ACT Land Rent

The ACT Government’s Land Rent Scheme is a more affordable way to own your own home. That’s because you’re buying or building your home on land that’s rented from the government, so you only need a loan just for the building.

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.

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. 

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.

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.

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).

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. 

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. 

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. 

The security payment has been introduced to discourage land speculation and make sure that land sold by the LDA goes to those people who are genuinely interested in building a home.

The security payment will assist in ensuring that people accessing land under the land rent scheme are committed to building on their block and are aware of the financial implications associated with building a new home.

No. The security payment protects the LDA in the event that a person enters into a contract for the purchase of land and, in breach of the contract, refuses to complete the purchase. The security payment will be retained by the LDA to offset the costs of holding and re-selling the land. 

The security payment is non-refundable if you have entered a contract to buy the land and later change your mind. 

Should you terminate the contract without reason, the security payment will be retained in full by the Territory and used to cover the costs of holding and re-selling the land. 

You will be eligible for discounted land rent if you meet the eligibility criteria 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 (http://www.revenue.act.gov.au/home-buyer-assistance/land-rent-scheme).

You will be asked to sign a statutory declaration indicating that you genuinely believe that you meet these eligibility criteria. Making an untrue declaration is a serious matter and may result in criminal prosecution.

The $10,000 reflects the reasonable costs the LDA anticipates in holding and preparing the land for re-sale should you fail to complete the contract.

The LDA’s costs in relation to a discounted land rent lease that you fail to complete are still around $10,000. However, the LDA will waive 80% of these costs in such instances, and will only retain the $2,000 security payment in settlement of its costs.

The policy of waiving all but $2,000 has been set to ensure that the security payment does not inhibit the ability of a person or family eligible for the discounted rate to secure a block.

If your circumstances change, you should inform the LDA as soon as possible. Generally speaking, where the change is either unforeseen or beyond your control (including a pay rise, promotion or other change of income) the LDA will not make any changes to your security payment requirements.

Yes. However, you should ensure that you are fully aware of the new requirements and any impacts they may have on your personal circumstances. Unless you have already made an appointment to purchase under the land rent scheme and enter into a contract before 18 February 2013, you will need to pay the security payment.

No, because the lease will have been granted.

The security payment remains with the LDA until the block has settled. It is then transferred to the ACT Revenue Office and credited towards the first year’s land rent payment.

You should ensure that any land rent credit is taken into account during negotiations for the purchase.

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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