Toorak residents are furious that the owner of a landmark local mansion has begun tearing down the house after a failed heritage protection bid.

The front portion of Idylwilde at 16 St Georges Road, sold to Xiaoyan “Kylie” Bao for $18.5 million in September 2013, has been ripped open, with the ornate interior of the property exposed to the street.

Built in 1913, the Queen Anne-style estate was marketed for sale as a “home for the generations” and “a rare and beautiful piece of Australian real estate”, but it took Ms Bao just two months to apply to council for a permit to knock it down.

The move prompted the City of Stonnington to apply last year to then-planning minister Matthew Guy for interim heritage controls, with the support of Toorak residents.

The property, while much loved by locals and iconic to the suburb, was deemed to not be of “sufficient architectural significance” for Mr Guy to step in and grant heritage protection.

The minister rejected a bid by council in May last year based on advice from Heritage Victoria, the planning department said in a statement.

An application to both Heritage Victoria and the Heritage Council, temporarily halted demolition works but was also declined.

Stonnington mayor Melina Sehr said that under the law, the council could not refuse the homeowner’s consent for demolition.

“Council works hard to ensure that the heritage of Stonnington is protected,” Cr Sehr said.

“Council is disappointed that Heritage Victoria and the (then) Minister did not see fit to protect this property.”

Ms Bao is the wife of Chinese billionaire-turned-Australian investor Wang Hua and is herself the owner of the Heritage Golf and Country Club in Chirnside Park, which The Age reported in March she took control of in a separation arrangement with her husband.

An excavator, surrounded by rubble of bricks and wooden beams, continued to raze the home, ripping down the roof on Wednesday as distressed locals watched on.

An irate neighbour – who did not wish to be identified – attempted to stop the works, approaching the site manager to complain.

A motorist slowed her car to scream “it’s a f—ing disgrace” as she drove past the wreckage on one of Melbourne’s most exclusive streets.

Toorak resident Dr Ann Singer was visibly shaken as she paused to watch the excavator gouge the old home.

Dr Singer described the property as a “real treasure” of Toorak.

“And to just come out one day and see it knocked down is tragic, just absolutely tragic,” she said.

“They don’t care … they just wipe out a home that was absolutely beautiful. Why is this house being destroyed? We have lived in this area for 30 years and to see this is absolutely stunning, just heartbreaking.”

Eddie Young, president of Toorak Village Residents Action Group, said Idylwilde was a standout home on the street.

“It is not a historically valuable home, but is aesthetically a wonderful-looking home that is similar to those of which we would like to retain in Toorak,” he said.

“To see it go down is disappointing.

“The main concern, from my members, some of whom are St Georges Road residents, is that you often find – and it is subjective – that grotesque buildings take their place.

“New zoning to a large extent has prevented the building of the sort of monoliths we have seen in the past, but there is no restriction on design.

“There will be angst when anything like this happens, because it has been happening. You only have to look around St Georges Road, and if you know the history of what has gone down, this is just another one.”

Local homeowner Helen Elsworth, who has lived in neighbouring Orrong Road for 30 years, said the demolition was “shocking” and the home’s former owners would be devastated.

“I thought it was the most beautiful house I had ever seen,” Ms Elsworth said.

She said fellow residents were concerned that apartments will be built in its place.

Ms Elsworth said locals were saddened when the former Baillieu family estate at 39 St Georges Road was demolished by property developer Harry Stamoulis, who has gone on to build one of Australia’s most expensive and elaborate mansions on the site.

Stonnington Council confirmed no recent planning applications have been lodged by Ms Bao, who will not need a permit to construct a single dwelling.