The ACT's 99-Year Leases Are Expiring — What Does That Mean for Home Owners?

The ACT is the only jurisdiction in Australia that operates under a leasehold system, meaning every home owner is actually a lessor. With the first of those leases coming up for renewal, there are questions about the leasing system's origin and ongoing relevance. ACT property owners should receive details about the 99-year lease along with the contract of sale.

( ABC News: Matt Roberts ) 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 the future is extremely unlikely. 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.

The ACT was created to resolve debate about where a national capital should be. "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. At Canberra's naming ceremony on March 12, 1913, the foundation stones for the capital were laid and the city's name was revealed. 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. The time period of a 99-year lease is not changed when a new owner purchases the property.

( ABC News: Ian Cutmore ) "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. "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.

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.

The leasehold system applies to all private property in the ACT. ( ABC News: Callum Flinn ) "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." 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.