Infrastructure Charges

Few will oppose that we should be creating more affordable homes.

Yet from the get-go it is bloody hard; if not impossible.

I, like many others, have reasoned that changing our existing planning schemes and widening our product choice would help deliver more affordable housing; but even if that was to happen the way we currently set infrastructure charges would need to change before any real inroads where made.

In Queensland, and keeping things simple, a developer (read the buyer!) has to pay $20,000 per new one or two bedroom dwelling or $28,000 per new three or more bedroom dwelling in infrastructure charges.

This is paid at the beginning of the development process and applies to all new dwellings, regardless of price, that require a subdivision or development approval.

The infrastructure charge is levied when a either a new allotment is created, or a new dwelling is supplied.  It is only charged once.

One table accompanies this post.

SEQ median new price points & % infrastructure costs*
LGA Vacant lot H+L package Attached dwelling
$ % infra charge $ % infra charge $ % infra charge
Noosa $340,000 8% $704,000 4% $783,000 3%
Sunshine Coast $275,000 10% $525,000 5% $564,000 4%
Moreton Bay $254,000 11% $487,000 6% $452,000 4%
Brisbane $415,000 7% $753,000 4% $600,000 3%
Redlands $280,000 10% $594,000 5% $540,000 4%
Ipswich $202,000 14% $403,000 7% $432,000 5%
Lockyer Valley $150,000 19% $364,000 8% $325,000 6%
Toowoomba $180,000 16% $419,000 7% $405,000 5%
Logan $225,000 12% $437,000 6% $372,000 5%
Gold Coast $291,000 10% $548,000 5% $580,000 3%
Average $261,200 11% $523,400 5% $505,300 4%

The table shows that the cheaper housing solution, the higher the proportion of infrastructure charge.

This is counterintuitive.

I think infrastructure charges should be levied at a maximum of 5% of the sales price. 

That would help deliver more affordable homes, whilst charging those that can afford it more.

The real benefit of most new major infrastructure projects is, more often than not, highest in the more expensive housing locations – i.e. inner city or similar urban spaces – and is levied at the expense of those living in cheaper accommodation.

Those that benefit the most should pay their fair share.

That sounds a bit like social engineering I know, but something meaningful needs to happen in this space.  Otherwise we will just keep going around in circles.

And my final word is that infrastructure charges, regardless of their quantum, should be levied at the end of the development process, on sales settlement.

….

*$28,000 was used to determine the land and house and land package infrastructure component and $20,000 was used for the new attached dwellings as most have either one or two bedrooms.

Until next time,

Michael Matusik

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