ACT Land Rent Scheme

What is the Land Rent Scheme?

The Land Rent Scheme is an ACT Government initiative to increase access to affordable home ownership. This scheme was a recommendation of the Government’s Affordable Housing Action Plan.

The main purpose of the land rent 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, households will rent the land from the Government. They will be required to pay the Government rent, calculated on the unimproved value of the block of land. Households will then be required to construct a house on the rented land within two years of the lease being granted.

The scheme will allow a person to lease the land rent block of land on an ongoing basis or to convert the lant rent lease to a traditional Crown lease at a later date, effectively purchasing the land from the Government at that time.

The Land Rent Scheme may not be the preferred or suitable option for every household, depending upon their preferences and circumstances.

What land will be available?

Initially only new land released by the Land Development Agency (LDA) will be available to rent. The scheme will only be available for single residential house blocks and not dual occupancy housing or units.

Lessees will be able to access the Land Rent Scheme by purchasing land directly from the LDA.

There is no quota on the number of blocks able to be rented. Any new block of land made available after 1 July 2008 by the LDA will be available to rent.

Land rent will also be available on house and land packages offered through the new OwnPlace initiative.

Can I land rent the land under an existing house?

No. Land rent will only be available on new land developments released by the Land Development Agency.

How will my annual landrent be calculated?

A lessee’s annual land rental payment will be calculated as a percentage of the unimproved value of the block of land.

Two land rental rates are available:
• a discount 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.

Lessees must meet strict eligibility criteria to access the discount land rental rate.

Example of land rent payable

How much would my annual land rent be on a block with unimproved value of $120,000?

1 On the discount rate?

$120,000 x 2% = $2,400 per annum (or $46 per week).

2 On the standard rate?

$120,000 x 4% = $4,800 per annum (or $92 per week).

The repayments on the mortgage associated with the house will be in addition to the land rent payments.

How do I know which land rent rate I am eligible for?

Anyone may be eligible for the standard land rental rate. However only people who satisfy strict eligibility criteria will be able to access the discount rate.

What are the Eligibility Criteria for the Discount Rate?

Am I eligible? Click here.

To be eligible for the discount rate, the lessee must:

• have an annual gross income of $75,000 or under;
• not own any other property in any State or Territory in Australia; and
• reside in the dwelling on the rented land once it has been built as their primary place of residence.

The $75,000 income limit will increase by $3,330 for each dependant child, up to a maximum of $91,650 for five or more children.

How do I apply for land rent?

Prior to applying for land rent, you will need to attend a CIT information session and submit a copy of the Certificate of Course Completion (from CIT) to the Land Development Agency (LDA).

Prior to attending the course you may wish to select your block for land rent.  You should contact the Land Development Agency (LDA) to find out what blocks are currently available.

You will then be required to complete a land rent application form.  Once your application for land rent has been approved, you will be required to exchange contracts for your land rent block within 28 days.  You will need to submit the certificate of course completion (from the CIT) to the LDA in order to proceed your application for land rent.

If you are leasing more than one land rent block, you will also be required to pay a non-refundable deposit of $1,000 to the LDA.

When the LDA grants your land rent lease, the standard rate of land rent will apply unless you apply for, and are assessed as eligible, for the discount rate.  You cannot apply for the discount land rent until you have become the registered owner of the land rent lease. 

To apply, you will need to complete an 'Application for Discount - Land Rent'.  This form is available from the course presenter and from the ACT Revenue Office.  When you have completed the application, you will need to submit it, and the required supporting documentation, in person to the ACT Revenue Office for processing.  You will be advised of the outcome of your application and, if eligible for the discount rate of land rent, it will apply from the date of the grant of the land rent lease.

How much will my rent increase each year?

Rent will increase in line with the increase in property values. However, to protect lessees from potentially large increases in rent, a lessee’s annual rental increase will be capped at the growth of ACT Average Weekly Earnings (AWE).

For example, on a $120,000 block of land (at the discount rate), the rent in the first year would be $2,400. Assuming the lessee was still eligible for the discount rate in the subsequent year, the annual rent increase would only rise by around 5 per cent (average growth in AWE). Therefore, the rent due in that year would be around $2,520.

What charges will I be required to pay?

Land rent lessees will be responsible for the payment of rates, and other taxes/fees associated with the purchase and ownership of land.

Will I have to pay stamp duty?

Land rent lessees will be required to pay duty on the value of the land, either at the point of the agreement to grant the land rent lease, or if the lessee is eligible for the Home Buyer Concession Scheme, duty may be deferred for a period of up to five years if the duty payable is $1,000 or more.

Duty will not be payable a second time if you decide to purchase the land at a later stage, and have already paid duty when you first entered the land rent scheme.

Will I still be able to access the First Home Owner Grant and the Home Buyer Concession Scheme?

Lessees may be able to access the Home Buyer Concession Scheme or First Home Owners Grant if they meet the relevant eligibility criteria. For further details on these initiatives, you should contact the ACT Revenue Office on 6207 0028or go to the Home Buyer Concession page on this website.

Will I still have to pay rates on rented land?

Yes. The lessee renting the land will be liable for rates and other taxes and fees that relate to the land being rented.

When can I purchase the land from the Government?

Lessees participating in the land rent scheme may choose to pay out the lease (purchase their block of land) at any point in time.  Lessees must lodge an application to the ACT Planning and Land Authority to pay out the land rent commitment from the Crown lease.

Will my land rent payments offset the cost of purchase?

No. The land rent already paid will not be considered as payments towards the purchase of land.

Can I sell my house if I am participating in the land rent scheme?

Yes. The new owner may continue with the land rent arrangement, or alternatively the new owner can choose to purchase the land from the ACT Government.

Do I ever have to purchase the land?

No. Lessees may continue to participate in the land rent scheme for as long as suits their personal circumstances. There is no requirement to purchase the land.

What if I can’t pay the land rent when it is due?

You should contact the ACT Revenue Office immediately to discuss the situation and try to work on an alternative plan of payment.

Is finance available for a home under the land rent scheme?

Community CPS Australia have announced that they are now offering finance to approved applicants for the construction of homes on land rent blocks.

To find out more, or apply for the home loan available through Community CPS for the land rent scheme, please call 13 25 85 or email landrentloan@communitycps.com.au.

How can I find out more information on the Land Rent Scheme?

For more information about the land rent scheme email land.rent@act.gov.au

CIT Information sessions

To make a booking or for further information on the information sessions, please contact the CIT on:

Telephone: 02 62073244
Email: joanne.bartell@cit.act.edu.au