Land rent

Description

The Land Rent Scheme is part of the ACT Government's Affordable Housing Action Plan.  The Land Rent Scheme gives a lessee the option of renting land through a land rent lease rather than purchasing the land to build a home. 

The Land Rent Act 2008 (external site) is administered under the Taxation Administration Act 1999.

Under the scheme, purchasers of a single dwelling residential block (previously unleased land) sold by the Land Development Agency (LDA) have the option of applying for the crown lease to be issued as a land rent lease.  The advantage for potential lessees in taking up this option is the reduction of the up-front costs associated with owning a house.  That is, lessees will not need to finance the cost of the land, only the costs associated with the transfer of the land (such as duty) and the construction of the home.

Land rented under a land rent lease is subject to payment of an annual land rent charge.  In addition, the lessee will be liable to duty on the grant of the land rent lease, rates, and, if applicable, land tax. 

Duty is payable on the land rent lease on the same basis as applies to the grant of a nominal crown lease.  The dutiable value is not reduced by virtue of the lessees taking a land rent option.

For further information see the Land Rent Leases and Duty Liability Information Sheet [RTF, 135Kb], [PDF, 119Kb].

For further information on other benefits available to home owners in the ACT, see Home buyer assistance. 

Applicants for a land rent lease are encouraged to seek legal advice. 

Land rent amount

The discount land rent rate is 2% of the unimproved value of the leased land.  For further details of how the unimproved land value is determined see Land valuations. 

The standard land rent rate is 4% of the unimproved value of the leased land. 

When a land rent lease is granted, lessees will commence on the standard land rent rate.  Lessees who are eligible for the discounted land rent rate must apply to the Commissioner for ACT Revenue (the Commissioner) using the Application for discount (external site).  The discount land rent rate will apply from the date of the grant of the land rent lease for eligible lessees.

A change from the standard rate to the discount rate of land rent during the term of the lease will normally apply from the start of the financial year after an application is approved.  However, a lessee may, on the grounds of financial hardship, apply for the discounted land rent to be applied from the date the application is made using the Application for discount based on financial hardship (external site). 

Eligibility for discount land rent rate

The eligibility criteria for discounted land rent are as follows:

• the total annual income of all lessees must not exceed $85,500, increasing by $3,330 per child up to a maximum of $102,150 for five or more children see Determination 2011-163 (external site);
• lessees cannot own any other real property;  and
• at least one of the lessees must reside in the property once a Certificate of Occupancy has been issued.

Application process for discount land rent rate

For any enquiries about the application process contact us.  Applicants:

• must use the Application for Discount (external site) and provide evidence of income to the Commissioner;  and
• will be advised by the Commissioner whether they are eligible or not.

Application processing time

The current standard for processing applications is 10 working days from the provision of all required documentation.  If you lodge an application, please wait 10 working days before checking on the status of your application.

Annual review

Lessees who have been approved for the discount rate of land rent are required to confirm by 30 September each year (commencing 2009) that their annual income has remained under the applicable income threshold amount using the Annual review of eligibility for discounted land rent form (external site).

An annual review of lessees' income will be conducted to determine their continuing eligibility for discounted land rent.  The standard rate of land rent as set by disallowable instrument 2008-138 at 4% of the Unimproved Value of the leased land applies where the lessees are no longer eligible for discounted land rent for any of the following reasons:

1. the lessees' total income exceeds the income threshold;  or 
2. if a Certificate of Occupancy has been issued—the lessees fail to take up residency or all of the lessees move out of the property;  or 
3. any one of the lessees purchases other real property.

Annual land rent increases

To protect lessees from large rental increases attributable to increases in unimproved land values, annual rent increases will be capped by wages growth.  Land rent is an annual charge billed quarterly; however, lessees have the option of paying weekly, fortnightly, monthly or quarterly.

Conversion of entitlement

Lessees have the option of converting the land rent lease to a nominal rent lease at any time.  The amount payable to convert the lease from a land rent lease to a nominal rent lease will be based on the unimproved market value of the land at the time of conversion i.e. not the original value when the land rent lease was entered into.  Land rent payments do not contribute towards the amount required to convert the lease from a land rent lease to a normal crown lease.

Interest

Interest will be charged on any amount of unpaid overdue land rent at the rate set by Determination 2008-137 (external site).  This is the market rate component as defined in section 26(2) of the Taxation Administration Act 1999. 

Enquiries

For initial information about the Land Rent Scheme see ACT Affordable Housing (external site).  Further enquiries can be emailed to land.rent@act.gov.au.

Discounted land rent and duty liability for land rent leases

For all enquiries about the application for discounted land rent, annual review of eligibility for discounted land rent, and the duty liability on the purchase of a land rent lease contact us.

Availability of land

For all enquiries about the availability of land under the land rent scheme contact the Land Development Agency (external site).

Canberra Institute of Technology sessions

Each potential lessee must attend a Canberra Institute of Technology (CIT) information session prior to applying for a land rent lease. To register for the CIT information sessions contact the CIT as follows:

Email: infoline@cit.act.edu.au
Phone: 02 6207 3188

Opening hours for phone contact:
Monday to Thursday: 8:30am to 6:30pm AEST
Friday: 8:30am to 4:00pm AEST

Relevant links

• Online postal address update
  

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Exchange of information

To assist in the identification and assessment of ACT taxes and grants we exchange information with other Revenue Offices and the Australian Taxation Office (ATO). 

The exchange of information with other Revenue Offices is in accordance with part 9 of the Taxation Administration Act 1999 (ACT) and similar legislation in the States and the Northern Territory.  The exchange of information with the ATO is in accordance with subsection 355-65 (5) Schedule 1 of the Taxation Administration Act 1953 (Cth).