Betterment charges on lease-purpose changes were substantially increased yesterday.
Betterment is charged according to the change in the value of a lease from the old use to the new, for example when someone wants to build a block of units where there was a single house.
Under the old rules, when calculating the “”before value”, some consideration could be given to its potential for redevelopment.
Under the change announced yesterday by the Minister for Environment, Land and Environment, Bill Wood, no consideration will be allowed for redevelopment potential when assessing the “”before value”. He said that when areas were flagged for redevelopment the “”before value” rose almost to the same as the “”after value”, thus resulting in very little betterment charge.
Mr Wood said the change would ensure a proper return to the community of the unearned increase in land value that came with changes of land use.
Under the old rules remissions of up to 50 per cent of betterment could be obtained depending on the age of lease. As most leases being redeveloped with new lease purposes were more than 20 years old, the 50 per cent remission applied almost universally. From yesterday remissions will apply only with changes from one sort of residential to another (single to medium or medium to high).
Mr Wood said continued remissions for residential would ensure redevelopment in the inner city, to invigorate it and provide wider housing choice, was not discouraged. The changes were not related to the Budget.