Shepparton, which is facing a critical shortage of new residential land, has been spared from the initial application of a 1.75 per cent Social and Affordable Housing Contribution.
Greater Shepparton would likely benefit from the fund to address an equally challenging issue with the supply of social and low-cost housing.
The levy, announced by the Victorian Government, will start in July 2024 and apply across Melbourne, Geelong, Bendigo and Ballarat.
From July 2024, all newly-built developments with three dwellings or more and three or more lot subdivisions will contribute 1.75 per cent of the as-if-complete project value to the Social Housing Growth Fund.
At the same time, social housing across the same regions will be exempt from rates, producing a saving of $54 million to be reinvested in new properties.
Other regional councils will not see a change.
“We’re establishing a stable funding stream to provide the dignity of housing to thousands more Victorians now and into the future, while locking in social and economic benefits for years to come,” Victorian Housing Minister Richard Wynne said.
Victorian Opposition leader Matthew Guy said the contribution was a tax on the industry and ultimately home owners.
“At a time when the cost of building a new home in Victoria is rising faster than any other state, more taxes will only make homes less affordable and put young families saving for a deposit further behind,” he said.
While supportive of more social housing, Master Builders Victoria acting chief executive Saeed Mirbagher said the building and construction industry already contributed heavily to the overall health of the Victorian and national economy and questioned the need for yet another new tax.
The Urban Development Industry Association said it supported a broad-based levy preferably applied to council rates on the basis that social housing was a community-wide problem.
The UDIA said the sensitivity and extremely low margins in regional development settings as a result of lower land prices and higher development costs must be recognised and increased requirements with direct cost impacts cannot be tolerated in regional settings without stalling development outcomes.
The Housing Industry Association said the levy was the wrong approach and would be another hit to housing affordability for all Victorians.
“HIA estimates that this tax could add over $6600 to the cost of land for new homes,” HIA’s executive director Victoria Fiona Nield said.
“Add stamp duty and GST along with many more costs and this tax could cost more than $20,000 for a new home buyer, adding to their mortgage repayments.
“The government should be funding social housing from general rates and taxes as well as working in partnership with the housing industry and the community housing sector to identify feasible and effective actions to support the delivery of long-term solutions for public housing needs.”
The Victorian Public Tenants Association welcomed the rates exemption and the fund for new housing.
“This is not the end of the road. The need for housing assistance is great and the upcoming 10-year Social and Affordable Housing Strategy must set forward additional growth targets, including public housing growth, so that every Victorian can have a safe and secure place to call home,” VPTA chief executive Katelyn Butterss said.
