Using value capture to fund SRL

Between Cheltenham and Box Hill – the SRL East will be funded from 3 sources:

$11.5 billion from the Victorian Government
$11.5 billion from the Commonwealth Government
$11.5 billion raised through value capture

None of these value capture mechanisms will directly apply to the family home.

Value capture is based on the simple principle that those who directly benefit from a project should contribute proportionally to its cost.

Increases in property value will naturally follow as the connectivity, productivity and liveability improvements created by SRL attract new businesses and residents.

SRL value capture measures will apply in the 6 SRL East precincts. The revenue from these 5 value capture mechanisms will repay up-front state borrowing over a 40-year period.

The SRL East value capture measures

Measure	Timing	Who	Rate	Share of up-front borrowing repaid by this initiative
Land tax	Existing and ongoing	Existing land tax payers	Existing land tax rate	$5.75 billion
Windfall gains tax	Existing and ongoing	Landowners	Existing windfall gains tax rate	$0.45 billion
Infrastructure Contributions Plans levy	From 1 Jan 2027	Developers and landowners seeking to increase the number of dwellings or amount of commercial floorspace in a property	For residential properties 2027-2032: Structure Plan Area^ – commencing at $11,350 per dwelling Outer Ring Area - $0 per dwelling 2032-2035: Structure Plan Area – commencing at $33,924 per dwelling Outer Ring Area – $13,158 per dwelling 2035-2062: Consistent rates across the Declared Planning Area Non-residential rates will apply on a square metre floorspace basis, aligned with rates outlined in the Train and Tram Zone Activity Centre Infrastructure Contributions Plans	$2.9 billion
Car parking levy	From 2035	Owners of off-street car parking spaces	Annual levy per liable car parking space, per the existing congestion levy category 1 rates	$0.8 billion
State-initiated development	TBC	State and private development partners	N/A	$1.6 billion
Total				$11.5 billion

^{*The Department of Treasury and Finance has assessed the revenue required to service the up-front borrowing on a Net Present Value basis.}
^{^Structure Plan Area refers to the area within 800 metres from SRL stations, while Outer Ring Area refers to the area between 800 metres and 1,600 metres from SRL stations.}
^{**Rates will be indexed annually.}

Land tax is a simple and effective value capture mechanism.
The SRL is expected to increase the value of land in the station precincts.
The revenue generated from land tax in SRL East precincts will therefore be used to support SRL construction.
Land tax rates in SRL precincts will remain consistent with existing settings and will only apply to those who already pay land tax, such as investors in SRL precincts.
It does not, and will not, apply to the family home.
A rezoning is an amendment of a planning scheme that changes how land is used, often increasing its value.
Windfall gains tax applies when a rezoning results in a land value uplift of more than $100,000. A tax on gains resulting from rezoning is widely recognised as an efficient and fair way of sharing these windfall gains across the community.
The revenue generated from Windfall gains tax that accrues in SRL East precincts will be used to support SRL construction.
There will be no increase to Windfall gains tax rates or changes to the current Windfall gains tax arrangements.
An SRL Infrastructure Contributions Plan levy will apply to new property developments in each SRL East precinct.
The levy will directly support SRL East construction and other new infrastructure including roads, footpaths and open spaces.
The Infrastructure Contributions Plan levy will apply to non-residential development and also to residential developments when that development will increase the number of dwellings or amount of non-residential floorspace in a property.
This one-off levy on new developments will commence from 1 January 2027 in the structure plan areas, which cover properties within approximately 800 metres from each SRL East station.
The initial rate will be the same as the charges applied to Train and Tram Zone Activity Centres, to attract early investment to the six SRL East precincts. The rate for SRL East precincts will be indexed annually and will then progressively increase in 2032 and again in 2035 when SRL East is operational.
The Infrastructure Contributions Plans will not apply to the full declared planning areas, or ‘outer ring’ of the SRL East precincts until 2032. This outer ring area covers properties between 800 metres to 1.6 kilometres from each station.
State-initiated development will leverage land already acquired for construction of the SRL to generate revenue. This could be achieved by partnering with the private sector to promote investment in the SRL East precincts, which would deliver more homes faster. Development could include a mix of residential, commercial and retail uses, which will be determined once the SRL precinct structure plans are finalised next year.

What does this mean for:

Jim and Sam’s home is in the Cheltenham SRL precinct. As the property is their family home there will be no changes for them. The exemptions associated with principal places of residence will continue to apply.
This means, as homeowners, Jim and Sam will continue to be exempt from paying land tax. If the land was rezoned, Jim and Sam would also be generally eligible for the residential land exemption from Windfall gains tax. They won’t have to pay the SRL Infrastructure Contributions Plan levy either, unless they build an additional dwelling on their property.
Above and beyond the connectivity benefits they will enjoy when SRL is complete, Jim and Sam may see their property value increase as has happened in properties near similar developments across Australia and internationally.
For further information, please visit the State Revenue Office website.
Philippa owns an investment property within the Clayton SRL precinct and rents that property to tenants.
There will be no changes for Philippa. She will continue to pay the same land tax rates that already apply to the total value of taxable land owned in Victoria, excluding exempt properties like the family home.
Land tax applies to investment residential properties, commercial or industrial properties and vacant land.
For further information, please visit the State Revenue Office website.
Developer X is building a block of apartments in the Box Hill SRL precinct to capitalise on increased demand for apartments in this transport and commercial hub at the heart of the SRL East.
Developer X will be subject to land tax and the one-off Infrastructure Contributions Plan levy to help fund the construction of the SRL and other new infrastructure including roads, footpaths and open spaces.
If Developer X owns the land where the apartment block will be located and has benefited from a rezoning of the land, Windfall gains tax may also apply.

To learn more

See the SRL Business and Investment Case (released in 2021) to understand the costs and outcomes of this project.

Updated 18 December 2025

Using value capture to fund SRL

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The SRL East value capture measures

What does this mean for:

To learn more