Andrew Barr has announced that his latest work on housing affordability is tweaks to the land rent system:
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.
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 email@example.com.