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Icon Water levy a tax on first home buyers, says Independent Property Group

Canberra real estate representatives have hit out at Icon Water's planned new levy on developers as a tax in disguise on first-home buyers.

The head of project planning at the Independent Property Group, David Shearer, said the charge would cost the buyer of a one-bedroom apartment in Woden $6000, but the buyer of a four-bedroom penthouse in Kingston would pay nothing.

"It's also not equitable and lacks transparency that developers who just happened to buy land from the [Land Development Agency] in Gungahlin and Molonglo pay zero whereas developers who are developing non LDA sites in Woden or Belconnen get hammered," Mr Shearer has told Icon Water.

Real Estate Institute ACT chief executive Ron Bell is meeting with Icon to raise his concerns.

"They're charging all the older areas and they're saying that infrastructure needs to be upgraded. Well, that's their job quite frankly, to provide water for the city and they charge enough for it.

"And now they want the infrastructure to be paid for by the developer, who in turn passes it straight on to the purchaser or the renter. So the impact is going to be more expensive housing no matter how you look at it."

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Icon proposes a new capital charge from July 1 in four areas - Woden, Belconnen, north Canberra and Fyshwick.

The levy, to raise $90 million for water and sewerage infrastructure, would apply to all new developments - apartments and houses, offices, restaurants, shops and the like. It is worked out on a formula that counts apartments as two people, homes as 3.6 people, and workers in shops and offices as 0.3 of a person. The biggest levy is proposed for Woden, where developers would be asked to pay $3000 for each extra person hooked up to the network. In Belconnen, the charge is $1400 a person and in north Canberra $1800.

Icon Water says the populations of Woden and Belconnen are expected to increase and the pipes must be upgraded to cope, but Mr Shearer said the justification was misguided because populations had fallen in many suburbs to well below peaks - so the water and sewerage systems should be able to cope with any increase.

"None of the maths, nothing, stacks up," he said. "...It's really just another way to get some money out of the development community - but like any charge, it misses the developer and it lands on whoever is paying for the end product."

Independent sold about 1000 units last year, about 70 per cent to first-home buyers, Mr Shearer said. Instead of designing its charge on actual bedrooms, Icon proposed counting all apartments as two people - so someone buying a one-bedroom apartment in Woden would pay $6000. 

"This tax is unfairly, whether it's through design or just through bad design, targeting first-home buyers," Mr Shearer said.

He also criticised Icon's claim that the charge brought Canberra into line with other jurisdictions, saying other states didn't have a lease variation charge. A water and sewerage levy on top was double-dipping, he said.

The Icon charge should only be levied if the lease variation charge was dropped, and even then it must be redesigned. If it was spread citywide and aligned to numbers of bedrooms, the levy for a one-bedroom apartment would be about $750, and for a new eight-bedroom Forrest mansion about $6000.

Mr Shearer accused the ACT government of protecting its own patch while shifting costs to others. The proposal to exempt areas such as Kingston, Gungahlin and Molonglo, and to charge areas such as Belconnen and Woden made no sense and aligned "uncannily" with the Land Development Agency's land, he said.

"They're picking and choosing where and who pays. And those pickings and choosings seem to align really closely with where the LDA has land and where it doesn't. Well, that's a bit unusual," he said.

But an Icon spokeswoman continued to insist the charge was not new but a change to the way the cost of upgrades was recovered from developers "to ensure fairness and equity".

"We believe there is a benefit to both developers and those purchasing homes to be able to anticipate the costs that will apply," she said.

Icon was considering the idea of charging per bedroom, but the flat per-apartment charge balanced "equity and complexity".

As to the criticism that Woden and Belconnen were well down on their population peaks so should be able to cater for extra people, the spokeswoman said Belconnen was forecast to grow beyond its peak, and network demand was driven by multiple factors, not just population. In lower-density areas, stormwater could heavily impact peak demand.