Perpetual leases are a form of land holding in New South Wales which originated under the complex system of tenures over Crown land created by statute. Perpetual leases can no longer be issued except in the Western Division of the state, which lies west of a line from the Queensland border at Mungindi to Balranald near the Victorian border. However, existing perpetual leases are still preserved.
Crown land – an introduction
Before delving into perpetual leases, it is important to understand the broader framework of Crown land tenures in NSW.
Crown land is land that is owned by the State Government and is governed by a group of statutes collectively referred to as “Crown land statutes”.
The significance of the Crown land statutes is twofold. Firstly, they govern the exercise of the State Government’s power to grant and deal with Crown land. Secondly, they impose conditions and obligations on the holder of Crown land that are more stringent than what might normally apply to other landholders.
The Crown lands legislative framework in New South Wales has undergone numerous changes since the mid-19th century. Over time, the system became increasingly complex and outdated. As a result, the Crown Lands Act 1989 (NSW) was enacted in an attempt to simplify and streamline the legal and administrative framework regulating Crown land in NSW. Crown land in NSW is now administered by the Department of Industry under the Crown Land Management Act 2016 (NSW), which came into force on 1 July 2018.
Crown land accounts for just under half of all land in New South Wales, and it is not uncommon for leases of Crown land to be “perpetual” or ongoing.
It is common for land used for community purposes to be Crown land grants, such as land administered by councils for public reserves, or land reserved for roads and environmental purposes. Often community clubs such as RSL clubs and bowling clubs are on Crown land.
As their name suggests, a perpetual lease is a lease that has no end date and therefore continues in perpetuity.
Under the common law, a perpetual lease is void for uncertainty because it has an unknown duration. However, a valid perpetual lease can exist if its creation is authorised by statute.
There are numerous perpetual lease tenures that exist under the Crown land statutes.
The relationship between the Crown and the holder of a perpetual lease is that of landlord and tenant.
A perpetual lease will form part of the tenant’s estate upon their death or bankruptcy. While a perpetual lease can be assigned, and the lessee has the authority to grant a sub-lease, a transfer or other dealing will typically require ministerial consent.
Typically, a perpetual lease imposes obligations on the tenant to maintain the premises in good order and condition and to keep any improvements on the land in good repair, with the exception of fair wear and tear. It is not uncommon for conditions to be imposed requiring the tenant to paint any buildings on the land at regular intervals, or preventing the tenant from removing any fixed improvements on the land without first obtaining written consent from the minister. Failure to satisfy these continuing obligations may result in the forfeiture of the lease.
If you hold a perpetual lease over Crown land, you maybe be eligible to apply to purchase the land from the State Government through a process known as conversion.
This is not a statutory right, but is subject to the discretion of the Department of Planning and Environment, which will investigate the application and determine whether it is in the State’s interest to sell the land. In granting consent, the Minister may often impose conditions to protect the environment, manage natural resources and control subsequent subdivision of the land.
If your property is subject to a perpetual lease, it is important to understand your rights and obligations relating to your use and occupation of the land.
Dealing with a perpetual lease is not as straightforward as other forms of landholding. If you intend to transfer a property that is the subject of a perpetual lease, then you will need ministerial consent.
As discussed, there is also capacity for a tenant under a perpetual lease to apply to purchase the land. However, this process can be lengthy and there is no guarantee that the application will be approved.
If you have any questions or concerns relating to perpetual leases, please contact our Property Team on 02 8251 7777.
This publication is produced by Pigott Stinson. It is intended to provide general information only. The contents of this publication do not constitute legal advice and should not be relied upon as legal advice. Formal legal advice should be sought from us in respect of the matters set out in this publication. Liability limited by a scheme approved under Professional Standards Legislation.