Lease Variation Charge Deferred Payment Scheme
The ACT Government is seeking to introduce changes to the timing of lease variation charge payments under the Planning and Development (Lease Variation Charge Deferred Payment Scheme) Amendment Bill 2018. The scheme would give developers the option to defer payment of lease variation charges (LVC) associated with augmenting their Crown lease.
Once LVC is deferred, the requirement to pay lease variation charges will be triggered by the earliest of the following events:
- When a certificate of occupancy is issued for part of the building work for the development to which the lease variation relates;
- When a certificate of occupancy is issued for all of the building work for the development to which the lease variation relates; or
- 4 years from the date of the lease variation
The ACT Revenue Office will be permitted to charge interest on deferred Lease Variation Charges.
The Planning and Development (Remission of Lease Variation Charges—Economic Stimulus and Sustainability) Determination 2016 (No 1) expires on 6 March 2018.
This instrument provided remissions for lease variations undertaken in conjunction with a design and siting application, and additional remissions for developments incorporating sustainability and adaptable housing measures.
The ACT government have announced that the instrument will not be extended once it expires on 6 March. Further information on LVC remissions currently available for development proposals is located here.
What does this mean for developers?
While currently LVC must be paid prior to commencing development (typically within two years of receiving DA approval), the scheme would allow deferral of LVC payments until a later project stage thus reducing upfront funding requirements.
We recommend that developers consult with their legal and financial representatives on whether participation in the scheme is suitable for their objectives.