A proposed change to the Lease Variation Charge that will allow developers to defer payments to ease cash flows has been welcomed by the ACT Property Council.
Under new laws introduced to the Legislative Assembly, the new Lease Variation Charge payment deferral scheme will give developers the option of paying the charge later in the development cycle.
Projects with an assessed LVC of more than $100,000 will have the option of deferring payment until a Certificate of Occupancy is issued, or for up to four years – whichever comes sooner, but interest will have to be paid on the outstanding amount.
Chief Minister Andrew Barr said that the deferral scheme would allow the timing of LVC payments to be aligned with project cashflows.
ACT Property Council Executive Director Adina Cirson said the industry had advocated this change for three years, especially since last year’s LVC increase which she said was impacting not just developers, but small builders or anyone wanting to develop existing blocks in the inner north and south.
“It helps with project cash flows and helps people get out off the ground quicker. LVC charges can range to millions of dollars so this is a significant change for many,” she said.
However the council remained concerned at the LVC increase, which would flow through to higher property prices and affect housing affordability in the ACT.
But Mr Barr, who has refused to give ground on the issue, said the LVC was designed to make sure the community shares in the windfall gains developers made when Government varied a lease to allow for new development.
“This means the community benefits from a contribution towards the facilities we all use, like schools, roads and hospitals,” he said.
Ms Cirson said the council was concerned at another change to the Planning and Land Development Act which would remove specific grounds for the Minister to reduce LVC charges, such as energy efficiency or adaptable housing.
Current remissions expire next month and the council was keen to talk to the Government about what the change would mean.
She said it might be a move to simplify the process and the Minister would still be able to grant remissions but the proposed change had created uncertainty.
“We’ve yet to have a discussion about what plans there are for remissions going forward. We have to make the case to government to make sure that those remissions are granted and deliver the policy outcomes they’re trying to achieve,”Ms Cirson said.
The LVC deferral scheme will commence following passage of the bill in the Legislative Assembly.
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