The ACT Land Rent Scheme Explained: How Renting the Land Instead of Buying It Works

What the ACT Land Rent Scheme is

For many Canberra households, the land is the most expensive part of buying a home. The ACT Land Rent Scheme offers a different path. Instead of buying the land outright, an eligible buyer takes a land rent lease and pays an ongoing annual land rent charge for the right to occupy the land. You still own and finance the home built on it, but you are not paying the upfront land cost.

The practical effect is that, at the start, you finance only the transfer costs (such as conveyance duty) and the construction of the home, rather than borrowing for the land as well. For some households this lowers the deposit and the loan needed to get into a home.

The scheme operates under the Land Rent Act 2008 (ACT) and is administered by the ACT Revenue Office. You can read the official overview on the About the Land Rent Scheme page.

How renting the land works in concept

Land rent is an annual charge calculated as a percentage of the unimproved value of the land (the land value, not including the home or other improvements). Because it is tied to the land value, the charge can move over time as that value changes.

A few features are worth understanding up front:

• Land rent is billed quarterly, but it can be paid weekly, fortnightly, monthly or quarterly to suit your budget.
• It is in addition to your normal general rates, and any land tax that applies. It does not replace those.
• You hold a land rent lease over the block while you build and live in the home.

The charge continues for as long as you stay in the scheme, so budget for it like any other recurring housing cost.

Standard rate versus discounted rate (concept only)

The scheme has historically had two rates: a standard rate and a lower discounted rate. The key point for anyone looking today is that since 1 October 2013, only the discounted rate is available to new entrants. The former standard (higher) rate is closed to new applicants. Lessees who entered the scheme before that date may keep their earlier terms.

The discounted rate is reserved for low-to-moderate-income households and is means tested. Eligibility is assessed on income, property ownership and residency, and the total gross income of the lessees must not exceed a published income threshold.

Because the current discount percentage and the income threshold are set figures that change over time, confirm the current numbers and download the Discounted Land Rent Form directly from the ACT Revenue Office Land Rent Scheme pages rather than relying on figures quoted elsewhere.

Staying eligible: the annual check

Land rent is not a set-and-forget arrangement. Lessees must confirm their continued eligibility each year, by 30 September. A lessee is required to transition out of the scheme if any of the following happen:

• Their income exceeds the threshold for two consecutive years;
• They acquire other real property; or
• They stop living on the land under the lease.

Plan ahead for what leaving the scheme would mean for your circumstances, particularly if your income is likely to rise over the years.

What to weigh up before applying

• Lower entry cost versus an ongoing charge. The scheme can reduce what you need upfront, but in exchange you commit to an annual land rent charge for as long as you remain in it.
• A variable charge. Because land rent is a percentage of the unimproved land value, the amount can change as land values change.
• It is on top of rates and land tax. Budget for land rent alongside, not instead of, your other property costs.
• Means testing and annual review. Eligibility depends on staying under the income threshold and meeting the property and residency tests, checked every year by 30 September.
• How it interacts with other concessions. First home buyers should also look at the separate Home Buyer Concession Scheme, which can reduce conveyance duty. Note the ACT First Home Owner Grant ceased for transactions commencing on or after 1 July 2019.

Where to confirm the current detail

Rates, thresholds and forms change, so always start with the official sources: the ACT Revenue Office About the Land Rent Scheme page for current figures and the application form, and the Land Rent Act 2008 (ACT) on the ACT Legislation Register for the underlying law. For the duty concession path, see the Home Buyer Concession Scheme landing page.

This article is general information only, compiled with AI assistance. It is not legal or financial advice. Confirm current rates, thresholds and eligibility with the linked official ACT sources, and seek advice from a licensed conveyancer, solicitor or mortgage broker before acting.