The ACT's 99-year leases are expiring — what does that mean for home owners?

With 99-year leases expiring in the ACT, what does that mean for home owners? The ACT is home to a quirky piece of legislation that means land is leased from the Commonwealth for a period of 99 years. It means that home owners (regardless of whether they are paying off their mortgage or own their home outright) are still technically lessors, and must renew that lease at expiry. That lease renewal comes with a fee and owners should be notified well in advance of its due date. But experts say no one has ever lost their home for failing to renew, and the prospect of that happening in future is extremely unlikely. Why does the ACT have 99-year leases? The origin of the leasehold system dates back to the 19th century when Australia was choosing the site of its capital city. At the time, speculation over land was rife in other parts of the country — a practice where someone would hold or buy land, only to see its value increase, and not to build on it. "Land scandals associated with the grant of lands and speculative development were especially common in Sydney and Melbourne in the 19th century and led to heightened concern that after the long debate about the siting of the National Capital it would give rise to unseemly land speculation," a parliamentary committee tasked with reviewing the leasehold system almost 80 years after its implementation reported. There was also a belief at that time that there would be limited funds available for the establishment of a federal government and its associated bureaucracy. The Commonwealth thought the leasehold system would lead to "orderly" and "predictable" development of the city by placing conditions on the granting of leases. Does it apply to all land in the ACT? Wayne Morgan, an associate professor of law at the Australian National University, said the leasehold system applied to all private and commercial property in the ACT. "States of freehold are what exists in the rest of the country, and it's the closest thing to complete absolute ownership that we have in our system of Anglo-Australian law," Professor Morgan said. "But because the Commonwealth government wanted to retain more control over land in the national capital, it decided instead that what it would put in place was this system of Crown leases." "So whether that's residential, commercial, rural, it is all under this system," Professor Morgan said. The year of the lease expiry can be found on the land title register of the individual property. "Anyone who's purchased land in the ACT ... they're purchasing the lease,"Professor Morgan said. "Anybody who's done that should have within the documents that they received upon purchase a copy of the Crown lease and that would also record when it was issued and when it is due to expire." Under the legislation, the lease period does not restart no matter how many times the property changes hands. What happens when leases expire? Canberra is a relatively young city compared to other places in Australia — it was founded on March 12, 1913. But the first residential and commercial leases were not auctioned off under the leasehold system until 1924. That means many 99-year leases have only started to expire in some older suburbs in recent years. According to Brad Maxwell from the City and Environment Directorate (CED), between 10 and 46 leases come up for expiry each year. This year, 32 leases are due to expire. "When these leases do come up for expiry, our team at CED write to lessees to remind them that the period's coming up soon and you do need to make an application to extend that period through an application that's called a further lease application," Mr Maxwell said. "There will be a letter in the mailbox reminding home owners to submit that application, and that is generally sent out a few years out from expiry. So there's plenty of notice." He said to renew the lease for a further 99 years, an administrative fee applied — about $540 for residential properties and $4,800 for commercial properties. Those who do not have the means to pay can access financial hardship support through the ACT Treasury, but Mr Maxwell said they gave years of notice in an effort to avoid such a predicament. While all home owners should have received a copy of their Crown lease upon purchase of the property, Mr Maxwell said in the event that that was not the case, they were available for purchase through the Land Titles Office, by searching the ACT Land Information System (ACTLIS). Can I be evicted or lose my property if I don't renew? While it is technically possible for someone to lose their property if they did not renew their lease, both Mr Maxwell and Professor Morgan said it was highly unlikely. "I don't want to panic anybody," Professor Morgan said. "Yes, theoretically, the government could refuse to renew a lease or vary the conditions on a lease. But as I said, that has never occurred throughout the entire history of the ACT and we would not expect it to occur. "You can imagine the political fallout." Mr Maxwell agreed it was extremely unlikely to occur. "There is a consideration when considering whether to grant a further lease if the land is required for public or policy use," he said. "[It's] very, very unlikely that is exercised, very rare that it will occur, particularly in a residential setting." In the "unlikely situation" a landholder did not renew their lease by the end of the 99-year period, Mr Maxwell said it could be continued on a "holding-over basis". "There's no penalty for that, but it's something that we would work closely with the lessee to finalise their further lease application as soon as possible," Mr Maxwell said. "So there is that contingency, but we'll be working with all lessees to make sure that doesn't occur." Professor Morgan agreed, saying it should be a smooth process. "But of course, if anybody has any concerns, it's always a good idea to seek legal advice," he said. Why do we still have this system? Canberra is the only location in Australia that does not permit a freehold system of occupying land. Since it was founded, the ACT has changed significantly, including moving to a system of self-government. So with those changes, why are the 99-year leases still in place, and do the reasons for their creation still apply? Mr Maxwell said the system did hold some value, despite being first drafted more than 100 years ago. "It was set up to provide that opportunity for orderly planning and imposing particular terms for the use of land, so it did have value and still has value in that regard,"he said. In the year before self-government began in 1989, the parliamentary committee tasked with examining it recommended the leasehold system continue. In coming to this decision, the committee said it saw public ownership as giving government stronger tools to plan and manage Canberra in the public interest. "Canberra land is a national heritage to be safeguarded and used for the benefit of the nation and its capital," it said. "Leasehold tenure ensures that ownership of the land remains in the public domain for the benefit of all Australians." These conclusions reaffirm one consistent tension that often reappears when town planning is debated in the ACT — it is not just a home for Canberrans; it belongs to all Australians.