Watch out for the inner-Melbourne Congestion Levy – residential owners – Jack Nevile
Many clients are being caught unawares by the Congestion Levy. The Levy also applies to businesses, with many commercial landlords being caught out as well, however this article will only cover residential property.
Owners of carparks in inner Melbourne used for non-residential purposes (i.e. commuting) are liable for a Congestion Levy, payable to the state government.
The levy is currently $3,030 in the CBD plus some nearby areas, and $2,150 in inner-ring Melbourne (Carlton, Fitzroy, Richmond, South Yarra, South Melbourne, parts of Brunswick & St Kilda etc.)
The most common scenarios we’ve seen are:
- Owners of a parking space in the CBD who keep it for personal use, but don’t live in the building;
- Owners who rent out their private parking space to third parties on websites such as ParkHound etc.; or
- Owners whose tenants lease out a spare parking space to third parties on websites such as ParkHound etc.
The last scenario can prove a nightmare for landlords who are caught unawares when the tenant has been subletting a parking space to a commuter, and the SRO has found out. Rental parking websites are public, and it’s safe to assume the State Revenue Office scrolls them every now and again.
The landlord can be left with a hefty bill, even in scenarios where the tenant has vacated and the bond has been refunded. If the tenant was for example an international student, pursuing them for recovery of the debt might not be possible.
If you lease your parking space to a commuter, you must factor in the cost of the levy when doing so.
If you’re a residential landlord in the Congestion Levy area and your property include a carspace, you must consider the possibility of the Tenant subletting that parking space and ensure it is forbidden in the Lease.
If you don’t use your carpark, and it’s separately titled, consider selling it to someone who will, or leasing it to someone in the building who will only use it for residential purposes.
