The LVC regime is too opaque and imposes a cost on developers that is impeding housing construction, the industry says. Photo: Michelle Kroll.
Planning Minister Chris Steel may have ruled out any changes to lease variation charges in a speech to the ACT Property Council on Tuesday, but the issue remains a live one for the industry with calls for a moratorium, particularly in the ‘missing middle’ area the government is championing.
The lease variation charge is calculated to reflect the one-off increase in the value of a property due to a change in the Crown lease, which allows for a particular development and ensures that part of that potential windfall goes to the community.
However, it can be a complex and uncertain business, and the industry sees it as an impediment to development, particularly in the current environment of rising costs.
Managing director of the Riverview Group, David Maxwell, told a panel discussion that Mr Steel’s move to consider larger block consolidations to encourage more low-rise, medium-density housing was a good initiative, but LVC remained a barrier to the viability of projects.
Mr Maxwell said that despite changes to the Territory Plan, there had been no rush to build missing middle housing.
He suggested a two-year pause to see what the impact would be.
“You’ve done all the planning work for it, but it’s still the LVC as a cost component that knocks the feasibility around,” he said.
“So put a moratorium on it for two to three years, see what happens, and then make a judgment call on it. That’s what my encouragement would be to the Minister.”
MV Law lawyer Alisa Taylor said that while cost was a huge factor, the opaque LVC regime itself made life difficult for developers.
“It’s a very uncertain system to be involved in,” she said.
“You kind of have to take a guess at what your LVC is going to be when you’re working out whether a development is feasible.”
This uncertainty was also being priced into projects.
Ms Taylor said codifying more parts of the LVC would take some of the guesswork and make it easier to navigate.
This would encourage people to be bolder about what they could and couldn’t take on, she said.
While the government did not want to lose revenue, the panellists said that projects were not being built, LVC and rates were not being collected anyway, and community benefit was being lost.
In his speech, Mr Steel also urged the Canberra Liberals to support his move to exempt public housing from third-party appeals to ACAT.
This prompted panellists to call for this to be extended to larger private housing projects, which could often be delayed by ACAT actions as costs rose.
“I don’t see why a single dwelling on a small block should be exempt, whereas a dual occupancy on a larger block where there actually is more land per house should not be exempt,” Ms Taylor said.
She said if a development met certain criteria, it should be exempt from third-party review, or the application itself could first face a threshold test before it could proceed to a hearing.
No cost rules could also be reviewed, so there would be consequences for someone who brings an action.
Ms Taylor said some applicants to ACAT see it as their social right but don’t really have any skin in the outcome, while community groups often didn’t trust the planning authority to do its job.
Nichelle Jackson from Canberra Town Planning said appeals could also be limited to certain aspects of a proposal, such as just planning and amenity.
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