THOUSANDS of landholders operating under leasehold agreements will have greater opportunity to freehold their land - or have annual rents substantially reduced - after some of the most significant land rental and tenure reforms in decades were passed by the Queensland Parliament on Tuesday evening.
The reforms have been hailed as a major win for Queensland leaseholders and represent the culmination of years of work by AgForce representatives who have fought hard to reverse severe hikes in land rental costs introduced by the Labor government in 2007 and remove a requirement for leaseholders to pay the full unimproved value (UV) to convert leasehold country to freehold.
The reforms will impact nearly 10,000 grazing homestead perpetual leases (GHPL) and rural term leases that cover more than 60 per cent of Queensland.
Speaking to Queensland Country Life ahead of the introduction of the bill on Tuesday, the Minister for Natural Resources and Mines, Andrew Cripps, said the opportunity for leaseholders to freehold their land would be “greatly and significantly improved”.
“We are going from a process where the freeholding price is determined by the full and total unimproved capital value of the property in addition to the commercial value of the timber to a situation where we will be using a mechanism that is called the net present value of revenue,” Mr Cripps said.
“The real interest of the State is in the future revenue of rental costs so if we can calculate the current value of that future revenue, that will be much more reflective of what the costs of freeholding should be.
“We believe that this will present wonderful opportunities for people who are in the position to go to freehold to step up and secure that best and highest form of tenure.”
Under the changes due to come into effect on July 1, the process for renewing term leases will be streamlined with the introduction of rolling term leases.
Annual rents on term leases will fall from 1.5pc of UV to 0.75pc of UV but rents on perpetual leases will stay at 1.5pc. All rent increases will be capped at 10pc, rather than the current rate of 20pc.
The cap will remain in place beyond 2017 – the date at which the current 20pc cap imposed by the former Labor Government was due to expire, exposing landholders to the potential of even higher rent rises.
Mr Cripps said the differential in the rate that term and perpetual leases rents would be calculated reflected the fact that landholders wishing to convert term leases to freehold would need to address native title issues.
“We recognise that the native title requirements will be an additional barrier for people moving from term leases to freehold and that’s why there is a differential in those leasehold arrangements but the rents are coming down,” he said.
Landholders operating under term leases who wish to convert their land to freehold tenure will pay 0.75pc of the UV multiplied by 13.1 while those wishing to covert perpetual leases to freehold will pay 1.5pc of the FUV multiplied by 13.1pc.
Queensland Country Life understands the 13.1 figure represents the States interest in annual rents that would have been collected under a leasehold agreement.
Rolleston beef producer, Ian McCamley operates a 4800ha property under a perpetual lease. His rent bill has almost quadrupled since the Labor government changes were implemented in 2007.
Mr McCamley welcomed the reforms and congratulated the government.
“I would like to see the finer detail however it certainly looks like the government have listened and acted responsibly,” he said.
“I think it’s a pretty big win for AgForce, Queensland landholders and the State as a whole.”
“What happened back in 2007 was that Labor increased the land rentals from 0.8pc to 1.5pc and the increase coincided with a massive period of growth in rural property values,” he said.
“So we had a doubling of the rent combined with a massive increase in the unimproved value and at that point in time we were staring down the barrel of a 1000pc increase in our rent in just a few short years.
“That well and truly got me fired up and I put my hand up to join AgForce’s Leasehold Land Committee.”
Mr McCamley said his next rent bill, due on July 1, was expected to be in excess of $23,000 for the 12 month period.
He said his family would now be having “a good hard look” at the possibility of freeholding the property at an estimated cost of between $250,000 and $300,000.
“It looks like it will be sensible for us move forward and freehold,” he said.
“It is easier for us because we are on a perpetual lease so we don’t have native title to worry about and we have more impetus to get in and get it done because our rent will still be compounding at 10pc per annum until it gets to 1.5pc.”
Mr McCamley would like to see the State government provide access to low interest loans to help landholders affected by drought and low commodity prices to make the leap to freehold.
“It’s still a very big chunk of money that you have to find in these tough times so I’d like to see landholders have access to low interest loans through QRAA to do that,” he said.
But the Minister for Natural Resources and Mines, Andrew Cripps, said the reforms would provide for “very competitive and attractive terms” for leaseholders.
“We believe it will be commercially attractive for people to get out of the spiral of rural rents,” he said.
“I expect a lot of people to sit down and seriously consider this option once they are able to determine what their freeholding price will be using the net present value option.
“I think a lot of people will give significant consideration to that.”
Mr Cripps said departmental staff would be making contact with leaseholders in the near future to provide additional information and guidance on the reforms.