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ACT Leasehold: Buying A Canberra Property

Buying a home in Canberra? Beware of this harsh truth

First time buyers of Canberra property are often shocked to find out that they are leasing the property rather than buying it!

This means that you actually don’t “own” the property you spent hundreds of thousands of dollars buying.

So, is an ACT leasehold property safe and can you borrow to buy one?


Can I borrow to buy a Canberra property?

Yes, banks accept properties in the ACT even if they are actually leasehold!

Unlike leasehold properties elsewhere, there are no restrictions on the length of lease remaining.

A Canberra property is treated like any other freehold property for lending purposes.


How much can I borrow?

To buy an ACT leasehold property, you can borrow up to:

Our mortgage brokers know and understand the lending policies used by the major banks. We can help you create a strong loan application and apply with the right lender for your situation.

You can speak with one of our specialist mortgage brokers by calling us on 1300 889 743. You can also complete our free online assessment form for a free quote within 24 hours.

What are the terms of an ACT leasehold title?

Canberra properties have a 99 year leasehold title. This means you have the right to use the property and land under a lease for a term of 99 years.

Towards the end of the 99 year period, the ACT will grant you a new residential lease and charge an administrative fee.

You will also have to pay a peppercorn rent of $1 a year if you own a Canberra property.

Who owns the property?

Technically, the government owns a Canberra property even if you have ‘bought’ it. However, you have the right to use it.

Is it safe?

Unfortunately, there are never any guarantees for the safety regarding a Canberra property.

However, it’s unlikely that the ACT will take back the property and not renew the lease.

Why? It’s because it would be political suicide!

If you want to purchase an ACT leasehold property, make sure you seek advice from your solicitor beforehand.


Why is the ACT leasehold?

Prior to the establishment of the ACT, Sydney and Melbourne were competing to be the capital city.

As a compromise between the two, the site of Canberra was selected for the location of Australia’s capital in 1908.

The territory that was to be the ACT was transferred by New South Wales to the Commonwealth in 1911.

The ACT is leasehold basically because of the initial idea of the Commonwealth to build the new capital city without spending taxpayers’ money.

How? The Commonwealth planned to “sell” Crown leases in Canberra at a low price and receive annual rent based on the value of the land. As the city grew, the land value would rise and with it, the rent.

The rising rent amounts were to finance the development of the national capital and its public buildings.

However, this did not happen. In 1970, the land rent for residential leases was abolished. Since then the ACT has been a freehold city in name but still uses the 99 year leasehold system.

If you want to learn in detail about why the ACT is leasehold, you can check out the Time for new lease on life article by The Sydney Morning Herald.


Get a home loan for a Canberra property

Buying an ACT leasehold or a Canberra property may seem daunting but it doesn’t have to be.

We have relationships with almost 40 lenders all over Australia, including the major banks, specialist lenders and private lenders. We can help you get approved for a Canberra property home loan.

Speak with one of our specialist mortgage brokers today on 1300 889 743 or complete our free online assessment form for a free quote!

  • Picard

    I work for my family and I understand that this can be a potential issue with most banks. Can I borrow more than 80% LVR despite my employment situation?

  • Hey Picard,

    The amount you can borrow depends on the income verification documents you can provide to the lender. This means that if you can’t provide any docs such as payslips, bank statements, group certificate / PAYG payment summary, tax returns or an employment letter, then your loan may be limited to 80% of the property value. You can learn more here:
    https://www.homeloanexperts.com.au/unusual-employment-loans/employed-family-mortgage/