ONE of the major wins Queensland state farm organisation AgForce has had for members in recent times was negotiating a change in method on how a landholder’s freeholding purchase figure is calculated.
Previously if a Queensland landholder was to freehold their Grazing Homestead Perpetual Lease (GHPL) property, the purchase figure was the Unimproved Value of the land. Often this figure was so high it did not make economic sense for many landholders to freehold their land.
Rolly and Jenny Walker and their family from Mitchell took the opportunity to Freehold their GHPL property, Iwona. The Walkers purchased Iwona in 1982, and when they enquired about freeholding with the Qld Lands Department, they were talked out of taking up the option.
“At the time it was affordable to freehold as Unimproved Values were quite low, the crown rent at the time was only $640 and didn’t seem to be an issue. But at the end we were paying $19,000,” Mr Walker said.
Before this opportunity, freeholding was out of the question. Mr Walker said an issue with the freeholdings is that unfortunately it is not tax deductable and as the unimproved values and the rent increases it will make freeholding much dearer than it is now. They are glad they took up the option to freehold Iwona, as it added value and security to their asset.
Roma district landholders James and Natalie Stinson of Moonya were also glad that they freeholded the part of their property, known as Tannaby, that was previously leasehold.
“We enquired about freeholding Tannaby prior to the change in the way the freeholding amount was calculated. It was way too much and not even worth considering,” Mr Stinson said.
“Once the method was changed on how the freeholding amount was calculated it was too good an offer to refuse and it was a monumental achievement for landholders,” he said.
“I talked to AgForce about the process and they recommended that we check that the Unimproved Value was correct. This was done through the objection process during the last revaluation.
“We benefited considerably with checking our valuation. It was great to have the support of AgForce to show the process of freeholding and that it was the right thing to do. This was mechanism to protect against rent rises due to increase in Land values and also the risk of raising the rental calculation.”
AgForce’s rural property valuer, John Moore said while there was no concrete evidence to suggest there was any market difference between leasehold and freehold land, freehold tenure was seen in the market place as a positive and would certainly attract additional buyers.
The property would be viewed more favourably in the market because:
- Added value of security that the property is freehold. The landholder now owns the land and not just the improvements.
- No ongoing rent payments. These are quite a considerable amount.
- No risk of rental payments increasing.
- Less restrictive vegetation management laws.
“From a valuation sense, in my opinion, as the freeholding amount is only 6-7 percent of the market value, a landholder may well return this amount in added capital value plus will have the ongoing savings of not having to pay Crown Rent,” Mr Moore said.
“The Queensland rural property market has already seen some very strong sales supporting valuation increases, particularly in the eastern areas that hasn’t been as badly impacted by drought over the past 12 months.”
“These increases will mean that in the next 12-24 months we will start to see increases in Unimproved Values, so I urge everyone to strongly consider converting to their GHPL’s to freehold.”
An application for a GHPL is $261.70 and can be done through your local Department of Natural Resources and Mines office.
“It is well worth checking your Unimproved Valuation is correct before you convert your GHPL,” Mr Moore said.
- To book a consultation to discuss any of the above issues, Queensland landholders can call AgForce on (07) 3236 3100.
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