Lease Variation Charge

Variation of nominal rent leases

This page outlines LVC processes for the variation of 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) by the Planning and Development (Lease Variation Charges) Amendment Act 2011. The amending Act provided that all DAs for a lease variation lodged and approved or 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.

An inter-Directorate working group is currently reviewing LVC.

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 1923 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
    • 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 the lease.

Chargeable variations

  • There are two types of chargeable variation
    • Section 276E - these are codified LVC fees - “The Code”
    • Section 277 - an assessment of the before and after values of the lease - a valuation process.

The Code

The determined fees and the associated maps are in Disallowable Instrument (DI2011-198). Schedules 3 and 4 are replaced by Determination (DI2015-205). The two Determinations must be read together. 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 - Specific Charges

  • Items 1 and 2 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.
  • Items 3 and 4 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 5 and 6 are used to calculate the LVC for consolidation of Crown leases.
  • Items 7 and 8 are used to calculate the LVC for subdivision of Crown leases.
  • Item 9 is used to calculate the LVC for variations to increase in the gross floor area of service station.
  • Item 10 is used to calculate the LVC for variations to increase the gross floor area of a club.
  • Item 11 is used to calculate the LVC for variations to increase the maximum number of self care units in a retirement complex.
  • Item 12 is used to calculate the LVC for variations to increase the maximum number of care beds in the retirement complex.
  • Item 13 is used to calculate the LVC for variations to increase the maximum number of children provided care in the child care centre.
  • Item 14 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 house an SUBJECT TO approval by the Territory a second single unit private dwelling may be permitted 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.

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 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 s277 chargeable variation is a variation that is not a s276E chargeable variation.

Examples of a s277 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 s277 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 (excluding clearing, filing, grading, draining, levelling or excavating the land) must not be taken into account.

Valuation assessments

A DA for a s277 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.

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

EPD 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, the Environment and Planning Directorate (EPD) 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.

Remissions

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

Schedule 1 - two remission determinations apply:

Remission value 25% - increase GFA for service station (Item 9) or increase GFA for a club with a liquor licence (Item 10).

Remission value 100% - If the only variation to the Crown lease is to add the use of childcare and/or to limit or increase the number of child care places This remission has been extended until 6 March 2016 consistent with the government’s economic stimulus package.

Schedule 2 - DI2014-201 applies a remission value of 55% until 1 July 2016 for a variation to increase the number of dwellings in a residential zone. DI2015-216 continues the remission but at a reduced rate of 25%

Schedule 3 - for a variation to increase the Gross Floor Area of a non-residential building. DI2014-201 applies a remission value of 25% and this continues under DI2015-216.

The following remission determinations apply for s277 chargeable variations:

Remission value 100% (expires 30 June 2016)

Remission value of 25% for economic stimulus and a maximum additional 25% for certain energy efficient developments or adaptable housing (expires 6 March 2016).

  • DI2011-318 - Community Purpose - Housing Assistance

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 s277 chargeable variation component may apply to the Commissioner for Revenue for reconsideration of the decision in respect of the s277 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 undertaken by EPD.

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 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 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. Should the Commissioner not make a substitute decision or confirm the original decision by the end of the 20 working day period or the period as extended, the Commissioner is taken to have confirmed the original decision.

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

The 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 s277 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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