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The Canberra leasehold system. Panic stations or non-event?

Ok, so we will do our best to digest the purchasing process in Canberra. 

If you're buying a property in Canberra, you're not actually purchasing the land, instead, you're buying into a 99-year Crown lease. This might make you feel uncomfortable - after all, you’re leasing the land your property is on back to the government. Can we really trust those poli’s in Canberra??

We’ll explain why it really is a non-event.

Firstly, what is leasehold? What does this mean? Leasehold is a system of land tenure. You buy the right to use land under a lease for a term of 99 years. In every practical way, though, you build your house and own it just as you would anywhere else in Australia. The leasehold and freehold systems are almost identical in operation.  

Towards the end of the 99 year period, the ACT will grant you a new residential lease and charge an administrative fee. You will also have to pay a peppercorn rent of $1 a year if you own a Canberra property. That’s the equivalent to 1/3 of a takeaway coffee at your local cafe!

The first 99-year leases granted will expire in 2023. It's almost universally assumed that the Government will simply roll over those leases for another 99 years. Likely, but not confirmed. 

So how did this all come about?

Before the ACT was born as a territory, both Sydney and Melbourne were competing to be Australia’s capital city. As a compromise, they hand selected a territory in NSW that was to be the location for Australia’s new capital city - now known as the Australian Capital Territory. The ACT is leasehold basically because of the initial idea of the Commonwealth to build the new capital city without spending taxpayers’ money.

The Commonwealth planned to “sell” Crown leases in Canberra at a low price and receive annual rent based on the value of the land. As the city grew, the land value would rise and with it, the rent. The rising rent amounts were to finance the development of the national capital and its public buildings. However, this did not happen. In 1970, the land rent for residential leases was abolished. Since then the ACT has been a freehold city in name but still uses the 99-year leasehold system.

Local barrister Chris Erskine S.C. hit it on the head when he said ”It's not immediately clear why we need Crown leases anymore and there has been discussion about this in the last 20 years but I suppose the most that you can say is that its inertia, it's the way things are and if it ain't broke don't fix it."

With Canberra returning capital growth over 9% for 2016 and the economy ranked third nationally only behind Sydney and Melbourne, we see no reason why this should be a deterrent in any way shape or form. 

We’ve declared the Canberra leasehold system as a non-event. But as always, please speak with your trusted conveyancer for more information.


Sydney Morning Herald
Home Loan Experts
ACT Government
Commsec State of States

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