Commercial property owners are avoiding objecting to massive rates rises imposed by the ACT government, fearing it could lead to even most costly legal proceedings before the territory's Civil and Administrative Tribunal.
Fewer than 15 per cent of the owners of 311 commercial properties across the city hit with massive rates increases due to a government revaluation in January last year have objected to their bills.
It was revealed during Legislative Assembly committee hearings last week some commercial property owners had been hit with increases up to 79 per cent in their annual rates bills from July last year, as a result of the government's revaluations of their properties in 2016.
The hearing followed an Assembly committee urging the government earlier this year to completely overhaul its rates and land tax system, after similar rate rises hit unit owners across Canberra last year.
Owners of properties in Phillip, particularly car dealerships along Melrose Drive, were the hardest hit, while properties in Braddon, Civic, Turner and Fyshwick were also affected.
Despite objections to valuations being the first option for owners to potentially reduce their rates bills, figures from the ACT Revenue Office show just 48 of the 311 owners affected had actually objected to the increases since they came into effect in July 2017.
The figures show 11 of 75 affected property owners in Braddon objected in the past two fiscal years; 13 out of 80 owners in Civic objected; three of 48 owners in Fyshwick and 19 out of 108 owners in Phillip objected in the same period.
ACT Property Council executive director Adina Cirson said some commercial property owners had told the council they wouldn't bother objecting to a valuation as they were concerned it would not result in a reduction, and they could be forced into appealing any decision to the tribunal.
She said if an owner had to appeal a decision on the objection to the tribunal, they could be looking at a legal bill in the realm of $80,000 to $100,000, which meant owners would likely get no real financial benefit out of an appeal.
Ms Cirson said the council was also working on approaching the government to create an intermediate step between an objection and legal proceedings, such as greater use of mediation, in an effort to find a better balance for all parties.
She said while owners of commercial property in Sydney or Melbourne had experienced significant rent rises in recent years, in Canberra owners were facing rate rises that were regularly exceeding any potential increase in rents or leases.
Ms Cirson said while the council had supported the government's tax reforms, which are abolishing stamp duty over 20 years, owners were concerned any benefit was being soaked up by increasing rates and taxes.
"The government has so far effectively capped the stamp duty abolition at $1.5 million, but these days you'd struggle to find an inner city house worth less than that, compared to a commercial property," she said.
Ms Cirson said while rates had risen significantly in the past six years since tax reform began, rents for commercial properties had not, and the territory's gross lease system (compared with a net system in NSW) meant owners could not pass on the costs to lease holders.
"Ultimately, this means for commercial owners it's really become a disincentive to invest in new commercial property, upgrade existing buildings or contribute to upgrades of the public realm of properties or improve the sustainability of their properties," she said.
"We're really saying it's now six years into this tax reform and it's really time to have a look at where this is headed and have some transparency around what's been proposed and what's actually happening.
"There’s no simple answer, but right now all eyes are on the ACT from around the country on how our tax reform is progressing, and I'm being told by commercial agents people are already looking seriously at places like Queanbeyan for industrial or commercial land."
While the government would not reconsider the changes to valuations as a whole, a spokeswoman for Chief Minister Andrew Barr said if property owners could provide alternative, accredited valuations, it could be provided to the revenue office as part of an objection.