At the start of 2025 the Victorian Government has expanded the Vacant Residential Land Tax (VRLT) to apply statewide. This meant that any residential land across Victoria left unoccupied for more than six months in the previous calendar year could now be subject to VRLT, not just land in inner and middle Melbourne. From 1 January 2026, VRLT will be extended even further.

What’s New in 2026?

From 2026, VRLT will also apply to undeveloped residential land in metropolitan Melbourne that has been:

• Vacant and capable of residential development for 5 or more continuous years, and

• Not developed or occupied since 31 December 2020.

This captures:

• Vacant blocks with no home

• Abandoned partially built houses

• Apartments or units with incomplete fit-outs that have never been lived in

Exemptions

Exemptions remain for:

• Land incapable of being developed for residential purposes (e.g. due to size, shape, natural features, environmental condition)

• Land adjoining a principal place of residence (e.g. used as a garden, pool, or tennis court)

• Land zoned or intended solely for non-residential use

If the land is sold, the new owner has five years to commence development before VRLT applies.

How Much is VRLT?

The tax is levied at 1% of the Capital Improved Value (CIV) of the land annually.

Property owners should carefully consider how these changes may affect their holdings and future plans. For tailored advice, contact our team.