Farmers paid less than $100K for leases they're selling back for millions

Canberra farmers paid less than $100,000 for rural leases they're now selling back for millions


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Tom Allen, head of the Rural Leaseholders Association, who says far from making windfall gains, Canberra's farmers are not being paid enough for their land. Photo: Sitthixay Ditthavong

Tom Allen, head of the Rural Leaseholders Association, who says far from making windfall gains, Canberra's farmers are not being paid enough for their land. Photo: Sitthixay Ditthavong

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"These farmers that sold out today, they all got robbed."

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New figures show farmers around Canberra's western fringe paid in many cases less than $100,000 for their land since 2001, land they are now selling back to the ACT government for many millions of dollars.

The Carnell government allowed rural leaseholders to convert their properties from 20 or 50-year leases to 99 year leases, which many did in the early 2000s.

Since late 2015, at least six farmers have sold their land back to the Land Development Agency.

NSW property owner and former Commonwealth public servant Brendan O'Reilly, who tracked down the numbers, says the farmers have made windfall profits from an ill-judged decision to convert the leases to 99 years and from the small prices charged.

Rural leases had been deliberately short term at 20 to 50 years, designed so the government could gradually resume them as the city grew - with clauses allowing resumption with just three month's notice. The 99-year leases don't have the same resumption clauses.

But ACT Rural Landholders Association president Tom Allen says far form making windfall gains, the farmers are selling their land too cheap.

"These farmers that sold out today, they all got robbed. They got $6000 a hectare," he said, comparing it to what he said was the $40,000 a hectare the ACT paid to the CSIRO for the land that became Crace.

Mr O'Reilly cites the Wintergarden deal as "the clearest example of the ACT government's stupidity".

In 2010, the Tully family paid $79,000 for a 99-year lease over the 104 hectare Wintergarden Estate. Last year, the family put their property up for sale and the government bought it back for $4 million (about $38,500 a hectare).

When the leases were converted to 99 years, they included a 10-year window when owners would have to pay 50 per cent of the capital gain if they sold quickly. With the 10- years over, Mr O'Reilly says farmers are cashing in. In the case of Wintergarden, while the lease was granted in 2010, it dates from 2006, so the 2016 sale falls just outside the 10-year window.

Mr O'Reilly also criticises the government's deal with the the Corkhill brothers at the new suburban area of Ginninderry. The Corkhills bought the land in 2002 from the previous farming family for $855,000. In March 2004, with the site already identified for future residential development, they were granted a 99-year lease, for which they paid $347,000.

Soon after, the family began planning their 60:40 joint venture with the ACT government to convert it to suburbs. Last year, the government paid the Corkhill family $4.52 million to buy the land. Mr O'Reilly said if the government had not granted the 99-year lease it would not have needed a joint venture to develop the land.

Asked why the government would grant a 99-year lease so close to redevelopment at Ginninderry, a government spokesperson gave no explanation beyond, "At the time the lessee applied for a 99-year lease, the disallowable instrument permitted the granting of a 99-year lease."

Asked why the farmers had been allowed to make such big profits on their leases, the spokesperson said many of the farmers had already paid market value to previous owners, and the buyback prices had been "guided by valuations undertaken by experts in rural land".

Many farmers did pay big prices for their leases when they bought them from previous farmers. The Wintergarden owners did not buy it from a previous leaseholder, but the Huntly owners bought up neighbouring blocks in the early 1990s, spending $2.37 million. They sold last year for $10 million.

Mary Constance, who now farms near Cowra, grew up on the land behind Black Mountain that is now the Glenloch Interchange, for which she said her family had paid freehold prices in the late 1950s. But they had faced ongoing pressure from the commonwealth, which resumed part of the block without a market payment. In 1986, her mother sold the remaining land to another farmer for a market price.

If farmers were now selling land back to the government for "squillions" that was their good fortune, she said, insisting, "People paid a freehold price for thier land. It's about time the farmers got a break."

Asked why 99-year leases were issued at all, the government spokesperson said, "Wherever possible, the government accepts its responsibility to provide long-term security of tenure", and sometimes, "the merits of longer term security for farming weigh more heavily than holding open all possible contingencies for urban development".

Mr Allen said the rural landholders' group supported the Land Development Agency's strategy, but for the farmers "it's not as good as it looks".

"I think they all panicked and sold too cheaply," he said, with some likely to face capital gains tax on the land part of the sales and also faced with trying to buy a new home.

The Canberra Times

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