Silverleaves residents win discounts after flood exposure concerns
A Phillip Island community at the mercy of a rapidly receding coastline has won huge cuts to its land taxes after successfully arguing its bills did not reflect flood exposure.
The victory for Silverleaves residents has sparked concerns that thousands of Victorians living in flood zones and bushfire zones could end up paying too much tax because their properties are overvalued, posing a major threat to a key revenue stream for the state government.
The opposition is calling for an urgent statewide review to deal with inaccurate valuations.
A number of properties in the 500-person community on Phillip Island were placed under the Flooded Land Overlay in 2019 because they were in the firing line of coastal erosion, which has driven up insurance premiums and made it nearly impossible to develop or sell much of their land.
A report prepared by the Ministry of Environment in 2024 revealed that the coastline has receded by 77 meters since 1953. Between 2022 and 2024, it retreated six meters per year.
But after a series of planning decisions blocking construction projects, residents have begun to question land tax bills coming in from January 1. They noted that they received valuations equivalent to properties not in flood-prone areas, and that these valuations have increased steadily since 2023.
Dozens of residents have since successfully appealed their assessments and received major reductions on their tax bills. This fee does not apply to primary residences, but does affect investments, second homes, vacation homes, vacant land and commercial properties.
In a letter he saw AgeA property valued at $775,000 was reduced to $175,000, reducing the owner’s annual bill by more than $2,000.
Silverleaves resident Natalie Gray said floods not only affected who bought and built on property, but also changed council planning policies that often prevented developments that could add value.
He said Victorians in areas at risk of bushfire or flood were likely to be in a similar situation and called on the state to be proactive in preventing them from being overcharged.
“We shouldn’t object. We should be able to trust that the state will act responsibly,” he said.
“They rely on people’s objections rather than a standard approach.”
Gray said this is the third year he has appealed the property valuation, but the first time he has been successful.
He said he believed Last year’s Supreme Court decision It may have made a difference by providing clearer guidelines on how areas where buildings are located should be evaluated, including what counts as an “improvement” on the site.
A Department for Transport and Planning spokesman said the decision to change site values at Silverleaves was not a result of the High Court decision.
They did not say whether the department would assess how many properties were overcharged or proactively apply land tax relief.
The incident has led the state opposition to raise questions about how many other properties across Victoria are significantly overvalued and taxed too high, and called on property owners with concerns to question their bills.
The Allan government estimates it will raise $6.4 billion in revenue from land tax this financial year alone.
Flood linings have significant impacts on property sales and council approvals, but not every area will be as limited as Silverleaves in terms of what can be developed.
Melbourne Water previously estimated there was at least a 1 per cent chance of flooding for more than 200,000 properties in its region.
A much smaller fraction of these have the possibility of flooding above ground level, but the 1 percent measure that estimates floods may occur every 100 years is a defining feature of land subject to flood layers.
The issue could affect properties affected by reconstruction following the 2022 floods in regional Victoria and along the Maribyrnong River.
Kensington Banks in Melbourne’s inner north-west has been labeled as flood-prone in Melbourne Water’s revised modeling for the Maribyrnong River catchment, with experts warning house values in the area could fall by up to 20 per cent.
According to the modeling updated last year, 90,000 properties The council areas of Darebin, Yarra, Glen Eira and Merri-Bek have been identified as being at risk in the event of severe flooding from stormwater.
A 2022 report by University of Melbourne expert Tom Kompas modeling the risk of sea level rises and storm surges predicted that 174,000 properties could be exposed to coastal waters by 2040.
West of Melbourne, Geelong and South Gippsland vulnerable to future sea level risesIt is predicted that Victoria will face property damage worth up to $337 billion today by 2100.
Tax lawyer Thomas Abraham said any Victorians who suspected their property had been incorrectly valued or overcharged in land tax should appeal or seek further information.
Since the Victorian Valuer became the sole authority on land valuation in 2023, many people’s land tax bills have tripled overnight, he said.
“Ultimately, the question isn’t how much growth there is, it’s whether the $1 million (value) is actually fair. If you sell it in a market where you get $1.5 million, then that’s fair,” Abraham said.
“If there’s flood lining or flood lining, what are you going to do with it? You’re not going to be able to sell it.”
Nationals MP Melina Bath, whose eastern Victoria electorate includes Silverleaves, said every potentially inaccurate valuation across the state needed to be reviewed.
“Labour must order every incorrect valuation to be corrected immediately and refund money to overcharged households,” he said.
“Citizens should not be forced to fight the Allan government to get bill reductions or refunds that they rightfully owe.”
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