Developer James Morphy is seeking tax breaks to push ahead with approved plans for 477 tenants-only apartments in Mercer St, Geelong.
A $250m plan to build 477 tenants-only apartments in a 24-storey Geelong project is in the balance as the developer pushes to secure special tax breaks to secure its viability.
Morphy Birrell director James Morphy said he’d put his case for the same access to tax concessions as affordable housing toVictorian Treasurer Jaclyn Symes and had also tried at the federal level, but was speaking out after a months-long silence from both governments.
Such concessions would include GST, land tax and council rates relief, which Mr Morphy said would improve the ongoing viability of the Build to Rent (BTR) project, approved for the former Winter & Taylor site.
Mr Morphy is advocating for regional BTR projects to have the same access to tax concessions as affordable housing schemes, as the rent was 30 per cent below the market rent paid in Melbourne.
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Mr Morphy said Victorian Treasurer Jaclyn Symes had committed to creating a bespoke arrangement to support the project, but didn’t attend a subsequent meeting.
“She said in front of six people I will do a bespoke arrangement with yourself to ensure it’s feasible,” he said.
“So I said you’re committing to a meeting with me and she said ‘yes I will’.”
Attempts to discuss the issue with a director at Housing Australia, which runs the Housing Australia Future Fund, were unsuccessful, he said.
The BTR sector typically targets higher rents for professional and corporate tenants across various tenures, with furnished apartments in high amenity buildings that also features such co-working spaces and gymnasiums.
The Mercer St project would create 477 apartments in two towers on the wedge-shaped site between Mercer and Cavendish streets.
Mr Morphy said Geelong MPs Christine Couzens and Richard Marles had both been great in advocating for the project.
The project stands at the corner of Mercer St and Cavendish St in Geelong.
The Mercer St project has hit the same hurdle stalling more than a dozen approved projects in central Geelong, as high building costs outstrip expected income from sales or rents.
He said the dwellings would attract a lower market value due to their regional location, but argued the cost to build is higher in Geelong because the industry was competing with Melbourne for skilled labour and materials.
“Rents in Geelong are 30 per cent below Melbourne. If we did the local rent, less 25 per cent we would be 57 per cent less than Melbourne rents. How could you build anything for 57 per cent the rent of Melbourne?” Mr Morphy said.
“We’re actually saying just give us a (tax) holiday – 36 per cent of the running costs are government charges.”
Mr Morphy said target rents for the project would see a furnished three-bedroom residence attracting $535 a week, $400 a week for two-bedroom and $350 a week for one bedroom apartment.
Mayor Stretch Kontelj said the council supported the project as he champions a call for special tax breaks to help developers make a start on 17 major building projects approved for Geelong’s CBD.
James Morphy, left, is seeking to have the 477-apartment build to rent project declared as affordable housing to unlock tax concessions to support its viability.
“Working collaboratively in this way doesn’t require any level of government to write a cheque here and now, all it’s doing is the three levels of government have to forego for what is a relatively short period of time – up to five years – certain revenue streams,” he said.
“In the meantime, we get the benefit of economic development and then in the medium term, those revenue streams like land tax will come back on line.
Mr Kontelj said the idea of a special economic zone in central Geelong to spark building activity was raised at a developer forum he convened last year.
“The Morphy project is a perfect example of one that’s stalled. And all they want, all they need, is a little bit of help and they can make it happen. I think that’s a very easy concession to grant.”
Victorian BTR tax concessions, under the Land Tax Act 2005, provide eligible developments with an exemption from the absentee owner surcharge and a 50 per cent concession on land value for land tax purposes for up to 30 years, subject to dwellings having occupancy dates between 1 January 2021 and 1 January 2032.
“Victoria is the Build To Rent capital of Australia, with around two-thirds of all BTR dwellings completed across the country,” a state government spokesman said.
“BTR creates affordable and secure housing for Victorians – our tax concessions and streamlined planning rules are incentivising developers to expand options for renters and improve housing supply.
There are 17 major development projects approved across central Geelong that have yet to reach construction phase.
“Only Labor has a plan to deliver the solutions to meet the new housing challenges facing everyday Victorians.”
BTR projects are eligible for streamlined planning through Victoria’s Development Facilitation Program if they are $50m in scale in metropolitan Melbourne, or $15m in regional Victoria, and provide at least 10 per cent affordable housing.
Victoria has published an Institutional Investment Framework, creating a new one-stop shop with a dedicated planning pathway to prioritise and facilitate institutional investment, including for BTR projects.
This includes opportunities to develop government land through a Housing Investment Front Door, led by Invest Victoria.
Premier Jacinta Allan, speaking at a recent Future Geelong forum, brushed off a question from Advertiser reporter Luke Griffiths whether Geelong’s CBD should be declared a special economic zone.
“Isn’t Geelong already a very special economic zone?” Ms Allan said.
“In all seriousness, it’s a really important part of our state and that is why we’ll continue to have those conversations about making sure that the investments support economic growth and activity.
“The role that we have as government is to get those projects approved,” Ms Allan said.
Victorian Premier Jacinta Allan in conversation with Geelong Advertiser political reporter Luke Griffiths at the Future Geelong forum recently. Picture: Alan Barber
“And we have approved many projects of that type that you described through our development facilitation program that is slashing the time that it takes cutting through red tape to get projects exactly like these to the stage being ready to get under construction.”
Ms Allan said the challenges of global finance was one of the challenges hitting construction in the development sector.
A Housing Australia spokeswoman said the matters being raised in relation to affordability settings, rental benchmarks and any potential declarations for built‑to‑rent developments are matters for the Victorian Government.
“Housing Australia administers a number of Commonwealth housing and finance programs; however, the proposal described would not be eligible for support under any of these programs,” the spokeswoman said.
“Should Mr Morphy wish, Housing Australia would be happy to arrange a call to explain the programs we administer and how they operate.”
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