Catherine Carter |
Friday, 10 June 2011 9:00 AM |
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As part of the ACT Budget handed down this year, details were revealed about changes to be made to the Change of Use Charge system that has been historically used to calculate the change in value attributable to a change in the land usage. The new system, to be implemented from 1 July will be known as the Lease Variation Charge, and brings into effect a new codified system with the intention of providing certainty for Change of Use Charges in development applications.
Industry has no argument with a codified system so long as it produces certainty and does not have a dramatic impact on the existing market and property values. However, it has long expressed concern that the draft tables and formulae that have been disclosed to date point to a significant increase in the cost of these charges. The information to date suggests that the charges will even exceed those currently being paid under the Government’s “rectification” scheme for the current system, which the Government believes represents fair value.
Along with the high values in the published tables available to date, this is a result of the new system disregarding the value of improvements and not taking into account the full value of upgrades to government infrastructure that are paid for by the property owner. The net result will be that the cost of redevelopment will be significantly higher than in the past resulting in increases on residential unit development by up to $50-60,000 per unit in some areas. Inevitably this cost will be passed on to new residents through higher prices, or stop new projects altogether – further exacerbating housing affordability problems in the Territory because of a shortage of supply.
Of immediate concern too is that although we are now only three weeks away from the implementation of the new system, the Government has still not released important details about how the new system actually work. For example, no one has yet seen the final codification schedules that have been produced for each suburb or the maps. The maps are important because most suburbs have been divided into three localities, each with different values. Differing localities will change costs dramatically. Without this detail no one is able to make concrete decisions about the new system, how much it’s going to cost, and whether in fact a new development is going to be viable at all.
Industry and the community urgently need more information from government. And we need it now.
Catherine Carter |
Friday, 10 June 2011 9:00 AM |
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