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Yesterday the ACT Chief Minister, Katy Gallagher, announced a package of initiatives aimed at providing confidence and economic stimulus for the ACT property and construction sectors.

The four elements to the package are:

  1. releasing at least four civil contracts for estate works in Moncrieff;
  2. changes to lease variation charges (LVC);
  3. a reduction in extension of time (EOT) commence and complete development fees; and
  4. the drafting of legislation to facilitate major projects in the ACT.

These are good initiatives that should help stimulate the ACT property and development sector.

Further details of the LVC and EOT initiatives are: –

Reforms to the lease variation charge (LVC)

To support potential urban redevelopment, over the next two years:

  • All codified LVC fee and remissions schedules will be frozen to provide certainty for lessees;
  • For non-codified variations, the LVC will be reduced from 75% to 50%;
  • Further LVC sustainability remissions of up to a further 25% will be available.

Reforms to the fee structure of commence and complete development fees – extensions of time (EOT)

The proposed measures are aimed at:

  • Relieving the burden of substantial accrued debts;
  • Removing complex multiple fee structures; and
  • Encouraging development completion.
  • The level at which the EOT fee is set is to be moderated from up to five times to one times general rates, and will apply only after a party has been in breach of lease conditions for four years.
  • EOT fees will be charge after 4 years of breach and will be based on one year’s rates bill per year of extension. These will be charge annually.
  • For people entering into a crown lease the new system will apply from 1 April 2014.
  • For the period of 1 July 2012 to 1 April 2014 EOT fees will not be charge or accrue, this will be performed through waivers and refunds.

For eligible people and businesses who have paid EOT fees during the waiver period, a refund equal to the component of their fee that accrued after 1 July 2012 will be available on application. This is to ensure that those who have and have not paid the fees during the period are treated equally under the reforms.

Please contact MMJ Canberra if you wish to discuss the announced reforms more broadly.