Vic new builds to fund social housing

Planning Minister Richard Wynne said the reforms signified the biggest change to social housing since the 1940s. 

"This is the biggest commitment by a state or federal government ever to the provision of social housing," he told reporters in Melbourne. 

"This reform that we are announcing today, frankly, will change the lives of thousands and thousands of people."

From July 2024, new developments with more than three dwellings or three or more lot subdivisions in Melbourne, Ballarat, Bendigo and Geelong will contribute 1.75 per cent of the as-if-complete market value to a Social Housing Growth fund.

The government said the contribution would affect fewer than 30 per cent of all residential planning permits and will raise more than $800 million a year to fund up to 1700 new social and affordable homes each year.

The social housing rates reform will be phased in over four years from mid-2023 and will only apply to social housing properties.

However, property bodies and the state opposition say the 1.75 per cent contribution is "another housing tax".

Urban Development Institute of Australia said there was a role for industry to help deliver social housing, but it should not be paying for the cost of government under-investment.

"Despite recent funding, Victoria is still recovering from decades of chronic under-investment which has left a massive deficit," UDIA Victorian president Tom Trevaskis said.

"It's incredibly disappointing that the government has shirked responsibility for a core social purpose and is looking to Victorian homebuyers to fund the shortfall."

The Property Council of Australia warned the contribution could increase house prices for new home buyers.

"There's no walking away from the fact that this will increase prices for new home buyers," PCA Victorian executive director Danni Hunter said.

"This new tax sends yet another signal to Australian and international investors that Victoria is a high taxing jurisdiction with an over reliance on Victorian homeowners to fund their announcements."

Opposition Leader Matthew Guy said the government was "obsessed with putting on new taxes" and the contribution would drive jobs away from the state.

Treasurer Tim Pallas also flagged reforms to planning, including taking away "unnecessary interventions around planning rules".

He said the changes would allow people to put a shed in their backyard or add a minor extension to their house without planning approval.

"It basically removes bureaucracy from the minor works that people have to do," he told reporters.