Leasehold land – What can/ can’t I do with it?
Last article, we discussed what the difference between freehold and leasehold property was.
This issue, we will explore leasehold property further to get a better understanding of it.
For those that hold or lease Leasehold Land (or aspire to), there are general provisions which they need to adhere to, otherwise they risk losing the right to hold or lease the Leasehold Land, which may make up an important part of their farming operations.
What Does the Lessee/Holder of the Leasehold Land Need To Be Aware Of?
The landholder:
has a duty of care for the land, which includes keeping noxious plants under control;
may not sell or sub-lease a lease without the prior consent of the Minister;
must not subdivide or amalgamate leases without the prior consent of the Minister;
must comply with the conditions of the lease (usually set out on the title);
must pay an annual rent to the Department (payable by 1 September each year) or for
rent over $2,000, the rent may be paid quarterly;
must obtain a tree clearing permit to destroy trees unless the clearing is for the routine management purposes which are prescribed in an Act
may apply to convert the lease to freehold unless the lease is over a reserve, or the conditions of the lease do not allow for an application to be made.
If the State considers the conditions of the lease have not been complied with, the matter may be referred to the Land Court for determination. The Land Court then decides whether the lease is liable to be forfeited because the conditions have not been complied with.
A lease may be forfeited if rent or repayments are not made. Any unpaid amounts remain a debt to the State even if the lease has been forfeited. This means the lessee (or former lessee) is still liable to make the payment.
Can You Freehold Leasehold Land?
The question that arises often is, can leasehold land be converted to freehold land? Well, the short answer is, yes under certain circumstances, you can make an application to the Queensland Government for a conversion of a lease to freehold land.
However, there are restrictions and you cannot convert certain types of leasehold land to freehold, including:
freeholding leases;
leases over reserves;
leases with conditions that could restrict conversion;
road and occupation licenses;
permits to occupy, and
leases over state forest and national and regional parks.
A person holding a perpetual lease or a term lease may apply to freehold the land.
In considering an application, the Minister will consider the following:
Whether the land is needed as a State forest or for environmental or conservation purposes;
Whether the lessee has complied with the conditions of the lease, and
Whether the public interest could be adversely affected.
For any deed of grant of a freeholding lease, the leased land must be in a surveyed state and dedicated access should be available before the conversion.
Where dedicated access is not an option, there are other possible ways to achieve access such as:
Having an access Easement granted over the adjoining land;
Having a Statutory Right of access granted by the Supreme Court under the Property Law Act (we discussed here);
A Covenant under the Land Title Act which provides a deed of grant to be issued “tying” the adjoining freehold land with dedicated access (so you can’t sell the property without the lot providing the access to it).
The Minister will determine the purchase price of approved applications with the purchase price being the unimproved value of the land as if it were fee simple (freehold), on the day the Minister receives the application.
If there is commercial timber on the land, then the Purchase Price will include the value of this timber.
Next issue we will continue on with this topic, discussing further how to Freehold leasehold land.
When dealing with property, you should always engage an experienced property lawyer to guide you through any land dealings.
Please contact our experienced team for professional advice about your specific circumstances.