Lease Variation Charge

Recent changes to LVC

The lease variation charge for varying a Crown lease to ‘specify the number of dwellings’ (Schedule 1 of DI2017-208) was amended on 1 July 2017 to increase the LVC applicable for specifying the maximum number of units in a Crown lease to permit unit titling, where the Crown lease does not already specify the number of units.

Any development application formally submitted for a completeness check in eDevelopment before 30 June 2017 to vary a Crown lease to specify the number of dwellings will be assessed under the former LVC provisions, consistent with DI2017-208.

This means that even if a development application passes completeness check or is approved after 30 June 2017, the increased charge will not apply as long as it was submitted in eDevelopment before 1 July 2017.

In addition, a further transition period has been announced which will mean that the previous determined charges for ‘specifying the number of units’ continue to apply where the variation relates to a Crown lease purchased between 1 July 2016 and 30 June 2017, where the development application is submitted before 1 October 2017 and where the application is lodged with all requisite documentation required to pass the completeness check before 1 July 2018. Applicants are required to produce evidence that the Crown lease was purchased during the 2016-17 financial year.

In cases of lease consolidation where the final property in a consolidation was purchased between 1 July 2016 and 30 June 2017, applicants can also apply to have the previous LVC Schedule 1 fees apply.  These applications will be considered on a case-by-case basis on application to the Treasurer. As above, this is conditional upon the applicant submitting the DA by 30 September 2017, and the DA being lodged with all required information by 30 June 2018.

Variation of nominal rent leases

This page outlines lease variation charge (LVC) processes for the variation of a Crown lease that is a nominal rent lease.

It does not apply to a rental lease or a Land Rent Lease.

Background

LVC commenced on 1 July 2011 following amendments to the Planning and Development Act 2007 (Act). The amending Act provided that all development applications (Das) for a lease variation lodged and approved but not determined by 1 July 2011 would continue to be assessed under the previous Change of Use Charge (CUC) unless the applicant for the DA chose to opt-in to LVC. The majority of CUC determinations have been finalised since 2011. A small number remain to be determined pending finalisation of conditions of approval.

Contacts

If the information in this Fact Sheet does not answer your specific questions about LVC or you need further information, please contact the Development Assessment Leasing Team on 6207 5403 or email actpladaleasing@act.gov.au.

Exempt Variations

  • The following are exempt from LVC. A variation:
    • of a holding lease (for subdivision and development purposes)
    • to authorise a secondary residence
    • of a perpetual crown lease held by the University of Canberra
    • the addition of childcare centre, limiting the maximum number of children provided care in the childcare centre, increasing  the maximum number of children provided care and increasing the maximum gross floor area of any building or structure permitted for use as childcare on the land under the lease.
    • to alter the common boundaries between 2 or more leases provided the purpose clauses are the same and none of the leases are rural leases
    • to remove the concessional status of a lease.

Chargeable variations

  • There are two types of chargeable variation
    • Section 276E - these are codified LVC fees (“The Code”)
    • Section 277 – a valuation process is required to assess the before and after values of the lease and determined the ‘added value’ and therefore applicable LVC.

The Code

The determined fees and the associated maps are in Disallowable Instrument (DI2017-208). The relevant fees are contained in three Schedules:

  • Schedule 1 - Specific Charges
  • Schedule 2 - Residential - increasing the number of dwellings
  • Schedule 3 - Commercial and Industrial - increasing the gross floor area permitted on the land

Schedule 1 was amended on 1 July 2017 to increase the LVC applicable for specifying the maximum number of units in a Crown lease to permit unit titling, where the Crown lease does not already specify the number of units.

Any development application formally submitted for a completeness check in eDevelopment before 30 June 2017 to vary a Crown lease to specify the number of dwellings will be assessed under the current LVC provisions, consistent with (DI2017-208).

This means that even if a development application passes completeness check or is approved after 30 June 2017, the increased charge will not apply as long as it was submitted in eDevelopment before 1 July 2017.

In addition a further transition period has been announced which will mean that the previous determined charges for ‘specifying the number of units’ ($7,500 for each of the first three dwellings and $5,000 for each from the fourth dwelling and above) continue to apply where the variation relates to a Crown lease/s purchased between 1 July 2016 and 30 June 2017, where the development application is submitted before 1 October 2017 and where the application is lodged with all requisite documentation required to pass the completeness check before 1 July 2018.

Applicants are required to produce evidence that the Crown lease was purchased during the 2016-17 financial year.

This instrument provides a further transition period for people planning developments following an increase in the LVC on certain residential leases required to enable unit titling.

In cases of lease consolidation where the final property in a consolidation was purchased between 1 July 2016 and 30 June 2017, applicants can also apply to have the previous LVC Schedule 1 fees apply.  These applications will be considered on a case-by-case basis on application to the Treasurer.  As above, this is conditional upon the applicant submitting the DA by 30 September 2017, and the DA being lodged with all required information by 30 June 2018.

Schedule 1 - Specific Charges

  • Items 1, 1A and 1B are used to calculate the LVC for variations to specify the maximum number of residential dwellings in the Crown Lease. This is used for Crown leases where the purpose clause permits “residential purposes only” - a non-limiting number.  These items are used to specify the number of dwelling to permit unit titling.
  • Items 2 and 3 are used to calculate the LVC for variations which will limit the maximum number of non-residential units in the Crown Lease (in industrial zones).
  • Items 4 and 5 are used to calculate the LVC for consolidation of Crown leases.
  • Items 6 and 7 are used to calculate the LVC for subdivision of Crown leases.
  • Item 8 is used to calculate the LVC for variations to increase in the gross floor area of service station.
  • Item 9 is used to calculate the LVC for variations to increase the gross floor area of a club.
  • Item 10 is used to calculate the LVC for variations to increase the maximum number of self care units in a retirement complex.
  • Item 11 is used to calculate the LVC for variations to increase the maximum number of care beds in the retirement complex.
  • Item 12 is used to calculate the LVC for variations to the association use in a Crown lease.

Schedule 2 - Residential

Schedule 2 is used to calculate the LVC for DA’s which increases the number of dwellings permitted in the Crown lease. It is calculated based on the suburb, the total approved number of dwellings and the locality zone. This is used for Crown leases where the purpose clause states a specific number.

Example of purposes clause wording:

  • single dwelling housing
  • single unit private dwelling house
  • maximum of two dwelling; or
  • not more than 5 dwellings.

These expressions limit the number of dwellings permitted on the block.

It also includes Crown leases with a separate qualifier clause that states:

“that the building erected on the land shall be used only as a single unit private dwelling and where permitted by the Territory Plan a second single unit private dwelling PROVIDED THAT any outbuildings erected on the land shall not be used as a habitation”.

This clause permits the Crown lease to be used only for a maximum of two dwellings.

This schedule is used to increase the number of dwellings to permit unit titling.

Schedule 3 - Commercial and Industrial

The charges in Schedule 3 apply to a chargeable variation to increase the maximum gross floor area (GFA) of any building or structure permitted for non-residential use on the land under a commercial or industrial lease. An example is:

  • to increase the maximum GFA from 1000m2 to 1500m2

Remissions also apply to some s276E chargeable variations. Please see the Remissions section below.

If the development application is approved, the delegate of the Commissioner for Revenue (currently within the Environment, Planning and Sustainable Development Directorate) will calculate the LVC in accordance with the schedule(s) and provide the applicant and Lessee with a notice of assessment. Remissions will be applied as applicable.

Section 277 chargeable variation

A section 277 chargeable variation is a variation that is not a section 276E chargeable variation.

Examples of a section 277 variation are:

  • a variation to add or delete a use from the purpose clause
  • a variation to add or delete a clause
  • a variation to change an easement.

A section 277 chargeable variation is calculated using the formula in the Planning and Development Act 2007:

LVC = (V1 - V2) x 75% Where: V1 = After Value and V2 = Before Value

When working out the V1 and V2 values, an improvement on the land comprised in the lease must not be taken into account. The charge is based on the added value attributed to the lease by the variation.

Valuation assessments

A DA for a section 277 chargeable variation must be supported by a full valuation report prepared by an accredited valuer in accordance with the requirements of the Act and a valuation certificate which identifies the V1 and V2 values. The accredited valuer's assessment will assist you to estimate the amount of LVC payable, although the final amount of LVC payable is not determined until a DA is approved.

More information about other DA lodgement requirements is available on the relevant DA form.

EPSDD may refuse to accept the valuation assessment if insufficient detail, evidence or other required valuation material has not been provided as per the requirements of the Act.

If the DA is approved, ESPDD will seek the advice of the ACT Valuation Office to determine whether the values provided with the DA are within acceptable market parameters.

EPD may request further valuation evidence, rationale, costing or other information if it is considered necessary to properly determine the LVC.

LVC is administered under delegation from the Commissioner for Revenue.

The delegate of the Commissioner will make a decision on the LVC and provide the applicant and Lessee with a Notice of Assessment. A fact sheet on the process for determining a section 277 LVC is available here.

Remissions

The following remissions are available for s276E (Code) determinations:

Schedule 2 -  DI 2015-216 applies a remission value of 25% for a variation to increase the number of dwellings in a residential zone.

Schedule 3 - for a variation to increase the Gross Floor Area of a non-residential building. DI 2015-216 applies a remission value of 25%.

The following remission determinations apply for s277 chargeable variations:

Remission value of 25% for economic stimulus and a maximum additional 25% for certain energy efficient developments or adaptable housing (expires 6 March 2018).

  • DI2011-318 - Community Purpose - Housing Assistance

This remission applies only to developments by the Commissioner for Housing and is ongoing.

Notice of assessment

After development approval and calculation of the LVC, the applicant and lessee for the development application will be provided with a Notice of Assessment. The Notice of Assessment determines the charges applicable to the variation to the Crown lease. The Notice also gives payment options and identifies any right to seek a review of the decision.

Application for reconsideration - s277 chargeable variations only

The applicant or lessee for a DA who has received a Notice of Assessment which includes a section 277 chargeable variation component may apply to the Commissioner for Revenue for reconsideration of the decision in respect of the section 277 component only. The reconsideration application must be in writing on the approved form and be signed by the applicant and lessee.

The process of reconsideration is administered by EPSDD.

Applicants are required to complete the form and pay the prescribed fee. The application must set out the grounds on which reconsideration of the original decision is sought and must also include a copy of the working out statement if one was provided by the Commissioner for Revenue.

The application must also include an independent valuation that works out the amounts represented by the before and after values in accordance with the Act. The independent valuation must be prepared by an accredited valuer who was not involved in working out or advising on the original decision. The valuer must be agreed to by the applicant for reconsideration and a delegate of the Commissioner for Revenue. The costs associated with the independent valuation are the responsibility of the applicant. The application should also include any additional information that was not provided with the original development application and which the decision maker should rely upon in their assessment.

Applications for reconsideration cannot be made later than:

  • 80 working days after the day the Notice of Assessment under s276D (1) is given or;
  • if a later day is prescribed by regulation, that day or any longer period as extended by the Commissioner for Revenue.

The delegate of the Commissioner for Revenue must reconsider the original decision and either make a substitute decision or confirm the original decision within 20 working days from the date of lodgement. However, the 20 working day period may be extended for a further period by agreement between the Commissioner for Revenue and the applicant for the reconsideration.

Application for review of decision - ACT Civil and Administrative Tribunal (ACAT)

The ACT Civil and Administrative Tribunal (ACAT) is responsible for hearing applications which seek a review of a decision made by the delegate of the Commissioner for Revenue in relation to lease variation charge under section 277 only.

However, the applicant cannot lodge an appeal at the ACAT until after a Reconsideration of the Notice of Assessment has been undertaken.

Further information on applications for administrative review through the ACAT can be found on the ACAT website.

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