Fate of Vic housing levy 'very uncertain'

The Victorian government last week announced 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 said the levy will 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.

Premier Daniel Andrews said his government had been discussing the levy with members of the property development industry as part of a broader package of reforms to hasten planning approvals.

The slashing of red tape, he said, would create "massive profits" and the sector had agreed to share some of the windfall to provide more social and affordable housing.

But Mr Andrews claimed industry bodies, including the Property Council of Australia, had reneged on supporting the levy after reaching an agreement with the government.

"It's fair to say that the future of this bill is very, very uncertain," he told reporters on Wednesday.

"I'm not in the business of creating super profits for developers if they are unwilling to support sharing those profits with those who need more affordable housing."

The Property Council returned served but vowed to continue to work with the government.

"This is the 10th new tax this government has introduced, the second in the last ten months," the body said in a statement to AAP.

"All our members are concerned about the flow of effects of new taxes on housing affordability."

The bill is yet to be introduced in parliament and Mr Andrews said it will not proceed without industry consensus, throwing the ball back into the court of the developers.

"It's now over to the development community," he said.

Shadow Treasurer David Davis said the government had miscalculated reaction to the proposed tax, and cast doubt on Mr Andrews' suggestion the industry had been on board with the levy.

"That is complete and utter rubbish. I have spoken to everyone across that sector ... and nobody thought this was a good idea," he said.

"It came as a complete bolt from the blue."

A planned briefing between the state government and shadow cabinet members on the levy and other measures within the bill was later cancelled.

Victorian Greens Leader Samantha Ratnam said her party would support the bill, branding the property sector's price-hike claims as a "furphy".

"We see the development community crying poor every time there is a reform to create more affordable housing," she said.

The Greens also introduced a private members' bill in the upper house on Wednesday to force the Victorian government to legislate a target to end homelessness in the state by 2030.

Australian Associated Press