Section: Andrew Barr, MLA | Media Releases
Today in the Legislative Assembly I introduced two Bills to improve the operation of the ACT’s successful Land Rent Scheme.
The Land Rent Scheme assists Canberrans, who may otherwise have been unable to enter the housing market, to build and live in their own home. The scheme was the first of its kind in Australia.
The ACT Land Rent Scheme allows home buyers to pay rent for a block of land rather than including the land cost in the overall house price – reducing entry costs and mortgage payments. The annual rental rate is based on a percentage of the unimproved land value.
The ACT Labor Government understands the need for Canberrans to have secure housing, whether it is through renting a home, or buying one, and the Land Rent scheme was just one of the many actions contained in the ACT Government’s innovative Affordable Housing Action Plan.
Since it started in July 2008 the land rent scheme has proven an attractive option for Canberrans wishing to achieve the dream of home ownership at a more affordable price. There have been 346 Land Rent Contracts settled with a Crown Lease registered. A further 753 land rent contracts have been exchanged. The Scheme is now being supported by BankMECU in addition to the CPS Credit Union.
Despite this success, Zed Seselja and the Canberra Liberals have tried again and again to force the Government into abandoning the Land Rent Scheme – describing the Labor initiative as "flawed from the start" and "bound to fail".
The first Bill is the Land Rent Amendment Bill 2012, which contains several changes to improve the scheme’s operation and effectiveness.
The key amendment is to widen the role of Community Housing Canberra (CHC) in the scheme. Currently CHC can only participate in the scheme at the standard rate of 4 per cent (i.e. by paying rent of 4 per cent per annum on the unimproved value of the land). CHC is recognised as an affordable housing provider in the Territory and it makes sense that they be able to access the scheme at the discount or 2 per cent rate – usually available to lower income applicants – to achieve their broader objectives. Allowing CHC to access the scheme at the discount rate will allow them to offer a home ownership product to their tenants with a target for transition from tenancy to full ownership.
The other amendment is to allow households to have the discount rate applied immediately if they can demonstrate hardship, and remove any delay in the discount rate applying. The Bill also contains other minor amendments in relation to the discount rate that will streamline processes and reduce the administrative burden on the ACT Revenue Office.
The second bill is the Duties Amendment Bill 2012, which amends the Duties Act 1999. The Land Rent scheme allows households to purchase their land at any time by applying to the planning and land authority for a variation of the lease to reduce the land rent payable to a nominal rent. However, the leaseholder is required to pay duty on the block to do so, in the same manner as for a standard sale of a home.
However, confusion about the value of a land rent lease has resulted from some valuers providing valuations indicating that the land rent lease has only a nominal value. It would be inconsistent and inequitable to treat the transfer of a land rent lease as having a lower value than a standard crown lease for duty purposes. This is particularly so when the land rent lease can be converted to a standard residential lease immediately after the transfer. No duty would then be charged on the conversion of a land rent lease to a standard crown lease.
These amendments will clarify the dutiable value of a land rent lease for the purposes of assessing duty. Under the Duties Act 1999, the dutiable value of a land rent lease will have the same unencumbered value as a normal crown lease.
The Bill does not increase taxation, nor does it represent a change in policy. Its sole aim is to make the legislation explicit as to how land rent leases are to be valued when transferred. This will ensure that these leases are treated in the same manner as other crown leases, and attract the appropriate duty as intended.
For further information on the land rent scheme, please visit www.economicdevelopment.act.gov.au or to make a booking or for further information on the land rent information sessions, contact the CIT on 6207 3188 or firstname.lastname@example.org.
|Daniel Landon||6205 1690||0434 668 email@example.com|