The secret land rent lender un-veiled!

johnboy 23 June 2009 25

The Chief Minister is jumping for joy and announcing that he can finally name a lender willing to be involved in his land rent scheme.

    The ACT Government has welcomed the announcement by Community CPS Australia that it will embrace the ACT Government’s nation-leading Land Rent Scheme.

    The scheme, which allows those on modest incomes to get a foot in the door of home ownership by renting the land component of a house-and-land package, will make the dream of home ownership a reality for more young Canberra families.

    “It is fantastic news that Community CPS Australia, after a rigorous examination of this new lending product, has today formally announced that it will partner with the ACT Government in extending the dream of home ownership to Canberrans on modest incomes,” Chief Minister Jon Stanhope said today.

    With operations in the ACT, South Australia, Western Australia and New South Wales, Community CPS Australia is one of the country’s largest and most influential credit unions, with 175,000 members, 37 branches and 530 employees.

So there we go.


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25 Responses to The secret land rent lender un-veiled!
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sepi sepi 8:44 pm 24 Jun 09

Bendigo bank is good and has low fees – and they are a proper alternative to the big banks.
But they have minimal ATMs.

miz miz 8:34 pm 24 Jun 09

Cheers for info, Ant.

ant ant 3:08 pm 24 Jun 09

miz said :

None of these half-arsed schemes are much chop IMO – neither this one nor the shared equity one. They just don’t get it.

I am pretty annoyed with Community CPS since the mergers started too – my end of month fees are now over $20.

If anyone has experienced IMB I would be interested in their perspective in changing over.

Housing priced closer to the average income? Yeah, I’d sure like to see that too, rather than these weird stunts.

CPS have been creeping up their fees, it’s certainly nothing like waht it used to be. That said, they gave me a loan when the banks shuffled their feet and found excuses not to lend to me, and sadly IMB was one of them. CPS said no problem and did I want to borrow more? (my case for borrowing was excellent and I still don’t know what the problem was with the others, other than it didn’t fit into a neat little box).

miz miz 1:42 pm 24 Jun 09

I can’t see who would be interested in this scheme – I certainly am not, though I would LOVE to have the opportunity to buy my govie house. None of these half-arsed schemes are much chop IMO – neither this one nor the shared equity one. They just don’t get it.

I am pretty annoyed with Community CPS since the mergers started too – my end of month fees are now over $20. They just keep saying ‘get money out at the supermarket when tou eftpos’. conveniently forgetting that supermarkets often run out of cash and don’t always like to give large cash outs.

If anyone has experienced IMB I would be interested in their perspective in changing over.

ant ant 11:05 am 24 Jun 09

Sepi has put it more comprehensively than I ever could. rural leases have been a nightmare for decades… mainly for the rural lesees themselves.

IN 1970, the Australian Government abolished land rent in the ACT, but retained the leasehold system. However, rural leases were not covered by the abolition, and so they continued to pay land rent. I recall our rent increased 10-fold in one year, and this continued to happen on the caprices of the federal valuer. It was on unimproved value, but, when the district occupants developed businesses and amenity in our area, the unimproved value was deemed to have exploded and so did the rent.

Many battles were fought in the AAT, with lawyers of course. at one point the government seemed set on ignoring the findings of the tribunal.

Rural leases can be resumed at any time, and owners (lessees, I should say) are compensated only for “improvements” ie house, fence etc. Not environmental work, pasture work, weed work etc.

Sepi’s explanations of land use clauses etc are very comprehensive, it’s a really complex area and the c’wealth and later local gov’t do not have good track records in this.

And this situation makes me wonder about how it will work for this new urban scheme, as I’ve seen first-hand how the government re-interpreted things in order to control the land, and extract ever more money from occupants for being on it.

sepi sepi 10:02 am 24 Jun 09

Rural leases in the ACT are an absolute mess.
The govt can change the rules at any time they choose.

ACT govt ‘manages’ the leases, but Commonwealth have input into the ‘uses’ and ‘rural appearance’ of the land – eg – the approach to Canberra on Fed Hwy has to be agricultural or tourism oriented.

The govt can get lessees to re-sign their leases at any time, under different conditions – as was done to the poor old couple whose property was the proposed dragway track.

Govt can ‘resume’ the rural lease at any time (under many of the leases) and only have to pay the owners for the value of ‘land improvements’ (eg – buildings). Not a cent for the land.

And once leases are re-started, they cannot be on-sold within 10 years, without attracting a windfall gain clause, whereby the seller gets only 10% of the profit, govt taxing the rest. – Not so good when the owners are not well off and in their seventies.

And – on selling the land, buyers are told the ‘land use’ may be changed upon buying, but they will have to buy the land-lease first, and then apply for permission to use it how they wish (even in the same way as the previous owner). Who who is going to buy something with no guarantee that they can even use it? {Except if you are that developer who bought Canberry Fair in Watson and is now going to get to build houses on it – so much for the green vista on approach to Canberra}.

Rural leases are a shocking rort in the ACT – they are an accident of history that the govt is gradually trying to get rid of by heavying the remaining lesees.

If you have a rural lease, do not sign anything without a lawyer.

housebound housebound 9:55 am 24 Jun 09

Not so sure about the 999 year lease. I have a vague memory of a push for that about a decade ago, but the government of the day (Libs I think, but just from the timing) didn’t go with it. It’s all very vague now.

Farms near the urban fringe had a very tough deal, because they were put on month-by-month leases for years, ostensibly to allow for future urban growth. All ACT Governments have treated the rural lesees very badly in a lot of respects.

I assume there is still a 99 year lease with these residential schemes – who owns it? And can the ACT Government decide that if you’re too much trouble, like the Tullys, then they can deal with you a bit more harshly. For example – who gets the house if you miss a rent payment?

Thumper Thumper 9:15 am 24 Jun 09

I was always of the opinion that ACT rural leases were originally 999 years but then were cut back to the standard 99 years. And then, as in the case of the Tullys, cut to whatever the government wanted? But certainly not Commonwealth.

Anyone can confirm?

ant ant 9:08 am 24 Jun 09

People living on rural leases buy and sell their homes the same as people in suburbs. I can’t remember when ACT land was converted to what suburban people enjoy now, but it was way before self government, I don’t know where you got the self government thing from.

People in rural areas pay land rent every year, and it’s pegged to unimproved value. If the gov’t valuer decides the land is very valuable, the land rent can increase 10-fold in one year, as it did back in the 80s for example. After years of fighting in the AAT, rural people won the right to re-buy their places, buying out the rent-portion of their holdings. Rural leases aren’t just open cow-farm paddocks. It’s Pialligo, Majura, Symonston, all the fringe areas. And when they hit the market, they bear a market price for purchase.

I’d be wary of this new scheme, having seen what the gov’t land valuer could do to the yearly land rent. Disputing this was lengthy and expensive.

VYBerlinaV8_the_one_they_all_copy VYBerlinaV8_the_one_they_all_copy 8:51 am 24 Jun 09

Can they up the rent then like every other greedy so and so landlord round here at will?

I would expect the owner of the asset to do whatever they liked with it. CPS wouldn’t be the owner of the asset, though.

YapYapYap YapYapYap 11:51 pm 23 Jun 09

ant said :

YapYapYap said :

That’s because they are tenants. They are are simply renting govt owned land, and like all tenants they pay rent.

Rural lesees “buy” their land and homes, same as other ACT residents. Difference is, they continue to pay rent on the land. It’s an anomaly that was overlooked at some point when ACT residents were absolved from paying rent on their land (which they don’t own, they rent). No one in the ACT owns their land, but some residents also get to keep paying. This Stanhope scheme is rather similar to the original system.

Sorry ant, you’re wrong. The Commonwealth resumed the vast majority rural leasehold land (in fact all, to my knowledge) well before self-govt. Leaseholders were paid what was deemed to fair compensation at the time, and allowed to continue to use those leases under a land rent system. This was done in order that future expansion of the city could go ahead without undue impedance.

If there are any current exceptions to this I’d need to see a copy of the lease to be convinced.

ant ant 11:27 pm 23 Jun 09

YapYapYap said :

That’s because they are tenants. They are are simply renting govt owned land, and like all tenants they pay rent.

Rural lesees “buy” their land and homes, same as other ACT residents. Difference is, they continue to pay rent on the land. It’s an anomaly that was overlooked at some point when ACT residents were absolved from paying rent on their land (which they don’t own, they rent). No one in the ACT owns their land, but some residents also get to keep paying. This Stanhope scheme is rather similar to the original system.

bd84 bd84 11:03 pm 23 Jun 09

peterh said :

how long did it take stanhope to convince them that it was a good idea? and was he still trying to convince them when being asked as to who the lender was?

I wonder what guarantees or incentives Stanhope has provided to them to take part in the scheme..

YapYapYap YapYapYap 10:57 pm 23 Jun 09

ant said :

bTW, rural lesees have always paid land rent, and what a nice rort for the gov’t that was.

That’s because they are tenants. They are are simply renting govt owned land, and like all tenants they pay rent.

ant ant 10:07 pm 23 Jun 09

bTW, rural lesees have always paid land rent, and what a nice rort for the gov’t that was.

Is there any potential for developers/builders to do their usual thing and take up these blocks and plunk giant yuck-houses on them and flog them off for squillions?

Wraith Wraith 9:25 pm 23 Jun 09

Um, Land rent in the ACT, isn’t that what we do now, lease the land. The only difference is we pay lump sum for the lease upon purchase of property, titles are leased, will CPS own the title for 99 years? Can they up the rent then like every other greedy so and so landlord round here at will?

SO is this double dipping on the land revenue? Say it isn’t so…….won’t believe you anyway.

jackal jackal 7:36 pm 23 Jun 09

MrPC said :

I’ve got a question about the scheme – does anyone know what would happen if land prices were to collapse? Would the rent/the buyout figure (to convert the land rent into a standard lease) go down?

I ask because of the following news link suggesting it’s possible house prices may collapse by 40%. http://www.news.com.au/story/0,27574,25666899-462,00.html

In the event of a default under the land rent scheme, the home owner has the same rights to sell the house and land as they would in a normal mortgage. However, when the sale eventuated, the Government (which owns the land) would be reimbursed the full unimproved value of the land first, then the bank would get the rest. Provided the house and land have increased in value at similar rates everyone should be happy. But if the land has increases much more than the house itself, or worse, the house has decreased in value, the bank could be left out of pocket.

MrPC MrPC 6:48 pm 23 Jun 09

I’ve got a question about the scheme – does anyone know what would happen if land prices were to collapse? Would the rent/the buyout figure (to convert the land rent into a standard lease) go down?

I ask because of the following news link suggesting it’s possible house prices may collapse by 40%. http://www.news.com.au/story/0,27574,25666899-462,00.html

VYBerlinaV8_the_one_they_all_copy VYBerlinaV8_the_one_they_all_copy 6:15 pm 23 Jun 09

Thanks, then, to CPS and the local govt for continuing to prop up property values! Hooray!

djk djk 4:45 pm 23 Jun 09

“The scheme, which allows those on modest incomes to get a foot in the door of home ownership by renting the land…”

It seems odd that the chief minister doesn’t seem to be aware that the land rent scheme is now open to everyone, not just those on “modest” income. Especially given that it is mainly builders or developers who are going to take advantage of the scheme.

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