The Land Rent Scheme gives people the option of renting land through a land rent lease rather than purchasing the land to build a home.
For potential lessees, choosing this option means reducing the up-front costs associated with owning a home. Lessees don’t need to finance the cost of the land; they need to finance only the costs associated with the transfer of the land (such as duty) and the construction of the home.
For land that you rent under a land rent lease, you pay an annual land rent charge, rates and land tax, if it applies.
You also must pay conveyance duty on the land rent lease grant. Duty for a land rent transaction is calculated in the same way as other residential property transactions; there’s no additional discount for the value of the land.
If you’re considering the Land Rent Scheme, it’s a good idea to seek independent legal and financial advice before applying.
Access to the Land Rent Scheme
As of 1 October 2013, the Government restricts those who can access the Land Rent Scheme to low- to moderate-income households that are eligible for the discounted land rent rate of 2 per cent. The standard 4 per cent land rent rate is no longer available to new entrants to the scheme.
These changes do not affect you if you signed your contract for sale before 1 October 2013.
The eligibility criteria for the Land Rent Scheme are different for leases granted before 1 October 2013 and leases granted on or after 1 October 2013.
Restriction on transfer
If you’re a lessee and you want to transfer a land rent block to another person, the transferee must also meet the eligibility criteria. The potential transferee needs to contact the ACT Revenue Office to determine whether his or her income is below the relevant threshold amount.
If you’re a lessee and you convert the land rent lease to a nominal rent lease, the restriction on transfer does not apply.
Annual review
We conduct an annual review to determine your continuing eligibility to remain in the scheme. As a lessee, you need to confirm by 30 September every year that your annual income is still less than the relevant income threshold amount using the Discounted Land Rent Form.
You’ll be ineligible to pay land rent if any of the following occurs:
- your total household income (including your partner’s income) exceeds the income threshold amount for two consecutive years
- you fail to take up residency or all of the lessees move out of the home once a Certificate of Occupancy and Use has been issued
- you become the owner of other real property.
Annual land rent increases
To protect you from large rental increases due to increases in unimproved land values, we cap annual rent increases by wages growth.
Conversion of entitlement
If you’re a lessee, you can convert the land rent lease to a nominal Crown lease at any time. The amount you pay to convert the lease is based on the unimproved value of the land at the time of conversion – not on the original value from when you entered the land rent lease. Your land rent payments do not apply towards the amount you pay to convert the lease.
If you want to buy the land rent block from the Government, contact the Environment, Planning and Sustainable Development Directorate for additional information. Note that there may be fees associated with this process.
Making payments
Although land rent is an annual charge that we bill quarterly, you have the option of paying weekly, fortnightly, monthly or quarterly.
You can make your payments online through Access Canberra.
If we don’t receive your land rent payments by their due date, you’ll incur interest charges on any amount that you haven’t paid; this interest compounds monthly. We impose these interest charges, which are subject to change during the year, on the 16th of each month.
How to apply
To apply for the Land Rent Scheme, you (and your partner, if any) need to complete the Discount Land Rent Form and provide evidence of your income.
When you apply for a land rent block, you also need to attend a Land Rent Scheme information session at the Canberra Institute of Technology (CIT). To register for an information session or to get more information, contact CIT on (02) 6207 3188 or by email at infoline@cit.edu.au.
What happens next?
The standard time for processing applications is 10 working days once you’ve supplied all the necessary documentation. Incomplete applications delay processing time. Please allow 10 working days before checking on the status of your application.
We’ll let you know the result of your application in writing by email or post.