Chief Minister Andrew Barr says tax incentives for housing developers are on the way. Photo: Ian Bushnell.
Chief Minister Andrew Barr has confirmed the government is close to rolling out tax reforms to encourage the construction of more housing, including in the ‘Missing Middle’.
Mr Barr has also told industry that the government was exploring the use of artificial intelligence (AI) to speed up the application and approvals process – a major bugbear for developers.
In a speech to the Property Council’s Capital Region Housing Summit on Thursday (20 November), Mr Barr said the government was developing “sensible” technical changes to the lease variation charge (LVC) framework and how the contentious charge was calculated.
“The LVC will continue to be an important revenue measure that ensures the community benefits from the windfall gains that come from lease variations that increase development rights,” he said.
In 2025-26, the LVC is estimated to earn the ACT Government $25.8 million in revenue (up from $20.6 million in 2024-25).
Mr Barr said there was scope to make changes that incentivised housing priorities.
He said the government was finalising an LVC remissions framework to support increased affordable and social housing, under which developers would pay less LVC for building these projects.
It was also working on a separate framework for private developments, under which developers would pay less LVC if they delivered public assets and infrastructure upgrades.
“This will mean that proposals with genuine contributed assets that take pressure off the government’s capital program could be eligible for a remission on their LVC,” Mr Barr said.
He said this would be particularly relevant to projects in existing town centres and local shopping precincts, where the delivery of new or renewed community infrastructure would not only support the project but also help generate activity in the broader precinct.
The government was also exploring time-limited changes to the LVC framework to partner the Missing Middle reforms, with Planning Minister Chris Steel to provide more details on this initiative.
Mr Barr said these measures would have priority over the coming months and be progressively implemented.
The government was also looking at how LVC incentives could be used to encourage adaptive reuse or redevelopment of older CBD assets.
Mr Barr said the City Renewal Authority and the City and Environment Directorate were already talking with industry about measures to maintain activity in the CBD, including adaptive reuse settings where appropriate.
In response to industry complaints about bureaucratic blockages, Mr Barr said further reducing unnecessary duplication in the public service and streamlining decision-making was in the government’s sights, including the adoption of AI to increase capacity and improve accuracy in assessment processes.
He said AI was already being used in planning and assessment agencies across the country.
“There is a real opportunity for the ACT to accelerate our capacity through the appropriate use of the technology,” Mr Barr said.
On the construction side, Mr Barr said trials were underway on the use of prefabricated and modular housing in the ACT’s public housing rollout.
“These approaches offer promising pathways to increase productivity, reduce waste, shorten construction timeframes, and provide higher-quality energy-efficient homes,” he said.
The Property Council’s Ashlee Berry says the current system is choking viable projects. Photo: Property Council.
Property Council ACT & Capital Region Executive Director Ashlee Berry said the speech marked the most significant shift in the LVC framework in more than a decade.
“Real movement on LVC is long overdue. A fairer and more transparent system will unlock stalled projects and get more homes out of the ground in the ACT,” she said.
Ms Berry said the current system was choking viable projects.
“If the changes announced today deliver the transparency, balance and incentives we’ve been calling for, we’ll see more homes delivered and fewer projects dying in the pipeline,” she said.
The changes should unlock stalled projects, bring forward supply, and attract private capital back into the system.
“Shifting the lease variation charge from a blunt tax to a genuine housing-delivery tool is a critical step,” Ms Berry said.
She said rewarding developments that take pressure off the capital program were overdue and would help unlock feasible projects in town centres and local precincts.
“The Chief Minister has opened the door. Now we need the timing and operational detail so Canberra can turn policy intent into real homes on the ground,” Mr Berry said.
