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 households 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 households to rent the land on an ongoing basis or to purchase the land from the Government at a later date.

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 through obtaining land through the ballot process, or 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 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 rent be calculated?

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

Two rental rates will be 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.

For the first six months of the Land Rent Scheme, only the discount rental rate will be available. Lessees must meet strict eligibility criteria to access this rate.

Example of Land Rent Payable

How much would my annual 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?

After the initial six month period of the Land Rent Scheme there will be a review of the scheme, with a view to opening up the scheme to others at  the standard 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.

If you do not meet the criteria you will not be able to access the scheme until the standard rate is available.

How do I apply for land rent?

Initially, land rent will only be available for those people who are eligible for the discount land rent rate.

Prior to applying for the discount rate, you will need to attend a CIT information session. Details of the next CIT sessions are available here.
You will then also have to provide relevant income details (tax return and any other documentation) together with an application form to the ACT Revenue Office.

Click here for a copy of the Application for Discount Land Rent form, or contact the ACT Revenue Office on 6207 0028.

The ACT Revenue Office will process the application and verify the information provided. You will then be notified of the outcome of the application and issued an approval letter.

Households who decide to continue with the Land Rent Scheme will then be required to submit the following documentation to the Land Development Agency (LDA):

• the approval letter from the ACT Revenue Office; and
• the certificate of course completion (from the CIT).

The LDA will then assist you in proceeding with the Land Rent Scheme.

How much will my rent increase each year?

Rent will increase in line with the increase in property values. However, to protect households from potentially large increases in rent, a household’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 household 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?

Households 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?

Households 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 household 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.

Stamp 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, households 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 purchase their block of land at any point in time. Lessees must lodge an application to the ACT Planning and Land Authority (ACTPLA) to pay out the land rent commitment from the Crown lease. The purchase price will be determined by independent valuation at the time of purchase.

Will my land rent payments offset the cost of purchase?

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

Can I sell my house if I am renting the land?

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 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.

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

DATES AND AVAILABILITY (bookings essential)

Date Status
Thursday, 20 November   6pm – 9pm

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

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