Developers caught short by cladding levyThe LaCrosse apartment building, which caught fire in 2014 due to flammable cladding. Photo: Wayne Taylor

Developers caught short by cladding levy

Developers say they have been caught short by the Victorian government’s plan to bring in an extra building levy on January 1 to help fund a $600 million package to fix buildings with combustible cladding.

The state government announced in July that it would directly fund half the cost of the $600 million package to rectify cladding on 500 privately owned buildings and increase the building permit levy to raise the other $300 million.

The building permit levy is currently set at 0.128c for every dollar where the value of building works exceeds $10,000. Under the new system, the increased levy will rise to 0.82c for works of more than $1.5 million.

The increased impost could potentially add millions of dollars extra to projects and it takes effect six months earlier than expected, according to the Property Council of Australia.

The legislation itself provides for the increased levy to come into operation on July 1, if it hasn’t already been implemented.

According to the Property Council, the industry was expecting the higher cost to begin on July 1 and were caught by surprise when the earlier start date was flagged during a second reading speech in Parliament last month.

Hundreds of projects with planning approval, but still awaiting building permits, which had not costed in the higher levy, will be hit, according to Cressida Wall, executive director of the Property Council’s Victorian arm.

“It is essential that an exemption from the increased rates of the building permit levy is implemented for those developers that had projects committed and already under development,” she said.

A government spokeswoman declined to comment beyond noting the revelation of the January 1 start date in state Parliament in November.

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