New Social and Affordable Housing Contribution Levy For Victorian Property Developments

Last week the Victorian Government announced it is proposing a new Social and Affordable Housing Contribution.

The government’s aim of the contribution is to “deliver social housing projects for Victorians who need them most”.

This new levy will be an additional cost payable by the landowner looking to develop or subdivide land under the proposed laws.

The new Contribution will be applied on the following types of properties:

• New developments of three or more dwellings; or
• The subdivision of land that results in three or more new residential lots.

Under the proposal, the contribution will apply to a planning permit that permits developments or subdivisions in the following areas:

• Metropolitan Melbourne
• Greater Geelong
• Ballarat
• Greater Bendigo

The levy is 1.75% calculated on the market value of the property. On a $500,000 property this works out to be $8,750. With full Stamp Duty (without any exemptions or concessions) on a $500,000 property being $25,070, the total levy/duties payable, excluding any additional trust or other surcharges that may apply, is $33,820.

Recently, the Victorian Government has also wound back some of the land transfer duty concessions for investors buying off-the-plan properties. The combined impact on new developments could be significant.

Under the proposed legislation, the contribution is to take effect from 1 July 2024 if passed through Parliament and it becomes law.

Given the early start date of July 2024 this will no doubt impact some developments and projects already underway.

At What Stage Is The Contribution Due?

For a development:

Payment will be required prior to the issuing of a building permit.

For a subdivision:

Payment will be required prior to the issuing of a statement of compliance.

The payments will be collected by the State Revenue Office of Victoria.

How Are The Funds To Be Used?

The Planning and Environment Act 1987 (the Act) included an objective “to facilitate the provision of affordable housing in Victoria”. This is aimed at providing housing for very low, low- and moderate-income households.

The funds will be allocated through a competitive grants process to Community Housing Agencies.

Funds can be allocated in different locations across the State.

The contribution is still at the proposal stage and the bill is expected to be introduced into Parliament in early 2022.

Housing affordability is a key issue for Victorians which affects more people than first home buyers trying to enter the property market.

Our property lawyers can help with a range of property law enquiries and assist if you need further clarification on how these new laws may impact you and your proposed development

Contact us on 1300 907 335.