ACCORDING to an independent report by the Allen Consulting Group released this past week, the ACT Government’s Lease Variation Charge will negatively impact on housing affordability, sustainability and the Territory’s economy, as well as confounding several ACT Government policy objectives.
The Property Council commissioned ACG to investigate the charge following its introduction in July last year. The LVC is a new, codified system to calculate the value of a change in land usage, with the intention of providing more certainty in change-of-use charge applications.
The Quinlan Tax Review, which was released earlier this month, fails to point out that the charge can be passed on in the form of higher prices for redeveloped properties or that property owners may end up with less when they try to sell their home in an existing redevelopment zone.
The ACG report, “The ACT Lease Variation Charge: Implications for housing affordability, development and growth”, confirms that the design, scale and application of the charge will have significant, adverse consequences for housing affordability in the Territory, as well as sustainability and urban infill, and Canberra’s long-term growth and development.
The report also confirms that the LVC will impact on the ACT Budget in direct and indirect ways and it now appears highly improbable that the ACT Government will be able to fund its new Urban Improvement Fund announced in February as a 2012-13 Budget initiative.
In light of the evidence, the ACT Government needs to move urgently to scrap its redevelopment zone super-tax and replace it with a simple, affordable and unambiguous system before irreparable damage is done.
Catherine Carter is ACT executive director of the Property Council of Australia