Mark Lane has driven past a large empty lot next to a petrol station at 3 Whitehorse Road in Blackburn for more than 15 years, wondering when homes might appear.
The mayor of Whitehorse council in Melbourne’s east, which also includes Box Hill and Burwood, was on the council when a planning permit was first issued for this site in 2008 for 35 dwellings.
Whitehorse Mayor Mark Lane at a vacant block of land at 3 Whitehorse Road, Blackburn. Credit: Wayne Taylor
That permit was extended three times but it eventually lapsed. In 2014, the owners were issued a different permit, this time for 115 dwellings. Although trees were cleared, a small site office was constructed, and some minor earthworks were undertaken, this second permit was extended two more times but also eventually lapsed.
Most recently, the owners were issued a third permit for 39 dwellings in 2021.
“Nothing’s happened,” says Lane. “It’s a bit frustrating for us because we’re working through increasing density as best we can.”
Melbourne councils with languishing vacant blocks and “zombie” buildings with unused residential planning permits have welcomed the state government’s surprise expansion of the empty residential land tax this week.
But the property industry has baulked at the tax, warning it may do little to kick-start approved housing projects that don’t “stack up” in the current economic environment because of rising interest rates, and labour and supply shortages.
As revealed by The Age last month, the peak body for Victorian local councils – the Municipal Association of Victoria – estimates there are at least 120,000 homes across Victoria yet to be built because landowners have not acted upon approved council planning permits for houses and units.
Of 23 Victorian councils that supplied individual data sets, the City of Melbourne has the highest number of dwellings (18,783) approved but not yet under construction. Others include 4411 homes in Yarra Ranges council, 2852 in Maribyrnong, 2902 in Banyule and 2071 in Brimbank.
In Melbourne’s inner north, Merri-bek Council is awaiting the construction of 2678 homes – including at 511 Sydney Road in Coburg where a permit was granted in 2012 for an eight-storey apartment building with 285 units.
Despite multiple permit extensions, there are still no homes on the block. The developer of the site, Banco Group, was contacted for comment.
Merri-bek City Council Mayor Angelica Panopoulos said such examples showed that “delays in the delivery of much-needed housing supply sits at the economic mercy of market forces and developers – rather than in the hands of those actioning planning approvals”.
In general, developers have two years to start building after a permit is granted, and four years to complete the build but can apply for multiple extensions for years at a time.
The vacant lot on Whitehorse Road in Blackburn is among many in the Whitehorse council area where 2144 dwellings are approved but not constructed. The company which owns the site – Australia Hua Cheng Pty Ltd – did not respond to requests for comment.
Lane said his council hoped the new tax would either “push these people to develop or they’ll divest and someone else will build”.
But it remains unclear if such sites would definitely incur the tax. Legislation made public on Thursday revealed the Commissioner of the State Revenue Office may waive the tax if landowners have an “acceptable” reason for the land not yet being developed into housing, or if there is evidence of steps being taken to prepare the land for development – such as remediation.
A government spokesman said the only way to improve housing affordability was to increase supply.
“We are extending the vacant residence policy that has successfully returned homes to the market in Melbourne – encouraging more owners to make their dwellings available for rent or sale across all of metropolitan Melbourne and in regional Victoria,” he said.
“Existing exemptions will continue to apply across the state, including to holiday homes, properties recently acquired or regularly occupied for work purposes, and properties being built or renovated.”
The property industry insists that owners do not intentionally “land bank” and pointed to current economic factors as to why developments weren’t getting under way.
“It’s very expensive business to sit on land without developing it. It just doesn’t make economic sense,” said Peter Hutchins, chief executive of property advisory firm Charter Keck Cramer, which gives market advice to developers.
“I understand where the treasurer is coming from and it’s well-intended – it’s to make sure sites are activated – but then you have to overlay the economic reality of these other factors that are at play.
“It could be viewed as just another tax, which adds to the cost of doing business and ultimately cost gets passed on to the consumer. That’s the risk.”
But Lane said some of the examples in his council area couldn’t be pinned on fairly recent increases in build costs because the permits had been issued more than a decade ago, and other developments in the area had gone ahead without delays.
Municipal Association of Victoria president David Clark said councils had “long known” land banking and permit warehousing were exacerbating the housing crisis and welcomed the expansion of the tax, but said it wouldn’t entirely resolve the issues.
“We welcome this measure but believe more will need to be done to ensure developers act in a timely manner on permit approvals”, he said.
The new tax would apply to residential land in metropolitan Melbourne that has been undeveloped for five continuous years, and will come into effect from January 2026.
The tax expansion also means that unoccupied homes across the state will now be subject to a tax, rather than just metropolitan Melbourne as it currently applies.
With Cara Waters
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