Land Rent Scheme FAQs


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What is the ACT Land Rent Scheme?

What is the ACT Land Rent Scheme?

The Land Rent Scheme is an ACT Government initiative to increase access to affordable home ownership.  The main purpose of the scheme is to reduce the entry costs and  mortgage payments for homeowners. The scheme is also expected to be used as a means for some people to advance their entry into homeownership, by saving to buy the land outright in the future while paying land rent.

Under the scheme, lessees rent the land from the Government. They are required to pay the Government land rent, calculated on the unimproved value of the block of land.  Lessees are then required to construct a house on the land within two years of the lease being granted. 

The scheme allows a person to lease the land rent block of land on an ongoing basis or to convert the land rent lease to a traditional Crown lease at a later date, effectively  purchasing the land from the Government at that time.  Land rent is not a ‘rent to buy’ scheme.

What land is available for land rent?

What land is available for land rent?

Any new block of land released by the ACT Land Development Agency (LDA) to the public will be available for land rent.  For further details on the land available for rent, contact the Land Development Agency.

What type of property can I build on rented land?

What type of property can I build on rented land?

Only single residential dwellings can be built on land rent blocks.  Units or attached dwellings cannot be built on land leased under the scheme.  Planning and quality controls applying to land rent blocks will be the same as for land held under traditional crown leases.
 

How will my annual land rent be calculated?

How will my annual land rent be calculated?

A lessee’s annual land rent payment will be calculated as a percentage of the unimproved value of the block of land.  There will be two different rates available for land rent. 
 

What are the different payment rates?

What are the different payment rates?

Two land rent rates are available:

  • a discounted rate, calculated at 2 per cent of the unimproved value of land; and
  • a standard rate, calculated at 4 per cent of the unimproved value of land.

What is the unimproved value of land?

What is the unimproved value of land?

The unimproved value takes into account the value of the land itself and not the value of any additions to the land – such as the house or garage.

How do I know which rate I am eligible for?

How do I know which rate I am eligible for?

Any person will be eligible to access the standard land rent rate.

However, strict eligibility criteria exist around the discounted land rent rate.  These include income, ownership and residency tests.  For further details on these tests please contact the ACT Revenue Office.

What type of lease will be issued?

What type of lease will be issued?

Under the land rent scheme, lessees will be issued a Land Rent Crown Lease.

Will my name be on the title to the land, even though I’m renting?

Yes.  The lessee’s name will be on a Land Rent Crown Lease giving the lessee title to the land.

Will my name be on the title to the land, even though I’m renting?

Will my name be on the title to the land, even though I’m renting?

Yes. The lessee’s name will be on a Land Rent Crown Lease giving the lessee title to the land.

What rights and privileges do I have under the land rent scheme?

What rights and privileges do I have under the land rent scheme?

A lessee under a Land Rent Lease has the same rights and privileges as someone who holds a traditional Crown Lease.  A person leasing a land rent block will be able to undertake all the same activities as those who have purchased a Crown Lease such as building a house or shed, laying grass or pavers, or putting in a pool.
 

If I rent the land in my name, can I take out a mortgage together with my spouse or partner?

If I rent the land in my name, can I take out a mortgage together with my spouse or partner?

There are no restrictions on who can apply for a mortgage over the land rent lease.
However, you may like to seek advice from your lender about the effect that this might have on your eligibility for finance, as the lender might require that all lessees are also applicants for the mortgage.

What happens if only one person has their name on the lease?

What happens if only one person has their name on the lease?

The person whose name is on the lease (the lessee) is always liable for all charges outstanding on the land. 

What happens if I default on my loan?

What happens if I default on my loan?

If you believe you are at risk of defaulting on your loan, you should contact your financial institution immediately. 

What happens if I can’t make my land rent payments?

What happens if I can’t make my land rent payments?

If you cannot meet your land rent payments, you should contact the ACT Revenue Office immediately.

Are there any professionals I should consult with prior to entering the land rent scheme?

Are there any professionals I should consult with prior to entering the land rent scheme?

Prior to entering the land rent scheme, you will be required to attend an information session at the Canberra Institute of Technology (CIT).  This session will provide youwith further detail on the scheme and allow you to ask questions. 

After completing this session, we strongly advise that you consult with a lawyer,
accountant and financial advisor for further information, to determine if this scheme is
right for your circumstances.
 

What are the Eligibility Criteria for the Discounted Rate?

What are the Eligibility Criteria for the Discounted Rate?

The eligibility criteria are set out in the Land Rent Act 2008.  As at 1 July 2012, to be eligible for the discounted rate:

  • the total annual income of all lessees must be $89,100 or under (this limit increases by $3,330 for each dependent child up to a maximum of $105,750 for five or more children); 
  • lessees cannot own any other property in any State or Territory in Australia;

and

  • at least one of the lessees must reside in the property once a home has been built and a Certificate of Occupancy has been issued.
     

Please note that the eligibility criteria will be updated in July each year.  For the most up to date information on the criteria, please contact the ACT Revenue Office.

Will the income limit for the discounted land rent rate increase for dependent children?

Will the income limit for the discounted land rent rate increase for dependent children?

Yes.  The income limit will increase by $3,330 for each dependent child up to a maximum of $105,750 for five or more children.

What is classified as a ‘dependent child’?

What is classified as a ‘dependent child’?

The definition of a dependent child can be found under the Social Security Act 1991
(Cwlth). 

What measure of income will be used to determine eligibility?

What measure of income will be used to determine eligibility?

The income threshold for the discounted rate is total gross income.

Is eligibility calculated on the household income or the lessee?

Is eligibility calculated on the household income or the lessee?

Eligibility for the discounted rental rate will be calculated on the total gross income of the lessee(s) only.
 

Will the income limit be regularly indexed?

Will the income limit be regularly indexed?

Yes. The income limit will be indexed to remain in line with current changes in
income.

What happens if my income increases?

What happens if my income increases?

If your income increases during the year while you are on the discounted rate, you must inform the ACT Revenue Office. 

If your income increases above the threshold for eligibility for the discounted land rent rate, you will move from the discounted rate to the standard rate.  The standard rental rate will not commence until 1 October, and any increase will be capped at Average Weekly Earnings (AWE).  This means that your land rent payments may only increase by around 5 per cent each year, until you reach the new amount.  This is to make sure that you are not burdened with an extreme increase in land rent at any one time. 

The ACT Revenue Office will send lessees on the discounted rate a letter to self assess their  income.  If your income has exceeded the threshold, you must inform the ACT Revenue Office at this time.

What happens if I move out of the house after I have become eligible for the discounted rate?

What happens if I move out of the house after I have become eligible for the discounted rate?

If you move out of the house (on the rented land), you will be required to inform the ACT Revenue Office immediately as you will no longer be eligible for the discounted rate.  Your rent will then increase to the standard rate (capped at the AWE rate of increase each year).

What if I purchase another property while I’m still on the discounted rate?

What if I purchase another property while I’m still on the discounted rate?

The eligibility criteria for the discounted rate indicate that you must not own another property. If you purchase another property, you will no longer be eligible for the discounted rate.  Your rent will then increase to the standard rate (capped at the AWE rate of increase each year).

You must notify the ACT Revenue Office immediately should your circumstances change. 

Will I be able to sub-let a room on my property under the discounted rate?

Will I be able to sub-let a room on my property under the discounted rate?

Yes.  You will be able to sub-let a room on the rented property if at least one lessee also lives in the property at the same time. 

If I’m not a first home buyer, can I access land rent?

If I’m not a first home buyer, can I access land rent?

Eligibility for the discounted rate states that lessees must have no current interest in
another property.  If a homebuyer does not currently hold property, even though they
have done so in the past, they will meet this criterion for the discounted rate. 

Homebuyers who already own property are still able to participate in the land rent
scheme at the standard rate. 

What if I do not meet the eligibility criteria for the discounted rental rate?

What if I do not meet the eligibility criteria for the discounted rental rate?

If you do not meet the eligibility criteria for the discounted rental rate, you may still participate in the land rent scheme at the standard land rent rate of 4 per cent.

Do I need to make a payment upfront to enter the land rent scheme?

Do I need to make a payment upfront to enter the land rent scheme?

Yes. As of 18 February 2013 a land rent security payment will be required in respect of all land rent blocks.

The amount of the security payment is $10,000 for standard land rent lessees, reduced to $2,000 for lessees eligible for discounted land rent rate. The security payment is not a deposit but security against the costs that are associated with holding and re-selling the block if the purchaser does not proceed with the contract. Upon settlement, the security amount will be transferred to the ACT Revenue Office and credited against future land rent payable. 

More information

More information

For more information visit the Land Development Agency website www.lda.act.gov.au or the ACT Revenue Office website www.revenue.act.gov.au 

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