Page 2190 - Week 06 - Tuesday, 21 June 2011
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redevelopments in the territory. This decision will give industry sufficient time to examine the schedules and plan ahead for next financial year.
Turning to the scrutiny of bills report, the committee raised three main issues surrounding the Planning and Development Amendment Bill. I have provided a written response to the committee and I will only briefly address the issues raised in the report and respond to the committee’s concern.
Firstly, the committee appears to draw a conclusion that individual owners of residential leases will suffer a loss under this scheme as compared to earlier schemes. The committee has asked for an explanation of what consideration was given to compensation under the scheme in respect of leaseholders who will suffer loss arising out of the operation of the scheme proposed. The government does not agree with the conclusion and the premise underpinning the recommendation. The committee has not specified what earlier scheme is being referred to. Codification of the lease variation charge cannot be compared in general to earlier schemes.
Prior to 31 May 2010, there was a fixed-fee arrangement in place for some types of residential development, with developers paying a lease variation charge well below the market value for the site. I note—and this is something I have pointed out in my response to the committee—that it has referred to text in section 6 of the Macroeconomics-Nicholls report, which states:
Use of land market indices under residential codification, rather than the valuation specific to a specific property used under the current CUC system means some property holders may be disadvantaged, while others will be advantaged.
The disadvantage relative to specific valuation is not tantamount to loss which would require compensation, an important point that needs to be recognised. Also, the committee is drawing on the cost-benefit analysis section which goes on to assess the impact as being negligible or nil. And I hope that responds to the committee’s concern.
It is useful, however, to clarify some matters of fact. The committee’s report says that many, probably the vast majority of, residential leaseholders will be affected by this code. The lease variation charge is a voluntary charge for the purchase of additional land rights. It becomes applicable if a variation to the right attached to a specific parcel of land is sought. For example, in 2009-10, the lease variation charge was paid for development on 113 blocks. The committee appears to conclude that the examples that it provided illustrate that the value of a lease may, subsequent to its purchase by the leaseholder seeking to vary the lease, be adversely affected by legislative change. The government disagrees.
The market value of a lease depends on the rights and limitations attached to the lease, apart from the supply and demand conditions in the market and the site characteristics. The proposed legislation does not seek to change the existing development rights for leaseholders.
The committee appears to raise concerns with the wide nature of issues that will be subject to regulation. It is worth while pointing out that in this part of the report the
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