Property - Growth Corridor Attracts New Charge
Own any land in Melbourne’s outer fringes?
If your property falls into one of the Victorian government’s new housing zones, you could face a hefty land charge bill if you decide to sell.
The new charge was revealed when the government unveiled its blueprint to deal with Melbourne’s swelling population.
In December, the government announced the city’s urban growth boundaries were being pushed out and more than 41,000 hectares of land would be rezoned for development in the new fringe suburbs.
This will result in a spike in land values and rising rates bills for land owners in those areas.
Details of the urban growth boundary expansion were released in June for public comment. As many as 300 properties will be compulsorily acquired to make way for new roads, including an outer ring road, a rail link and a 15,000-hectare grassland reserve.
Landowners in the new housing zones will be hit with a charge of up to $95,000 per hectare when they sell, with the money used to fund infrastructure.
The charge – called the growth areas infrastructure contribution (GAIC) – will apply to land brought into the urban growth boundary (UGB) after 2005.
It will apply to any land which is zoned for urban development. It will not apply to land that cannot be developed for urban development or to land that is within an existing urban area such as land already zoned Residential 1, Township or Comprehensive Development.
The government has provided information about the GAIC in the Growth Areas Authority Growth Areas Infrastructure Contribution Information Sheet (GAA Information Sheet).
According to the GAA Information Sheet the GAIC will apply at a rate charge of:
· $80,000 per hectare to land zoned for development and above 0.41 hectares which was brought into the UGB in 2005; and
· $95,000 per hectare to land zoned for development and above 0.41 hectares within Investigation Areas which is subsequently brought into the UGB in 2009.
Legislation regulating the operation of the GAIC is yet to be introduced but the government has indicated transitional arrangements will apply to the sale or subdivision of UGB land between 2 December 2008 and the date GAIC legislation comes into effect.
For transactions during this period, the land owner at the time the legislation comes into effect will be liable to pay the GAIC.
Once the GAIC legislation is introduced, the GAIC is expected to apply to either the first sale of the land or its subdivision, or the building permit for major works, whichever occurs first. It is proposed that the land owner at the time of sale or subdivision or the building approval process for major building works will be liable to pay the GAIC.
The Law Institute of Victoria (LIV) has warned vendors, purchasers, mortgagees and even lawyers involved in UGB land transactions to make sure they are aware of the issues surrounding the GAIC and its operation.
“The LIV considers the lack of information about the operation of the GAIC substantially undermines the certainty of both existing and potential UGB land transactions,” stated the LIV in a May submission.
The LIV has asked for more information on how the GAIC will be calculated, who will be liable to pay it and how and when the charge will be collected.
Vendors and purchasers who have not factored the GAIC into the price of the land and are unsure of how to address the issue of liability will be adversely affected, claims the LIV.
LIV CEO Mike Brett Young said the lack of specific information could also affect potential vendors and purchasers who were trying to determine a price for the land but want to make sure the significant GAIC liability is factored into the price.
“Similarly, any valuer appointed by a mortgagee would need to ensure that any GAIC liability is considered in determining the fair market value of land,” he warned.
Remember, your lawyer can help you with any of these issues.
Disclaimer: The information in this article is not intended to be a complete statement of the law relating to the issues raised. Accordingly, no person should rely on this information without first obtaining specific advice from Brendan Kelly or Sam Marash of our office. | 
