Controversial rates hike to quash development in Highbury

Owners of vacant land in Highbury will soon be paying double the rates of their residential neighbours, after the council approved the introduction of a differential rating system.

This vacant block in Highbury will soon attract double the rates of its residential neighbour.

The City of Tea Tree Gully Council has passed a motion to increase rates payable on vacant land, a highly controversial move which local property experts say will stifle development.

At a special meeting of the council held on February 21, councillors made the decision to introduce a differential rating system as of July 1, 2012. The new system will see rates payable on non-residential properties rise incrementally over the next three years, with owners of vacant land to be slugged double the rates imposed on residential properties come 2014.

Councillor Kevin Knight, the elected member for Balmoral Ward, voted against the motion, and said the rates increase is no more than a grab for cash by a council deeply in debt because of financial mismanagement.

“I oppose differential rates right across the board… It really is just a cash grab, and councils do it because they can, and if everybody who owns a vacant block of land protested and voted for someone else, it wouldn’t make a scrap of difference,” said Cr Knight.

While council documentation cites the reason for the rates increase as encouraging development of unimproved land, local real estate agents say that higher rates will achieve the opposite.

Russell Burton, Company Director at Burton Groves Real Estate, said the rates hike will equate to increased holding costs for both developers and buyers, in turn causing buyers to postpone purchase of land until their building plans have been finalised.

“I believe the Tea Tree Gully Council’s decision to increase rates on vacant land definitely has the potential to stifle development and will be a consideration to buyers looking to purchase vacant land,” said Mr Burton.

Community consultation undertaken by the council showed that 94 per cent of vacant land owners strongly disagree with the new rating system. Overall, 40 per cent of those who provided feedback said they oppose a differential rating system in any form, with respondents commenting that increasing rates unfairly penalises vacant land owners.

Currently, the City of Tea Tree Gully imposes a minimum rate of $980 which applies to all properties valued at less than $283,000.

Under the new system rates will gradually increase over the next three years. Rates for unimproved land with a capital valuation of $340,000 will increase from $1178 per annum in 2012, to $2356 per annum in the third year of the implementation of the scheme.

At the time of publication, City of Tea Tree Gully Council officials who voted in favour of the differential rating system, including Mayor Miriam Smith, had not responded to repeated requests for comment.

Click below to watch Cr Kevin Knight speaking about the introduction of a differential rating system in Tea Tree Gully.

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