Developers affected by a sharp hike in the ACT's lease variation charges will receive a temporary reprieve, with the government to announce a transition period before the tax will take effect.
Those within the industry said they felt ambushed after the ACT government quietly raised the charge 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 in the June budget.
Head of project planning at Independent Property Group Dave Shearer told AllHomes the increase could spell "the death of the townhouse" in many inner-city areas.
But the government will reveal on Wednesday a transition package, in which the previous lease variation charge would apply to properties bought between July 1, 2016 and June 30, 2017, if owners submit a development application within the next three months and the last residents move in by June 30, 2018.
Owners looking to consolidate more than one block into one unit title may also be given a reprieve, as long they bought the last block in the 12 months to June 30, 2017. This will be considered on a case-by-case basis.
Where a lease on a property bought in the same period is being consolidated, project proponents can apply to have the previous fee schedule used and these will be considered on a case-by-case basis.
"We believe these arrangements, coupled with those already put in place regarding applications submitted before June 30, provide a reasonable transition period for people currently planning developments," a spokesman for Chief Minister Andrew Barr said.
"Any further adjustments to this component of the lease variation charge scheme will be considered after an implementation review has been conducted in 18 months' time."
ACT Property Council executive director Adina Cirson welcomed the transitional arrangements but said she wanted to see the government introduced scaled charges mirroring the current system.
Under the proposal the Property Council and the Master Builders Association ACT put to government, the charge on the first unit would be $30,000, the next three would be $7500 and the rest would be $5000, she said.
"$30,000 is a long way from the current scheme but I got the sense from government they wanted to wait and see how market responded to the charge before a change of implementation," Ms Cirson said.
Ms Cirson hoped the review would consider the broader implications of the policy on affordable and medium-density housing
"Our concern is in 18 months' time we won't have seen amount of development of affordable housing or townhouses we otherwise would have seen if existing arrangements had been maintained," Ms Cirson said.