MELBOURNE, AAP – Victoria’s government is backing down from it $800 million housing tax on property developments to fund social housing.

The Andrews Labor government announced in late February its plans to impose a 1.75 per cent levy on new developments of more than three dwellings to pay for the construction of thousands of social and affordable homes from 2024.

It argued the tax would affect less than 30 per cent of residential planning permits and could raise more than $800 million per annum to fund up to 1700 new social and affordable homes each year.

But several key industry groups immediately expressed concern the levy costs would be passed onto buyers, in a further blow to young people trying to break into the housing market.

The tax would have been introduced alongside reforms to cut red tape for the sector, which the government said would have stripped six months off the planning process.


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Treasurer Tim Pallas on Tuesday confirmed the tax and adjoining bureaucratic reforms would be dumped.

“They are done, they are dusted, they are finished,” he told reporters.

He cited the “negative” response and “misinformation” from the industry for the decision.