Reasons for choosing freeholding
Since 2014, around half of the state’s perpetual lessees have converted to freehold. Reasons for converting to freehold include:
- leasehold rents usually increase
- freeholding costs increase
- better finance options
- vegetation management depending on government
- stronger buyer interest
Things to know
- Cost
If lodged this financial year, the current freehold conversion price for a Grazing Homestead Perpetual Lease (GHPL) is approximately 25% of the current unimproved land value. Unlike previous tenure upgrades prior to 2014, this sum is payable as a lump sum after which the freehold deed of grant will be issued.
- Getting your unimproved values correct
As the freeholding price is based on the Unimproved Value (UV) of the lease, we recommend you seek guidance from a rural property valuer (or if you are a member, contact AgForce Rural Property Valuer, John Moore at propertyvaluation@bigpond.com) to get a free appraisal of whether your property’s UV is accurate, or whether it can be lowered.
- Survey
Sometimes perpetual leases require that additional surveying work be done before they can be converted to freehold. Note that AgForce members are eligible for member-only discounts with a number of surveying consultants.
- Talk to the Department
The Department of Resources, Mines and Energy also recommend that you hold a pre-lodgement meeting with their local staff to talk through the process, timeframes, paperwork and costs. Their website includes further information on the process and the application form.
While a pre-lodgement meeting may help, please ensure that your application is lodged prior to the end of the financial year to avoid cost increases that will be incurred post 30 June.
- Forest consent areas
Depending on how much, if any, commercial timber your lease has on it, Governments may seek to retain ownership of commercial timber species on your lease
What next?
- Talk to the Department
- Discuss options with your bank for financing the freeholding cost
- Ensure your unimproved value is accurate/low
- Obtain other specialist assistance (or speak to us at AgForce if you are a member).