Introduced in 1904 under Premier Thomas Bent, Closer Settlement Estates were designed to revive an agrarian ethic after the hardships of the 1890s depression and to make homes available to men of small means. The growth of Melbourne's population at the expense of rural Victoria over several decades prompted attempts, such as Village Settlement schemes, to ameliorate the experience of urban and rural workers. From 1898, country estates had been purchased and broken up for small farming, while in Melbourne, vacant estates were purchased and subdivided for working men's homes. Similar areas were provided under the Small Improved Holdings Act 1906, which was to provide 'rich land for poor people' to farm intensively in outer suburbs.
Once estates were purchased by the Closer Settlement and (later) Lands Purchase and Management Board, they were subdivided into quarter-acre (0.1 ha) blocks. Applicants were selected according to criteria that suggested they would successfully meet the terms of their leases. In general, applicants for workers' home allotments could be any clerk or manual worker 21 years old or older owning property up to £250 value and earning up to £200 a year. They were expected to make regular payments at 4% interest, build a 'substantial dwelling-house' to the value of £50 within a year, make other improvements progressively and reside there permanently, although substituted residence by family could be arranged. Residence conditions were still to apply in the Crown grant.
Purchases of urban estates began with 31 acres (12 ha) in Footscray and 45 acres (18 ha) of Dal Campbell (Brunswick) in 1904, the latter adjacent to the Moonee Vale settlement (91 acres, 36 ha) of 1900. These were followed by Cadmans (18 acres, 7 ha, Brunswick, 1905), Penders Grove (23 acres, 12 ha, Northcote, 1906), Phoenix Park (23 acres, 9 ha, Brunswick, 1906), Glen Huntly (74 acres, 30 ha, 1906), Tooronga (101 acres, 40 ha, 1911) and a small area at Thornbury. Thus over 420 acres (168 ha) from Moonee Ponds Creek to Darebin Creek were subdivided by the State for working men, while over 175 acres (70 ha) in the relatively more affluent inner east were subdivided principally for 'clerks'. Added to these areas were Small Holdings at Mordialloc (460 acres, 184 ha, 1907) and Thomastown (581 acres, 232 ha, 1907).
A 1909 Committee of Inquiry found the administration of the Small Improved Holdings to be a shambles and Closer Settlement was largely discredited by a royal commission in 1915. The plight of the urban estates' lessees was mixed, but by 1910 it was clear to settlers, if not administrators, that success depended on far more than the right 'stamp' of workman. Legislation provided land and some money for improvements, but far more was needed to create a suburban home and community. On all estates water supply and sewerage depended on the prior construction of roads, which were the responsibility of municipal government. Settlers complained for years about unmade roads, winter bogs and summer health hazards due to inadequate sewerage and drainage. Settlers' associations, soon linked with local progress associations, sent deputations to Lands ministers but rarely gained concessions or satisfaction.
It had become clear by 1915, when city planning and slum clearance were attracting attention, that the success of workers' home allotment lessees depended on the provision of a suburban infrastructure requiring at least a co-ordinated approach by government departments and town councils. The haphazard provision of water, light and power, roads, schools and parks and gardens was complemented by demands for sports grounds, golf clubs, churches and concessions in times of unemployment.
This welfare experiment from 1904 to 1911 on urban estates was replicated in outer Melbourne after 1917 as part of Discharged Soldier Settlement. By mid-1918 there were 4335 residents on Melbourne's closer settlement estates and 266 residents on small holdings. Among the latter at Mordialloc from 1915 was the Women's Farm, or Women's Rural Industries Co., managed by Cecilia John and Ina Higgins. With soldier settlement in disarray by 1932, the policy of Closer Settlement was wound up in 1938 just as the Housing Commission of Victoria was being established to help house the urban poor after another depression.