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Land tax on vacant residential homes would triple if they are unused for three years and Victoria will trial a scheme forcing homeowners to declare who lives at their property under new concessions from Treasurer Tim Pallas.

A proposal that would have led to major increases of the fire service levy on renewable energy projects has also been abandoned.

A vacant parcel of residential land.Credit: Chris Hopkins

The Allan government will this week make adjustments to its land tax laws to secure support from the Victorian Greens in the upper house.

Last month, Pallas surprised the property industry by announcing he would expand a 1 per cent tax on vacant residential homes to include the whole state, rather than Melbourne’s inner and middle rings. The tax will also be widened to include vacant undeveloped land that is zoned for residential use, if it has not been improved within five years.

But the changes were on track to be defeated in Victoria’s upper house after the Greens announced they would block the bill unless the Allan government addressed their requests on housing affordability, including rent controls and changes to plans to rebuild Melbourne’s public housing towers.

The opposition does not support expanding the tax, and Labor faced a difficult task convincing the rest of the crossbench to provide the six votes needed to pass the legislation. Debate over the legislation was delayed while Pallas sought to fix the stalemate.

Treasurer Tim Pallas.Credit: Joe Armao

After a breakthrough in negotiations, the Greens will now support the bill after the government agreed to major changes. Labor now needs just two more votes to pass the laws.

In return for the Greens’ support, Pallas has agreed to triple the 1 per cent tax rate to 3 per cent if homes stay vacant for three years.

Victoria will also launch a trial where the tax is made enforceable rather than relying on self-reporting. This would mean homeowners in the trial would provide records that people live at their residence to the State Revenue Office, which the Greens argue would allow the tax to cover more properties that have been missed under the current program.

Estimates provided by the Parliamentary Budget Office predicted that making the vacant land tax scheme enforceable this way could expand its reach to 5000 properties in Melbourne, compared to the current 900.

Another part of the legislation which would have included the value of wind farms and solar panels in land valuations will also be removed. Clean energy groups warned this would push up the cost of the fire services levy, which is based on land value, by as much as 25 per cent on projects.

The changes will be debated in parliament’s upper house this week.

Victorian Greens Leader Samantha Ratnam said the concessions showed that that pressure from her party had worked, but did not back down from pushing for rent controls.

“Every day this housing crisis is getting worse. We’re seeing renters face unlimited rent increases and struggle to find a rental home.

Victorian Greens leader Samantha Ratnam.Credit: Joe Armao

“If Labor wants to continue passing their housing statement through parliament, they’re going to need to work with us on the kinds of solutions that will fix this crisis.

“That means urgent rent controls, and a commitment to build public and genuinely affordable housing.”

Greens treasury spokesman Sam Hibbins said the original bill would have limited investment in renewable energy.

“Through our negotiations with the government, we have pushed the government to make more homes available for renters and made investment in renewable energy and storage easier. We are delivering,” he said.

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