Help requiried I want to lease a portion of my rural land to myself then sell the block minus the leased part

Im not sure if this can be legally done. Im thinking outside of the box here.
I have an 11 acre hobby farm with house sheds etc etc. I want to build a 2nd house, well away from the main one and fence it with an acre or 2 and provide separate road access.  I then would like to legally set the new house up as a 99 yr lease then sell the main property and live in the new one. Council restrictions do not allow subdivision.
Does anyone know if this can be done? Thanks.

Neil,

Bad news I'm afraid.

I work in establishing long term leasehold interests across a range of properties types and can confirm the situation in NSW.

It may not suprise you to learn that legislators have anticipated attempts to essentially subdivide by establishing long term leasehold tenure over properties such as 99 year leases and alike.  From their perspective it would allow you to avoid adherence to all local planning controls etc.

As a result the Local Govt. Act requires subdivision to take place when a lease including option terms exceeds 5 years or total tenure on the site exceeds 20 years.  The optimum solution is to register 4 consecutive 5 year leases providing a total of 20 years tenure without subdivision.

You could theoretically register 4 x 5 year leases on your house and then sell the entire parcel including the new hose to a third party but it's unlikely to be financially beneficial.  You could also look to sell 20 years tenure on the new house and resume the whole property in 2028.

Alternately you could offer an extended licence agreement on the new house for a lump sum but this is unlikely to be worth much as the licence would not stay with the property if you sold.  Therefore no-one would part with much money to secure it.

Hope this helps

Thank you for the prompt reply and excellent advice. I had a feeling it would not be possible. I guess a better option might be to just rent the new house and retain ownership of them both.
Thanks again.
Rgds
Neil

Neil,

Just a thought - you may be able to consider company title.

Company title essentially allows seperate entities to have an interest in the same property without subdivision.  A company would own the hobby farm and you would sell shares of that company that entitle the other party to have exclusive rights in perpetuity over the new house.  The potential downside in this is that it would be more difficult for the owner to finance a purchase so the price would be lower than freehold.  However as the land is administered by the company board you would have more input over the way the new house was maintained/leased etc.

This form of ownership was the standard for unit buildings pre 1961 but since then has lost favour in comparison with strata which provides direct ownership of the unit.

Make sure you check the above out with a solicitor/conveyancer before going too far if you're considering it.

Cheers

There's also Group Title, (in QLD at least) which allows separate ownership without actual subdivision.  In our shire a lot of 20-acre blocks were converted to Group Title so they could be sold in 2-5acre parcels.

In practice there is joint ownership of common land like roads, (and the parties have to maintain and insure that), then there are "owned" areas (which are treated like your own yard) and smaller "exclusive use" areas where you can put a dwelling or sheds.

I personally live on such a Group Title, and we have yearly meetings just like Strata Title, and occasional "Working Bee" days for road maintenance.

Although some valuers are wary of GTP (Group Title Plan) because they don't know whether buyers will value them less because they are not freehold, when our neighbour on 2 acres sold for $400k it made for a very good val for our place on 5 acres.  :)

Cheers

.
Mr Fair Go
Fair Go Homes - Wholesale Division
"Wholesale Houses for Renovators and Investors in North Queensland"
http://fairgohomes.com.au/wholesale