The new Lease Variation Charge which comes into effect today will see the introduction of a massive new tax of residential housing, through the introduction of excessive charges for lease variations, according to the Property Council of Australia.
Property Council ACT Executive Director, Catherine Carter, said that the ACT Government has, with the support of the ACT Greens, introduced a new system intended to provide certainty for change of use charges in development applications, but which will in fact be extremely complicated and massively expensive.
“Industry has never had any argument with a codified system so long as it produces certainty and does not have a dramatic effect on the existing market and on property values. Unfortunately however the Government has now implemented an absolutely incorrect policy through the introduction of excessive charges for lease variations which is likely to lead to a reduction in the value of many existing homes located in redevelopment areas, as well as big increases in the price of the end product.
“The new system has now been further complicated with the introduction of a range of last-minute amendments tabled by the Greens and agreed to by the Government, aimed at encouraging development in strategic locations by creating exemptions and reductions to the charges.
“Unfortunately, in spite of the fact that the new system starts today, few details are available about how decisions will be made, creating considerable uncertainty and ambiguity in the system.
“One of the ironies about this new legislation is that one of the rationales from Government to justify the imposition of massive cost increases is based on the myth that developers have been making mega-profits at the expense of the community and that it’s time they pay a “fair” share. Without question, developers expect to make a reasonable profit on transactions, having regard to the cost and risk involved in development.
“However, the increased lease variation charge won’t affect developers’ profits, because the financiers won’t allow this to happen. The result will be that where lease variation charges are higher, the amount a developer can pay the landowner goes down. So, the community are in fact the losers.
“The Government’s policy on the new lease variation charge is wrong in theory and in practice. What we should have is a simple, affordable and unambiguous system instead of a new tax,” Ms Carter concluded.
For further information contact:
Catherine Carter, Executive Director, 02 6248 6902 or 0412 330 079
