Rural leasehold in Queensland now more attractive for investors

By John Beckinsale
Agriculture Environment & Planning Government Property & Development

In brief

New legislation in Queensland that implements a range of reforms for leasehold land has been passed (and will commence on a day to be fixed by proclamation). The reforms will provide greater security of tenure for rural leaseholders, and are likely to make such leases more attractive to investors. Partner John Beckinsale and Senior Associate Annabelle Aland report on the main changes. 

Key amendments

While the amending Act (the Land and Other Legislation Amendment Bill 2014 and the proposed new Regulations) will implement a number of changes to leasehold land held under the Land Act 1994 (Qld), the main changes which are likely to make rural leasehold more attractive for investors have been summarised below.

Removal of corporation and aggregation restrictions

The restrictions that:

  • prevented corporations from holding certain rural leases; and
  • limited the number of rural leases that can be owned by individuals,

have been removed.

This will give leaseholders greater flexibility in the manner leasehold land is held and will create additional corporate investment opportunities in rural land.

Rolling term lease extension

The renewal process for rural leases has been substantially simplified. The provisions will apply to leases used for agricultural, grazing or pastoral purposes where the leased land is 100 hectares or more. The simplifications include the following:

  • A rolling term lease may be extended by a term equal to the original term of the lease. The application for renewal may be made by the leaseholder at any time during the last 20 years of the term of the lease.
  • There are no restrictions on the number of times a lease may be renewed in this way.
  • Many of the qualifications that may have previously applied to a lease renewal have been removed, so that the time period to effect a renewal is likely to be substantially shortened (the Queensland Government considers the assessment time for renewals will be reduced 'from years to weeks').
  • Land management agreements will no longer be required as a matter of course (although the right still exists for the Minister to require them where the leaseholder is in breach of their duty of care obligation).
Conversion to freehold

The process for conversion of certain leases to freehold title has been changed as follows:

  • An interim step for the conversion of certain term leases to freehold title has been removed (ie, the need to first convert the term lease to a perpetual lease).
  • The method of calculating the price payable by the leaseholder to convert a rural lease to freehold title has changed. The full unimproved value of the property will no longer be used to set that price. Instead, the accounting method 'net present value of revenue' will be used. The Government notes that while the cost to convert to freehold title will vary from year to year due to trends in the economy, for the 2014/15 financial year, the net present value cost of conversion will equate to around 11-14 times the leaseholder's annual rent payment.

It is important to note that before any conversion to freehold title can occur, the leaseholder must have first dealt with any native title issues that may be relevant (including payment of any relevant costs or compensation) as a result of the application of the Commonwealth Native Title Act 1993.

Annual rents
  • The rental cap for leases in the primary production rental category will be reduced from 20 per cent to 10 per cent.
  • Rents for such leases will be calculated using annual valuations in place of the five year average.


The reforms described above will be welcomed by leaseholders, particularly the increased security of tenure offered by the changes. That increased security of tenure, the ability for corporations to now hold certain rural leases, and the other changes described above are also likely to make rural leasehold in Queensland more attractive to investors looking at investment opportunities in rural Queensland.