LVC Valuation Guidelines

LVC guidelines for valuers in the ACT


The purpose of the guidelines are to provide more clarity to Valuers when undertaking V1- V2 LVC (Lease Variation Charge) assessments.

The LVC process is unique to the ACT and these valuations are not widely undertaken by all ACT based valuers. Additionally, valuers external to the ACT are unlikely to be familiar with the purpose of the LVC and associated processes or possess the requisite skills in order to be competent with the valuation of land under a lease tenure system, as in existence in the ACT.

LVC valuations are usually submitted to the EPSDD by the Crown Lessee in respect of a Development Application (DA) that seeks to vary the Crown Lease purpose clause. The LVC valuations are conducted by private sector valuers in support of any Crown Lessees DA’s submitted.

The role of the ACT Valuation Office (ACTVO) on behalf of the Territory Government with respect to the LVC process, is to critique LVC valuations submitted by the Crown Lessee. Following the critique the ACTVO may confirm the LVC valuation or provide an alternative valuation.

LVC valuation differences between the ACTVO and private valuers engaged by the Crown Lessees vary from case to case. The differences primarily relate to the assumptions and/or interpretations of Crown Lease purpose clauses in relation to what the Crown Lease allows in the ‘before value situation’ (prior to any permitted use variation) and the ‘after value situation’ and the analysis and application of appropriate sales evidence.

The aim of this document is to provide guidance and improved clarity about the LVC valuation process and the obligations of the parties involved in the LVC exercise.

Purpose of the LVC

The LVC is the current form of a betterment tax (added value) which has been in place in the Territory since 1971.  It is levied on any increases in the market value of land arising from an improvement in development rights contained in a Crown lease purpose clause.

The economic principle underlying the LVC is that the community should share the benefit from any increase in the value of the land arising from changes to the original Crown Lease granted by the government.

In theory, the LVC compensates the community for the loss of revenue that would have been raised if the government had originally sold the lease with those higher valued Crown Lease conditions in place.  On this theoretical basis, the charge should reflect 100 per cent of the increased value of the land attributable to the lease variation. As the LVC process isolates and taxes the additional value of the lease that is solely due to government decisions, it should have no impact on production and consumption decisions.

The LVC is currently generally levied at a rate of 75 per cent of the uplift in value of the land.

LVC valuations

The LVC of single purpose residential and commercial developments are codified. This means that the LVC is calculated using a set (codified $value) rate that is based on the value of any additional residential unit(s) or additional commercial Gross Floor Area (GFA), depending on the requirements of the development. These set (codified $value) rates are based on locality and size of development, reviewed on market value movements evidenced by comparable sales. A charge is levied on the total value uplift. The charges are set out in Disallowable Instrument DI2017-208 made under the Planning and Development Act 2007.

Where the development is more complex such as mixed residential and commercial developments, the LVC charge is generally based on 75 per cent of a value uplift that has been determined by valuations of the “before” and “after” market value (V1 – V2).

This guideline has been developed to provide more information to private valuers about the expected basis for the “before” and “after” market valuations.

Key issues to address:

For the purposes of LVC the valuation is based on the market value of land. The market value of land includes any ground improvements such as grading and excavation or site levelling works that may have been completed on the site. In contrast to Unimproved Value under the Rates Act 2004, market value for LVC matters may also incorporate any premium associated with the scarcity of land for sale in an area.

Where the site has recently been purchased, the “before” lease variation valuation in most circumstances is the price that was paid for the site. In cases where the site has not recently changed hands, then the “before” valuation is based on market sales evidence of sites with similar Crown Lease purpose clauses. It is important to note that the valuation is always based on the existing lease purpose clause of permitted uses and should not reflect any potential additional development rights available as a permitted use under the Territory Plan.


  • A site is included in a Territory planning zone that allows the development of up to 80 residential dwellings, however the existing Crown Lease specifies that only 10 dwellings can be built. The V1 would be based on the rights to build 10 dwellings only.
  • A site has been purchased with a Crown Lease that only allows Community Use. However, based on other comparable market evidence the purchase price appears high and reflective of the additional development rights (‘after value’ situation) under the Territory Plan accessible via an LVC process. The V1 is based on the Community Use purpose clause only.

The ‘after value’ scenario should include a valuation of all permitted use rights and conditions associated with the development application as if the rights and conditions have been approved in the varied Crown Lease. The assessment is made on the basis of the market value of the land and is conducted concurrently i.e. at the same time as the valuation of the ‘before’ scenario, but assuming the approved new development rights exist immediately after the approval date (i.e. Notice of Decision date).

In some cases a property may have been purchased at a price that appears to be reflective of the value associated with some or all of the development rights permissible in the future ‘after’ value scenario. In these circumstances, the valuer should include comparisons of the subject sale to sales of other property with similar Crown Leases in order to confirm whether the price paid is fair and reasonable e.g.

  • The subject property is restricted to Community Uses only under the Crown Lease purpose clause. It has been purchased with the intent to develop the site as a Hotel as permitted under the Territory Plan. However based on other sales evidence of community use property the price paid appears high and more reflective of sales that already have hotel use in the Crown Lease purpose clause. The sale of the property is qualified in the report as it was purchased without the right to develop a hotel. More weight is placed on the comparable sales that reflect the ‘before value’ situation i.e. as community use.

The most reliable and primary valuation methodology for the establishment of a LVC is the Direct Comparison valuation methodology i.e. using comparable sales of similar properties in similar locations. This method has been supported by numerous ACAT decisions.

An alternative method is the use of the Hypothetical Development approach. However, due to the number of inputs into the hypothetical model that require valuer assumptions, it is considered by the ACAT to be not as reliable as Direct Comparison approach for LVC purposes. Hypothetical Development is generally regarded as a secondary or check approach.

LVC valuations are generally based on the estimated price achievable from the sale of the development site and a list of sales of comparable property must be included in any valuation report. Comparable sales evidence should be:

  • sufficient in number
  • recent sales transactions i.e. close to the valuation date if practical
  • similar permitted uses to the property being valued
  • verifiable
  • consistent with local market practice

The best comparable evidence is in most circumstances the sale of the subject property and details and the treatment of this transaction must be included in the LVC valuation irrespective of the bona fides of the sale. Other comparable market evidence such as sales of similar properties situated in the same or similar localities should also be included in the valuation exercise. If sales of lesser comparability are used then depending on the degree of comparability the valuation will require a greater explanation of all adjustments undertaken to equate the price of the less comparable sale properties to the subject property.

The sales analysis must include details associated with the transaction including any adjustment associated with contractual or Crown Lease obligations such as offsite works and the provision of public car parks.


  1. The sale price of the subject property appears ‘out of line’ with other market evidence and is omitted from any valuation considerations. For the purposes of LVC, a full analysis must be undertaken on the subject property sale by the private valuer, fully explaining why the price is too high or too low and the reasons if any as to why the sale over the subject property is set aside from consideration in the valuation.
  2. The sale of a comparable development site includes non-functional buildings. The valuation report must address any considerations in order to return the property to a vacant site. These considerations should be included by way of relevant commentary by the private valuer and may include the impact of GST, offsite works and demolition costs.