The council is also proposing to increase rates on derelict buildings and vacant land by between 300 and 400 per cent as it seeks to push landlords to bring the disused spaces they own back to life.
The owner of The Clifford in Ripponlea,Rob Fregon,has been warned of a rate rise for his bar,which has been closed since the pandemic hit in 2020.Joe Armao
The Port Phillip council has warned affected property owners of the looming hike as it tries to turn around stubbornly high vacancy rates in some of its most storied shopping strips. This approach has been tried in London,but Port Phillip is among the first councils in Australia to propose a rate rise for vacant shops.
Acland Street in St Kilda had a vacancy rate of 27.5 per cent last year,according to one property consultancy – worse than Bridge Road in Richmond with 22.2 per cent.
Councillors will vote in June on the proposal to raise rates for derelict land and “unactivated” retail spaces to 400 per cent higher than residential rates,and raise rates for vacant land by 300 per cent.
“These changes have been recommended to improve the local area’s vibrancy,amenity,and safety through disincentivising leaving land unused,” the council said in a letter to landlords,seen byThe Age.
Among those who received the council’s warning letter is Rob Fregon,who opened Ripponlea,in early 2020,just weeks before Melbourne was plunged into its first lockdown.
Fregon said the bar had a successful launch but that he has not reopened it or leased it for a range of reasons,including anxiety and the absence of a fair offer from prospective buyers.
“For five weeks it just went off like a bag of crackers;it was heaving,” he said.
“I’ve had a lot of seagulls,as in scavengers,wanting to get a hold of the place and lease it and I would do that,but I’ve said you’ve got to buy the business.”
Fregon described the council’s proposed rate hike as punitive given the current.
A push to expand the hours of shopping in Melbourne could see shops open until 9pm during the week.
“What they are saying is,either rent your shop out at a peppercorn or we are going to penalise you,” he said. “They want the villages activated but in a state where you have an economy in recession or close to it,shops are going broke and they’re closing.”
Retail sales rose by just 0.1 per cent last month,after falling 0.4 per cent in March,according to data released on Tuesday by the Australian Bureau of Statistics,which said retail was experiencing “weak underlying spending”.
Port Phillip Mayor Heather Cunsolo said the proposed changes would not alter the total rate revenue that the council collects,which is determined in line with state rate-capping legislation.
“These changes only update the distribution of rates between different ratepayers. For example,a property that is classified as derelict will have to contribute more rates compared to a property that is not derelict,” Cunsolo said.
Many shops are vacant in Bay Street,Port Melbourne,which is part of the City of Port Phillip.Paul Jeffers
The mayor said fewer than 80 landowners in Port Phillip had properties classified as derelict,vacant or unactivated retail land. Properties must be in this vacant state for at least 24 months.
Property consultant Richard Jenkins is working with the City of Port Phillip to reactivate Acland Street,which 12 months ago had in Melbourne at 27.5 per cent.
Jenkins said the council’s approach was novel in Australia but that such levies were increasingly being applied in cities overseas,including in the United Kingdom.
“It is one lever the councils are looking to to improve the amenity of these precincts,and while there are challenges for some landlords of leasing these long-standing vacancies,it is in all our interests to have vibrant areas for the community,” he said.
Council Watch president Dean Hurlston said the City of Port Phillip was taking an “anti-business” approach to the problem of vacant properties and unused shopfronts.
“It’s using a blunt instrument,designed to penalise those already struggling with high costs of goods and high wages growth,” Hurlston said. “The council should be ashamed of itself for threatening small business owners.”
Get the day’s breaking news,entertainment ideas and a long read to enjoy.