Development levy proposed to pay for new social housing in Victoria

A levy on new housing developments will be applied to Victorian projects from 2024 to help pay for social housing, under a new government proposal.

The plan will see a 1.75 per cent contribution imposed on new builds to pay for up to 17,000 homes that would be used for social housing over a decade.

The proposal will also phase out rates for people in social housing from 2023.

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According to the government, developers will fork out 1.75 per cent of the market value of any new build with three or more dwellings or three or more lot subdivisions in Melbourne, Ballarat, Bendigo and Geelong from July 2024.

Victorian Treasurer Tim Pallas has said the change will "only affect about 30 per cent of all residential planning permits issued".

However, property experts, including the Urban Development Institute of Australia (UDIA) chief executive Matthew Kandelaars, say the new cost will fall to home buyers.

"The government won't say that but that is the truth," he said.

"On a new home of $750,000 — which, by the way, is well below the Melbourne median house price — that is about $13,500 in tax."

Opposition Leader Matthew Guy has slammed the new tax as unfair.

"This is completely unfair for first home buyers to be stung with more new taxes from a government that is addicted to taxing Victorians," he said.