Victoria – Big Housing Build

The Victorian Government has announced as part of the Victorian budget for 2020/21, the Big Housing Build, the largest ever investment in public and community housing in Victoria.

The Big Housing Build will involve a $5.3b investment in social housing, creating:

  • 9,300 new social housing dwellings; and
  • 2,900 new affordable and market homes for first home buyers and renters.

As a result of the Big Housing Build, over the next four years:

  • Victoria’s social housing supply will increase by 10%; and
  • approximately 10,000 new jobs will be created each year.

To facilitate the efficient implementation of the Big Housing Build, the Victorian government has announced the creation of a new government agency, Homes Victoria, to manage the project, and will be streamlining planning approvals for social and affordable housing. Homes Victoria will work closely with industry, the not-for-profit sector and the community to:

  • support Victorians to find secure and affordable housing;
  • manage the more than $26 billion in housing assets that currently house more than 116,000 Victorians;
  • ensure the Big Housing Build is delivered in a timely way and on budget; and
  • make sure we have a sustainable housing system that can deliver for the long-term future of Victoria.

Some of the more particular reforms and programs of the Big Housing Build include:

  • New homes on public land: $532 million allocated to replacing obsolete properties and constructing new homes to deliver 500 new social housing properties and 540 new affordable and market homes.
  • Social Housing Growth Fund: $1.38 billion allocated to support Community Housing providers to deliver up to 4,200 new dwellings. Rapid Grants will be launched in 2020, which will target projects capable of construction commencing before 31 December 2021.
  • Streamlined Planning Reform: Projects funded by the Big Housing Build will have reduced planning approval times (down from 18 months to 3 months) and will no longer require planning permits or scheme amendments (except for industrial or rural land). Community Housing Provider projects on residential land will also have reduced planning approval times (down from 12 months to 3 months) if the projects are ‘by or on behalf of’ the Director of DHHS.
  • Gender equity plan: Homes Victoria has implemented a gender equity plan to increase the participation of women in the construction industry workforce.
  • Existing projects and spot purchases: $948 million allocated to working with the private sector to bring forward existing large developments to deliver 1,600 new social housing properties and 200 new affordable homes. As part of this spot purchase program (known as the Purchase Program – In Progress and Ready to Build Developments), the Department of Health and Human Services (DHHS) is currently seeking to purchase dwellings that can be delivered as turnkey properties for new social housing dwellings from any sized developer, including registered builders, developers and product marketers. The DHHS is accepting ‘Requests for Proposals’ in relation to these spot purchases of dwellings or developments up until 2.00pm (AEDT) on 17 December 2020.
  • Rural investment: 25%, or approximately $1.25b, of the total amount invested will be allocated to rural and regional Victoria (including Geelong, Bendigo and Ballarat).

These particular reforms present not just timely and necessary assistance to those in need of social and community housing, but great opportunities to:

  • builders, developers and property owners to be involved in the Purchase Program – In Progress and Ready to Build Developments program; and
  • community housing providers to partner with the Victorian government in a range of funding rounds – starting this year and continuing through 2021 – for housing projects led by community housing providers.

If you have any questions, or would like to know more about the particular reforms and programs that comprise the Big Housing Build, and how they may be relevant to your business, please phone, or email the key contacts below.

Jane Hodder
Jane Hodder
Partner, Real Estate, Melbourne
+61 3 9288 1692

David Sinn
David Sinn
Partner, Real Estate, Melbourne
+61 3 9288 1509

Lucy McCullagh
Lucy McCullagh
Partner, Core Finance, Melbourne
+61 3 9288 1318

Nicholas Carney
Nicholas Carney
Partner, Projects, Sydney
+61 2 9322 4727

Changes to FIRB guidelines in relation to lease renewals

On 29 March 2020 monetary thresholds for acquisitions of leases of land of more than 5 years (including options to renew) by foreign persons were reduced to zero.  This meant that a large volume of leasing transactions which previously did not require approval fell into the Foreign Investment Review Board (FIRB) net.  On 3 September 2020, the FIRB amended these temporary measures to allow renewals and material variations of leases to proceed without approval in some circumstances. The new measures took effect on 4 September 2020.

What were the key changes?

In summary, the key changes were as follows:

  1. For the renewal or material variation of existing non-sensitive leasehold interests in developed commercial land (where the same acquirer held a substantially similar interest under a lease before 10:30pm on 29 March 2020), the previous monetary thresholds have been reinstated.
  2. The reinstated thresholds for the value of the leasehold interest being acquired (below which approval is no longer required) are set out in the table below:
Type of land Threshold – more than:
Land that is being acquired by a foreign person who is an agreement country or region investor $1,192 million
Land that is being acquired by any foreign person other than an agreement country or region investor, or a foreign government investor $275 million
Land that is being acquired by a foreign government investor $0

In this context, “renewal” means the extension of a lease through the exercise of an option to renew or the entering into of a new lease on substantially the same terms as the previous lease.  A “material variation” can include things like an extension of the term (including adding options) which can be regarded as a new lease for FIRB purposes.

  1. Certain transitional arrangements were introduced which govern the treatment of applications submitted under the regime before 3 September 2020 where such applications relate to actions which are no longer notifiable under the new rules set out above (such as withdrawal of applications and waiver or refund of application fees paid). We can provide guidance on this on a case by case basis if required.
  2. For all other leasehold acquisitions by a foreign person (where the term of the lease including options is reasonably likely to exceed 5 years) the $0 monetary screening threshold continues to apply and the acquisition of the leasehold interest will therefore need to be notified to the FIRB and approval obtained before the transaction proceeds.
  3. Examples of leasehold transactions still caught where the term is sufficiently long are an agreement for lease where the land is vacant at the time and a lease of developed commercial land which is regarded by FIRB as “sensitive” land.

Further information

For more information, the full FIRB guidance note 53 can be found here.

Contact Us

If you have any questions, please reach out to your HSF contact, who will be happy to discuss.