October - ACT’s 99 Year Leasehold System
According to the ACT Government website, “Leasehold is a system of land tenure. You buy the right to use land under a lease for a term of 99 years."
In the early years of Federation, there was a widespread belief in the need for government ownership of all the land within the proposed federal territory. In 1901, the Prime Minister, Edmund Barton spoke of the territory to be chosen for the seat of government: “we shall be able to get the land on fair terms, lease it on fair terms and still make a profit for the Commonwealth.”Provided that the land is not required by either the Territory or Commonwealth, the Territory will grant a new residential lease towards the end of the 99 years to the person holding the old residential lease, without payment (other than an administrative fee). This gives the lessee continuing security of tenure.”
Every year, the landholder would pay rent to the Commonwealth, based on the value of the land. As the city grew, the land value would rise and the rent would increase. Soon the rising rents would provide the money needed to develop the national capital, including its great public buildings.
Section 9 of the Seat of Government (Administration) Act 1910 provided:
“No Crown land in the Territory shall be disposed of for any estate of freehold.”
Legislators of the time were determined that they “shall not play into the hands of the speculators.” Instead, Edmund Barton, first Prime Minister of Australia, termed the arrangement as a matter of good business: “we shall lease it on fair terms and still make a profit for the Commonwealth.”
The City Leases Ordinance 1921 empowered the Minister to grant leases of land within the city area for periods not exceeding 99 years. The basic provisions were:
- an annual rent of 5% of the unimproved value of the land;
- the value of the land to be reappraised after 20 years;
- the construction of a building, in accordance with the lease, was to be commenced within one year and completed within two years of the granting of the lease.
The scheme failed almost immediately. Two things were necessary for its success. First, to keep out the speculators, you could not trade a Crown lease if you hadn't built on it. Second, the value of the land had to be reassessed every few years so that rents could increase in line with the increasing value. Neither of these things happened.
The citizens of Canberra soon realised that they were missing out on the wealth and security of owning their own home. Canberra residents moving interstate had little capital to buy a house in a freehold city like Sydney.
The scheme was further eroded in 1970 when the Gorton government abolished land rent for residential leases.
Leases, however, turned out to be useful to regulate the planning of Canberra. In each Crown lease there is a "purpose clause" which sets out what can be built on a block and what it can be used for. For most of us, the purpose is simple: to build a dwelling. But in commercial and industrial areas in particular, there are detailed restrictions on the size of a building, how much of it can be used for a shop and how much for a warehouse, and so on: micromanagement on a metropolitan scale.
In the '60s and '70s, the purpose clause was the way the planning system was enforced, block by block. There was no Territory Plan and no Territory Planning Act.
On self-government, the Commonwealth required the ACT to establish a planning authority and develop a Territory Plan. We were moving away from purpose clauses as the means to regulate town planning.
The first 99-year lease was issued for a block of land on the corner of Giles Street and Wentworth Avenue in December, 1924. The lease for the block, which now forms part of the Wentworth Gardens units in Kingston, was extended in December, 2015.
The current assumption is that the ACT Government will simply roll over the leases for another 99 years on expiry.