Draft Variation 350 closes an anomaly in planning laws that meant hundreds of homes across Canberra could have been developed into higher density housing because of the granny flat in the backyard, and has been in interim effect since last May.

The quirk led to standard homes being replaced with up to half-a-dozen townhouses, a parliamentary inquiry was told, leading to "out of character" developments according to the ACT government and residents groups.

These developments were allowed because the residential leases on these blocks do not limit the number of dwellings that can be built.

The loophole is contained to several hundred leases issued in the late 1960s and early 1970s, when two dwellings - one house and one small flat - were allowed to be built on these blocks, so long as the development looked like a single dwelling from the street.

The idea was to improve the available housing stock while keeping the suburb's low-density character.

However, this has meant the current definition of "single dwelling block" in the Territory Plan does not apply to these blocks with the extra flat, and some of the rules that govern the development of multi-unit housing don't apply either.

Those rules include restrictions on plot ratio, block size requirements, replacement dwellings, the number of dwellings in each building and restrictions on attics and basements.

However up to eight people who were in the process of developing one of the affected blocks have been left in the lurch by the changes, with some even at the development application stage.

The Master Builders Association said that meant that some people would be left hundreds of thousands of dollars worse off than expected.

However the ACT Legislative Assembly's planning committee ruled that the changes were necessary and the "impact on surrounding residents and urban amenity in the affected residential areas without these changes is equally pertinent".

"To ensure ongoing fairness and equity to both proponents and residents in residential areas the majority of the committee feels that the need for consistency in planning rules and criteria in residential areas is paramount," the committee wrote.

But Liberal politician Mark Parton filed a dissenting report, critical of the committee's dismissal of the prospect of a grace period.

He said the retrospective impact of DV 350 "imposes a sudden and unforeseen loss on small companies and individuals who had a genuine expectation that they could proceed under pre-DV 350 assumptions."

"In many cases, owners may have incurred a premium to buy such blocks based on previous planning rules and are now confronted with significant deprivation through no fault of their own," Mr Parton wrote.

He argued that owners who could prove they were financially committed to their development before May 25 last year, through hiring architects or doing site preparation, should be able to proceed under the old rules.

In lieu of that, he said the government should provide "adequate compensation" for those left out of pocket.

A spokesman for Planning Minister Mick Gentleman however confirmed the government would accept the committee's majority report, which recommended no such measures for developers.