block and Mr Weretka thinks more could follow.

Six other property owners in the vicinity supported his objection put forward to Indigo Shire Council.

"We're not against development, it's just a question of what fits within the town," Mr Weretka said.

"We actually looked at buying the block and putting some small, self-contained accommodation on it and turning the rest into gardens.

"Most of us in this neighborhood have been concerned about heritage problems. The town basically exists because people come to look at heritage buildings.

"It's a tricky issue because we have to have development in the town. It's not a museum, people actually live here, but it's a question of getting the balance right."

An Indigo Council spokesperson said applications for multiple dwellings were considered against a number of criteria, including existing or preferred character.

"Character of a building is quite subjective and only a small proportion of properties are restricted in the planning scheme," the spokesperson said.

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"Some parts of Beechworth are covered by a heritage overlay and this creates obligations that usually apply to existing buildings. If a property does have a heritage overlay then this will be considered as part of the final assessment.

"The planning scheme supports a range of housing types, however there are no controls that limit the value of a proposed house."

Mr O'Halloran said it could set a dangerous precedent if it was approved.

"If you let these apartments be built, you may as well build a McDonald's and then a KFC and a 7-Eleven. There has to be some modulation of the sort of properties that are built," he said.

"I feel our house was carefully considered to fit the scheme of the town.

"I think residents want to protect that look and character of the town."

Mr Weretka said the development also didn't help the affordable housing shortage.

"Two-storey townhouses aren't likely targeted at older people and they're too small for families," he said.

"Clearly they're holiday accommodation. The town needs holiday accommodation, but it's not going to deal with housing issues."

Development consultant Mountain Planning was contacted for comment.

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