Page 242 - Week 01 - Thursday, 11 February 2016
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So we have to debate it today otherwise, in the absence of Mr Coe putting something alternative forward, it is my understanding that, in fact, if the instrument were disallowed, there would be no mechanism to be able to convert from land rent. That would be the situation we are in. I gather that is why it has been brought forward today. I can see everyone scurrying around checking. If I am proven wrong I will accept that, but that is my account of the number of sittings there have been since this instrument was tabled.
In terms of the substance, the land rent scheme is part of the ACT government’s exiting affordable housing action plan. The scheme gives people the option of renting land through a land rent lease at a low two per cent rather than purchasing the land outright from the government to build a home. It reduces the up-front costs associated with owning a house as lessees will not need to finance the cost of the land, only the costs associated with construction of the home.
It is important to note that this scheme, up until now, has been for greenfield sites only and it only exists in the ACT. Entrance to the land rent scheme is restricted to low to moderate income households that are eligible. Eligibility criteria are that the total gross income of the lessees must be assessed by the ACT Revenue Office and must not exceed the income threshold of $160,000. Income is calculated on a household basis and the income threshold is increased by $3,330 for each dependent child.
Lessees have the option of converting the land rent lease to a nominal crown lease at any time. The amount payable to convert the lease from a land rent lease to a nominal crown lease is based on the unimproved market value of the land at the time of conversion. That is not the original value when the land rent lease was entered into.
It is important to note that this scheme has been designed for greenfield areas where the cost of the land is much lower than in established suburbs. The government has introduced this scheme to eligible Mr Fluffy home owners as an option for affected home owners who otherwise would not be able to refinance rebuilding a home on their old block. It is a tricky issue as all affected home owners who surrender their blocks are being paid the market value for the value of their house and block as valued in October 2014.
However, we know that there will be some of these home owners who struggle to find the finances to purchase their old block back at market value when it is available in a few years’ time and then also be able to finance construction of a new house. That is a particular problem in the inner suburbs where land values are high and rising, as opposed to greenfield which the land rent scheme was designed for and where the government has not paid home owners anything throughout the process.
I have met with a number of these affected home owners as I considered the issue in detail. I believe that there are about 15 affected households who are eligible for the land rent scheme. A few of these people have asked the government to set up the scheme slightly differently so that they can land rent but when they want to convert to
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