The ACT Assembly and Government are bound by both.
It is worth revisiting these for several reasons. Last week a respected authority on land tenure in the ACT, Justice Rae Else-Mitchell, called for freehold to replace leasehold in the ACT; the Minister for Land, Environment and Planning, Bill Wood, has suggested perpetual leasehold as one of several for commercial sites the ACT, and there are three inquiries into the Territory Plan.
Justice Rae Else-Mitchell’s radical conclusion indicates a belief that the present land tenure system has gone off the rails. However, the federal Constitution prohibits it.
Section 125 provides that the territory containing the seat of government “”shall be vested in and belong to the Commonwealth”. That means the freehold shall be retained by the Commonwealth and cannot be assigned to someone else.
At the time the Constitution was framed, many of the Founding Fathers were deeply suspicious of land speculators. They did two things to try to stop them. One was to create a very large federal territory because a small one would have resulted in people buying up the land around it for speculation.
This was successful. As Belconnen spread westward in the early 1970s, people snapped up land across the border around Murrumbateman. Fortunately, the ACT was big enough for Canberra to spread south to Tuggeranong and north to Gungahlin.
The second tool of the Founding Fathers was to insist that the Commonwealth own all the land so that people could only have leasehold.
In theory the difference is this. Freehold is indefinite; has no conditions on resale or leaving in a will; has no conditions on what can be done with the land; and there is no rent. Leasehold is for a term of years, can have conditions; and has rent. If the conditions are not met, the lease is resumed without compensation. The lease is a contract. Freehold is ownership.
Leasehold is a great weapon against speculation because the Crown could charge rent high enough to make speculative holding of the land unattractive. It could also insist on conditions like forcing people to build on the land within a certain time and to use the land only for certain purposes. And the Crown could impose conditions on reselling.
For 60 years all of these things were successfully used to control land speculation in Canberra and to impose orderly planning of the city. Leasehold was used to give first-home-buyers a fair crack; to prevent long-term hoarding; to stop vertical monopolies of developer, builder and agent; and to stop people changing land use contrary to good town planning.
Now, the weapons of leasehold have been discarded one by one.
What about perpetual leases? Property authority B. A. Helmore says they are a contradiction in terms, and can be fairly regarded as freehold. But in 1947 Chief Justice Latham said a perpetual lease was not freehold.
Even so, the grant of a perpetual lease might still offend the Section 125 that the land be “”vested in and belong” to the Commonwealth.
The federal Constitution aside, the federal ACT Planning and Land Management Act limits leases to 99 years. The Federal Government can make regulations to replace the 99 years with “”such longer period as is prescribed”, but the words “”longer period” do not mean perpetuity. So perpetual leases could not be created by federal regulation; it would need federal legislation, at least.
But I suspect that in the bowels of Attorney-General’s is a legal opinion suggesting that perpetual leases could offend the Constitution, and that’s why the Act was drafted that way.
Whatever the legalities, the suggestion that freehold or perpetual leasehold would make no practical difference shows the intent of the Founding Fathers has been destroyed. You can have the best system in the world, but if the people managing it do not use it with intelligence and integrity, it is of no value.
Mark Twain may as well have said: “”Buy leasehold young man; they’re not making any more of it.”