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The property developer contribution would fund an extra 1700 social and affordable homes each year.Credit:Bloomberg

The tax is expected to rake in about $800 million a year,but the property and building industries have warned it could add almost $20,000 to the cost of a typical Melbourne house.

Labor now controls just 16 out of 40 upper house votes,placing its legislative agenda under a cloud in the lead-up to the November 26 state election.

With Labor requiring an extra five upper house votes,Opposition Leader Matthew Guy said he was hopeful the levy could be blocked. He said if it did pass,a future Liberal government would repeal the change.

“We will fight this crushing new tax tooth and nail,on behalf of all Victorians seeking to enter the housing market or buy a new home,” Mr Guy said.

The overhaul appears to be supported by the Greens,the Reason Party and the Animal Justice Party,with some qualifications. Transport Matters MP Rod Barton said as an advocate for social housing,he “absolutely” supported the legislation.

Victorian Greens leader Samantha Ratnam welcomed the levy,although she said it wouldn’t pay for nearly enough housing.

“We’re concerned that without a commitment to more funding,this levy won’t go anywhere near building the number of public housing homes we need to address our blown-out waiting list or rising rates of homelessness,” she said.

A spokesman for Reason Party leader Fiona Patten said anything that increased resources for community housing was welcome,given Labor’s lacklustre record.

“Evidence shows increasing investment in community is not only key to alleviating homelessness,but it saves scarce public resources. It should therefore appeal to progressives and fiscal conservatives alike,” the spokesman said.

But support from other independents needed to pass the legislation is unclear.

A spokeswoman for the Justice Party’s two upper house MPs was unable to confirm a position as the legislation has not yet been released.

She said the party had long backed schemes to support social housing,although there was concern about the impact of the levy on affordable housing.

Liberal Democrats MP David Limbrick was opposed to the legislation,saying it would add to the cost of housing.

Councillors at Tuesday night’s City of Melbourne council meeting were also critical of the government’s proposed changes to social housing under which such properties would be exempt from paying rates,bringing them in line with hospitals and schools.

Deputy Lord Mayor Nicholas Reece said the rates were not paid by people living in social housing,but were previously paid by the state government for social housing in local municipalities across Victoria.

“The Victorian government’s decision to no longer pay $54 million in rates to local councils for its social housing properties is a real body blow to the sector,” he said.

Cr Reece said the change would reduce the City of Melbourne’s budget by $2.2 million a year.

Cr Rohan Leppert said those councils that had been doing the most to facilitate new social housing within their municipalities would be hardest hit by the “blatant cost shift”.

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