Melbourne City Council highrise apartment tax sparks debate

A charge of $900 per dwelling for new Hoddle Grid residential towers has been passed unanimously by the Melbourne City Council as they look to fund necessary infrastructure for an expected population surge.

The charge is to create a $26.5 million fund for public infrastructure needed for the expected 14,200 new residents by 2031.

However, it’s less certain who will be footing the bill.

While they are more officially called ‘developer contributions’ Fairfax Media reported that Melbourne lord mayor Robert Doyle said it is a charge that will be simply passed straight on to the purchasers of the residential units.

The levy will be regardless of when applications were lodged and will come into existence from next month.

With 25,210 residents, according to Robyn Hellman, actring manager strategic planning in the Report to the Future Melbourne (Planning) Committee, the area is rapidly growing with 9,547 new dwellings expected in 2031. This required 3,792 square metres of new community infrastructure.

The report notes that a $900 levy would be a “modest impost” on development, and in conjunction with the proposed open space contribution it would total $3,800 on a $500,000 apartment, or 0.76% of the value.

It notes that this is comparable with Central Sydney’s 1% levies. Brisbane has similar levies and in Victoria the City of Moreland collects an average of $800 per dwelling, while the City of Darebin collects an average of $851 per dwelling.

The maximum under the Act for this levy is $900, though it’s noted that to reach the infrastructure contribution it would likely need to be $1,659.12.

Another 5,260 apartments are currently under consideration for approval, and are likely subject to the levy.

From 1 July 2015, the state government is looking to introduce a standard infrastructure levy of $4,500 per dwelling.

“However the mechanisms for its application have not been defined. While the Hoddle Grid appears to fit the criteria for an SDA, this has not yet been determined by the State Government,” the report notes.

The report also suggests strongly considering the Hoddle Grid as a State Development Area.