Vancouver's beloved "Hobbit house" will get an interior upgrade and some new neighbours, after city council approved a zoning proposal that will keep the unique building in its current location.

Located on King Edward Avenue and Ash Street, the 84-year-old house – which is officially known as James Residence – is recognized for its distinctive storybook house architecture.

Vancouver city council approved a re-zoning proposal Tuesday, that will see the home's interior upgraded and modernized. The proposal also includes plans for 20 three-storey townhouses that will be built around the "Hobbit house" on surrounding lots. The project will be overseen by W.T. Leung Architects Inc.

The King Edward Green townhomes start at $1.2 million, according to the project's website.

The "Hobbit house" was sold last year, prompting concerns it might be torn down. Once the home is upgraded it will be sold as a single-family residence.