A New South Wales court has criticised a local council for allowing a couple to build a house near a beach on condition they demolish it in 20 years if sea level rise predictions are fulfilled.

The NSW land and environment court ruled that a condition placed on Greg and Lesley Newton’s new home that it be flattened due to rising seas and coastal erosion should be removed.

The Great Lakes council placed the stipulation, known as condition seven, on the development at Jimmys Beach on the NSW coast near Newcastle. The Newtons were to bear the cost of an assessment of coastal conditions after 20 years, with the house to be vacated if sea level rises followed scientists’ predictions.

"Although Condition 7 is cast in terms that hold out a prospect of some future reconsideration of its impact toward the time that the Damoclean sword is scheduled to drop, the burden placed on whoever might be the owners of the dwelling at that time is not an insignificant one – there is no guarantee of an extension," said NSW land and environment court commissioner Tim Moore in his judgment.

Prof Andrew Short, an expert in coastal development at the University of Sydney, told Guardian Australia the council’s condition was unusual.

“A house had to be abandoned in Old Bar (in NSW), after it was threatened by erosion, but this is the first time a condition like this has been applied to a new house,” he said. “Jimmys Beach certainly is a high-risk area and it will continue to be an ongoing problem in terms of erosion.”

Currently, local councils have to devise coastal management plans, under the supervision of state governments, that place restrictions on beachfront dwellings deemed at risk from erosion or rising seas.

But Short said the federal government has to draw up a national strategy for coastal planning in the face of rising sea levels, which could threaten homes and vital infrastructure in the coming decades.

“There are 15 hot spots at imminent risk of coastal erosion in NSW, all from areas sub-divided 100 years ago when there was no awareness of erosion or sea level rises,” he said. “At the moment there are hundreds of homes at risk, in the future it will be thousands.

“The regulations are in place now but the issue is local councils don’t have the resources to grapple with the problem. The federal government will have to step in at some stage for an effective policy, because we can’t have a piecemeal approach in a climate-changed world.

“We are already seeing property values declining in some areas. And if the beaches retreat by 10 metres this century, as they could do, most of the houses in that zone will fall into the sea.”

Short said in other states, areas such as Adelaide and Gold Coast are also at risk from coastal erosion, requiring sand nourishment programs.

According to the latest IPCC climate report, released last year, the global sea level rose between 1.7mm and 3.2mm a year between 1900 and 2010, with this increase accelerating during the last century.

The rise in sea levels is primarily caused by melting sea ice and the thermal expansion of the oceans as they warm.

Oceanographer Dr John Hunter told Guardian Australia the eastern seaboard of Australia is experiencing slightly larger increases in sea level than the west coast.

“Overall, we’re looking at a sea level rise of 0.5m and 1m by the end of the century, which will increase the frequency of flooding events and enhance the erosion of muddy and sandy shorelines,” he said.

“As a rule of thumb, for every 10cm of sea level rise, you get a trebling of flooding events. And that’s not accounting for houses also near rivers that have to deal with flooding from increased rainfall.

“The sea level rise is likely to accelerate. We will get to a time where there are areas of the coast where it’s simply not worth building a house. At some point, a government will need to decide it’s important enough to put together a plan.”

Last year, the NSW government announced that local councils were no longer required to use previous sea level rise benchmarks for 2050 and 2100.

A spokesman for the NSW department of planning and infrastructure said the government was drawing up new guidance for councils.

"Councils are encouraged to give local sea level rise projections due and proper consideration," he said. "However, there is nothing to stop a council using the IPCC projections.

"This approach is in line with the government’s commitment to return planning powers to local communities. It will give certainty and consistency for councils, property owners, property buyers, solicitors and conveyancers.

"The decision to remove the state sea level rise planning benchmarks was the first stage of a comprehensive review of coastal management in response to concerns raised by communities and councils regarding previous coastal erosion reforms."