New subdivision with 99 year lease partition

[landlord78]

Hi All,

We are looking at purchasing a 3 acre property (land only) as a future PPOR. It is a new subdivision off a 20 hectare site in an area of Melbourne's East (the Yarra Ranges Shire) that doesn't allow too many subdivisions as there are many environmental overlays.

Part of the property is subject to a 99 year lease ($10 per annum) between the future owner and the owner of the other 20 hectares.

My questions are:
Why the need for the 99 year lease?
What are the implications for usage?
What are the implications for the price of the property over time?

Thanks in advance,

John

 

[Terryw]

Hi John

I have never come across this, so am only really guessing, but...

-There may be stamp duty differences between buying and entering a long term lease.

- You may be able to claim the stamp duty upfront (rather than when you onsell) if it is an investment property.

-may be difficulties in getting a loan if the leasor is a private individual.

- the value would probably decrease over time as the lease slowly gets shorter.

- carefully read the lease and look for restrictions on use etc and then get a lawyer to go through it properly.