A planning permit application for a proposed 33-lot subdivision at 8 Hamilton Street (the Great Ocean Road) has been lodged with Moyne Shire.

The proposal also includes a reception area with an attached "manager's unit". The developer, GOR Retreat Peterborough, said it would built in five separate stages.

The development would involve building a number of large and small buildings across the L-shaped block, which sits beside the Schomberg Inn pub and wraps behind four neighbouring residential buildings.

In 2014 the same developer was granted a planning permit for the site, giving permission for a 34-room motel, along with a restaurant and gym facility. Several neighbours objected to that application and the matter went to the Victorian Civil and Administrative Tribunal, where the judgement panel backed Moyne Shire Council's approval decision, citing the amenity the development would bring to the town.

"We accept the conclusion reached by the council and consider there will be a net community benefit," the panel said at the time. Then-design manager Dean Picken said works would start by the end of 2014, with the planned motel to open by Christmas 2015, but the project never proceeded.

While the previous permit amalgamated two separate lots into a single title, the new permit requests the site be split into 33 different lots, along with areas of common property. The developer said the new plan "seeks to reduce the overall scale of the development", however a number of neighbours said that suggestion was a "joke".

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Eddy Strengers owns two residential properties to the west of the development site. He took the previous proposal to VCAT, but said the new one was "even worse". "How can they say this is reduced scale when they're asking for 33 residential blocks?" he said.

Mr Strengers said while the previous application only had a car park on the section of the block behind his properties, the new proposal had six "large" buildings on the same site. He said the buildings would block the northern "sight lines" across the Curdies estuary wetlands.

"Those sight lines from the Great Ocean Road are protected under the Peterborough residential design guidelines," he said.

Mr Strengers also argued the proposal, which includes units as small as 78 square metres, didn't fit with the character of Peterborough where the average block was 10 times bigger. "My main issue is that it doesn't comply with the standards. Why should they get an exemption?" he said. "We all have to follow the rules, so why don't they?"

The developer said the proposal was "designed to integrate with the town and landscape" and the design was "carefully considered".

The nature of the proposed accommodation is left intentionally vague, with the developer saying the proposal "seeks to provide flexibility in terms of allowing a range of complementary uses nested under accommodation, including dwellings, short stay tourism accommodation, and key worker accommodation, servicing a range of local needs".

Mr Strengers said he wanted clarity on the type of accommodation being proposed. "The previous proposal was deemed an asset to the community. I want to know what benefit this new proposal offers," he said.

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