By Meg Hill
A growing number of CBD buildings have had their official values slashed as a result of a heritage land valuation loop hole, saving owners hundreds of thousands of dollars in land tax.
The General Post Office (GPO) building was the first to be decided, with a Victorian Civil and Administrative Tribunal (VCAT) decision dropping its value to just $1 and setting a precedent for others. The mammoth CBD building was previous valued at $29 million.
The Age reported that the Block Arcade is also now officially valued at just $1. The Cohen family in 2014 bought the arcade for $80 million.
With landlords now lining up for similar valuations, the state government has expressed concern about the loss of land tax revenue and has signalled it will move to close the loophole.
Melbourne Heritage Action president Tristan Davies called the decision “bizarre” and flagged that if the loophole was not closed, it might mean fewer buildings were given heritage status in the future.
“Heritage does have value and economic value, so it’s bizarre to see that discounted completely,” he said.
“I’m sure the state government would have difficulty putting something on a heritage list if that would affect their land tax. It would put bizarre priorities on government.”
City of Melbourne heritage chair, Cr Rohan Leppert, said: “Clearly the Valuation of Land Act [1960 s2(8)] is deficient and should be amended to avoid situations where some owners can have their land valued at a nominal amount.”
Cr Leppert said the current situation was a burden on local councils.
“The owners of the Argus, Leviathan, Batmans Hill Hotel and others, just like the GPO, have all previously lodged planning applications to demolish their buildings knowing that council would be obliged to refuse them, but in doing so would trigger that part of the Valuation of Land Act that requires the value of the land to be determined in a particular way.”
“This is a bureaucratic merry-go-round and it’s a waste of everyone’s time. I’m sure the Treasurer will be looking to fix this loophole so that all land owners pay their fair share.”
A City of Melbourne spokesperson said seven other heritage-listed buildings had their values reduced – two of them also to $1 – but would not identify the buildings for privacy reasons.
VCAT is due to hear a similar case concerning a building at 100 Queen St, which was sold for $274.5 million in 2016.
Applications have also been finalised, but have not been made public, for 333 Collins St, 318-332 Flinders St and 1 Collins St.
333 Collins St, also known as The Dome, was preserved and heritage-listed after a campaign by the Builders Labourers Federation in the 70s. It’s renowned as one of the most grandiose buildings in Melbourne.
318-332 Flinders St was built for the Commercial Travellers’ Association in 1913, and 1 Collins St was built in 1877 for pastoralist, financier and politician William Campbell.
The Age report also suggests the Intercontinental Rialto Hotel at 495 Collins St had its value significantly decreased, and that 345 Collins St, Myer Emporium, David Jones Bourke St store and 170 Russell St were also under consideration.
In their decision, VCAT deputy president Mark Dwyer and senior member Justin Jacano criticised the Valuation of Land Act 1960.
“At the very least, s2(8) is inelegantly drafted by modern standards. It is difficult to apply in practice given its reliance upon artificial assumptions, with potentially different assumptions applying to different part of a site,” the members said.
“In our opinion, the provision has become anachronistic. It is forcing parties into complex and costly litigation about the artificiality of a contrived valuation that bears no resemblance to the market or the real world when the underlying dispute is really about land tax.”