As if drawn by freehand, a small grid of dirt tracks are etched in the scrub, dotted with about 90 shacks and sheds.

But this is not a remote community. It's next to a commuter belt train station in an identified growth area, west of the tracks from Wyee, New South Wales, between Newcastle and Gosford.

'Shantytown' vs 'snobbery'

Peter Hennes says the people living in his community are "workers, not bludgers". ( ABC News )

This informal neighbourhood has recently become a class battleground, with one local councillor calling it a "shantytown" and counter-accusations of "snobbery". The council itself calls the community a "reputational risk".

"Shantytown could be a name for it, but I prefer to call it Wyee Heights," Peter Hennes, who has called this this place home for 35 years, said.

"I've raised my children here, both my children are in their early 30s now with children of their own. And after all that, I own my own place and that's the big one for a lot of people in Australia."

Some blocks here have high security fences, "no trespassing" signs and guard dogs, some lie overgrown and dormant. Many are littered with the carcasses of rusty cars. Most have a caravan, tent or shipping container with a solar panel peeking out the top. Proof of life, where life is not permitted.

"Personally I've been called a squatter, living on somebody else's land, when this is my land. I bought it and I pay the rates on it. I don't live on dirt floors, I'm not robbing banks and hiding up here, this a beautiful area. The place has got workers, not bludgers," Mr Hennes said.

Unauthorised housing

There are lots of rusty old cars in the neighbourhood. ( ABC News )

Amongst these unapproved shelters lives a small community of people at society's fringe who have lived here without permission in the same conditions since the year World War I broke out.

Up to four generations have worked, fallen in love, raised children, been in trouble with the law, paid rates and taxes, and died here, but have never been connected to water, sewerage, mail or bitumen roads, like their fellow townsfolk in brick homes with pools 100 metres away across the tracks.

You have to be "on the grid" before you go "off the grid", and the settlement here predates the law which requires urban services.

The reasons landowners live here in contravention of council bylaws are complex, and range from a lack of living alternatives, to real estate speculation, a family connection to the place or as short stay stopgap.

Very few residents have applied for development approvals and none have been granted, creating a tense situation for some.

'I burnt my own house down'

Les Scott says everyone in the community looks after each other. ( ABC News )

Les Scott claims he's the cousin of AC/DC frontman Bon Scott and has been in the area for 37 years.

"[There are a] lot of drug and alcohol problems in this area, because of depression of the way we live, I suppose," he said.

"[We're] not allowed to build anything. No shower, no toilet. My toilet's a bucket. Terrible."

Mr Scott blames the council's demands to stop working on his unauthorised house for what he did next.

"Got on the port pretty bad, got deeply depressed and burnt it down. I know it was madness."

Mr Scott still lives amongst the ashes of his burnt home in a caravan.

"There should be community here, because everyone looks after each other and when we are down and out we all share our food together," he said.

Residents told to pay up

Council wants residents to pay for infrastructure costs associated with the land. ( ABC News )

Lake Macquarie City Council is using a NSW state law to demand residents pay for essential services.

This is despite residents' rate contributions over decades and the council's acknowledgement that many residents' only major asset and principal place of residence is that land they are living on.

"Any future development and infrastructure costs associated with the land will need to be met by landowners," a council spokesperson said.

"Council's current proposal is to form a group that will explore options to assist in the provision of infrastructure for the paper subdivision."

Until then, Mr Scott is recovering timber from his burnt home in the hope of being able to build again.

"I've been awake since 2:00am this morning stressing about how much longer am I going to live here if council says, 'Oh you got to go,'" he said.