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Changes to LVC following Review

July 11, 2019

Changes to LVC following Review

The ACT government has announced a number of changes to the Lease Variation Charge. As part of the 2019-20 ACT Budget, details aware included on the changes the Government will make to the LVC framework. The ACT Government will:

  • increase access to the Lease Variation Charge deferred payment scheme by lowering the minimum value threshold from $100,000 to $50,000 from 1 July 2019;
  • simplify and consolidate schedule 2 codified residential charges to make this schedule easier to understand, use and update;
  • introduce a 25 per cent Lease Variation Charge remission for registered community housing providers, commencing on 1 October 2019, to encourage the development of more affordable rental housing; and
  • improve the presentation of information on ACT Government websites containing information about the LVC, including by developing an online LVC calculator.

The Government has said it will also engage further with industry to explore options to:

  • extend application of codified charges to mixed-use developments that are primarily residential in nature;
  • extend application of codified charges that apply to specific types of commercial developments; and
  • address inequity and inconsistency between schedule 1 and schedule 2 residential codified charges.

Unsurprisingly, the Government overall found in its review that its Lease Variation Charge is working. The Review received twelve submissions from a range of stakeholders (including HIA) and found that the LVC –

  • is achieving its objectives, without impacting on housing affordability and available housing choices;
  • was not demonstrated to impact on the financial viability of projects, as the review confirmed it isolates the value attributable to government decisions on the use of land, and is a relatively small component of overall project costs; and
  • framework is confusing and difficult to understand according to industry. This contributes to development timeframes. It was recognised that improvements could be made to make the LVC framework simpler, more equitable and more transparent.

For more information please contact HIA on 1300 650 620.