Developers would be able to defer the payment of their lease variation charge until residents are about to move in, under new laws to be introduced into the ACT Legislative Assembly.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
ACT Chief Minister Andrew Barr is set to table legislation on Thursday that would give developers the option of a later payment of the change-of-land-use charge for projects over a certain threshold.
The bill comes after years of lobbying from the industry to allow payment to be deferred to the end of a project, when cash flow is better.
It also followed a sharp increase to the charge in last year's budget, which pushed the price to change the use of land from a house block to a strata title from $7500 a unit for the first three units and $5000 a unit after that to $30,000.
"The LVC is designed to make sure the community shares in the windfall gains developers make when government varies a lease to allow for new development," Mr Barr said in a statement.
"This means the community benefits from a contribution towards the facilities we all use, like schools, roads and hospitals."
As it stands, lessees must pay the charge before the land use is changed.
But under the proposed scheme, lease variation charges of more than $100,000 can be deferred until a certificate of occupancy is issued or for up to four years - whichever comes first - with the use changed immediately.
To take part, developers must enter into a arrangement with the ACT Revenue Commissioner for the deferred payment.
The deferred amount will attract an interest payment, understood too be the bond rate plus a small margin, making it around 3.5 per cent.
This is to ensure ACT taxpayers are not subsidising the deferral of payments by developers, a spokesman said.
The deferred amount will be secured by a first charge on the land.
The legislation is likely to be welcomed by the ACT's property industry, who felt ambushed when the government quietly increased the charge last year.
Figures within the industry warned it could spell "the death of the townhouse" in many inner-city areas.
The government bowed to pressure to allow for a transition period for properties purchased between July 1, 2016 and June 30, 2017, where the old charge would apply if a development application was filed within three months from July.
Planning officers were hit with a whopping 152 applications before the tax hike took full effect, leading government to agree to a Greens proposal for a review of the scheme.
