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As a result, the government is proposing to increase land registry fees to cover its costs.
Registry fees would be cheaper for property valued below $1 million, but would grow for higher-value properties to increase annual revenue from $150 million to $223 million.
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When the registry was commercialised in 2018, Pallas managed concerns about consumer costs by saying the government would maintain control of the prices Victorians paid for statutory land registry services. But the state also agreed separately that SERV could peg its charges to inflation, including the service fees it charges the government.
At the time, the nation’s competition watchdog recommended to a parliamentary inquiry that the state periodically review this agreement to keep the operator’s prices reflective of its costs, preventing it from profiting far above what could be achieved in a competitive market. Instead, the government is seeking to increase consumer charges partly to keep up with SERV’s rising service fees.
The department, in its regulatory impact statement, said higher fees were unlikely to have material impacts on the property market. But the document conceded it could discourage businesses from setting up in Victoria.
“It is unlikely that fees charged by the registrar are high enough to have a significant impact on whether parties enter those transactions, but there may be a marginal impact (e.g., land registry fees, in combination with other land taxes, may have some weight on a business’s decision to set up operations in Victoria versus another jurisdiction).”
In a move that could boost government coffers if property values increase, the department also wants to alter a tax it charges as part of land transfer fees paid to the registry.
Known as an ad valorem fee, this tax raised $335.6 million last year and is separate to the stamp duty collected by the government. The fee does not exist to cover the cost of any services, only to boost the state budget.
“The ad valorem fee on land transfers is a means of raising general revenue for the Victorian government; it does not reflect the costs of processing land transfers,” the consultation documents state.
Victorians currently pay $2.34 for every $1000 of a property’s value that is being transferred under ad valorem, which is capped at $3510 and raised $335.6 million in revenue in 2024-25.
The department argues this disproportionately targets lower-value transactions, and proposed to reduce the rate to $1.85 for properties valued below $1 million. The existing cap would remain for those valued above $1 million, with a new cap of $7020 for those valued above $1.5 million.
“This option would shift the relative burden share of revenue away from lower-value transactions and more towards higher-value transactions,” consultation documents argued.
“In particular, the proposed option provides the best option for assisting housing affordability for transactions below $1 million, resulting in significantly lower fees than the current arrangements for this group.”
Revenue is expected to remain the same but would increase with property prices.
If property prices increase by 2 per cent a year, the tax would bring in $2.2 billion over the next 10 years in today’s dollars under the proposal. This is $95 million more than it would if the tax were left in its current form.
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Opposition Leader Jess Wilson, who is also shadow treasurer, said the proposed change was a desperate cash grab from a government that couldn’t manage money. “This latest tax hit will only place further cost-of-living pressures on Victorians and make our state a less attractive place to do business and invest.”
A state government spokesperson said the current fees were inadequate.
“Our registry and ad valorem fees have not been updated in 20 years and currently don’t cover the costs of processing land sales,” the spokesperson said. They said no decisions had been made.
SERV was contacted for comment.
In December, The Australian Financial Review reported that Aware Super had commissioned a strategic review of SERV and that several sources suggested the super fund’s preferred option was to sell as much as half its share in the registry.
A spokesperson told the newspaper it did not comment on market speculation but would remain a long-term investor in SERV.
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