GSSMR Land Tenure and Role of Association

The whole GSSMR property is held under two State head leases; an ‘on-shore “Dry” perpetual State lease and a 40 year “Wet lease” covering the marina within Urangan Harbour. These two head leases are held in a shelf company (Agreedto Pty Ltd – the ‘head lessee’) managed and controlled by the Mantra Group based on the Gold Coast. All residential and accommodation units are bought and sold under a sub-lease over each unit (either a 75 year or 999 year lease – originally there were about 130 x 75 year sub-leases, but this has dwindled to about 45, and most across the dry lease are now 999 year leases).

The original 75 year State lease issued under the Harbours Act is dated 31 October 1991 (the commencement of a 10 year project development programme). In 1997-98, without reference to the approximate existing 130 holders of 75 year sub-leases and in contravention of the head lease, the head lease was transferred to the current perpetual lease under the Lands Act, dated 26 January 1998. Project development was ultimately completed with the opening of the Mantra Precinct about March 2003.

Each precinct is managed and funded independently of the others. Each sub-lessee within a precinct pays rent to cover the budgeted annual cost of maintaining their precinct. The GSSMR Tenant’s Association deals only with the interests of the Residential Precinct. All sub-lessees within the Residential Precinct become members of the Association upon purchase of their sub-lease as a condition of their lease.

The Association is incorporated and members elect a representative committee annually. The Association raises and administers its own funds for its own purposes (about $10,000 pa). This funding is separate from the precinct accounting (the annual rent – annual budget about $1.2m) which is controlled and administered by the Mantra Group, through the shelf company Agreedto Pty Ltd. The precinct accounts are kept by Archers Body Corporate under contract to the Mantra Group.

The Association is not like a Body Corporate as assumed by some from time to time, nor does the Association have the powers, duties and responsibilities that a Body Corporate has under the BCCM Act. For example:

  • All management decisions are at the direction and control of the Head Lessee, effectively the Mantra Group. There is no documented review or appeal mechanism of decisions of the Head Lessee or their manager.
  • The Head Lessee may appoint and make any contract arrangement they wish without reference to sub-lessees.
  • There is no legislation specifically covering the GSSMR leasehold structure. The only recourse of sub-lessees is litigation. Sub-lessees are defined as “tenants” in their sub-lease, but have no rights under the Residential Tenancies Act.

Sub-leases over residential and accommodation units in the past have typically sold at prices equivalent to freehold unit prices, including the land value. In fact, the Government development concept for GSSMR provided to extract the land value to fund various harbour works such as dredging the harbour, land reclamation, roadworks, boardwalks, the seawall forming the northern boundary of the harbour and Government administration buildings, all about equal to the original land value.

The introduction of the 999 year sub-lease in 1997 ensured for many potential buyers units sales at equivalent to freehold values. However, by 2003-04 it became apparent to the Tenant’s association that the formulas for payment of State land rent would gradually force sub-lessees to sell-out and eventually all would abandon their sub-leases, probably within 30 to 50 years.

All stakeholders came to accept that the only achievable solution to the GSSMR land tenure (dry lease) problem is to convert the occupied lands to freehold.

With the transfer of the leases to control under the Land Act in 1998, sub-lessees have, after a long administrative and legal undertaking, found under a recent decision (28 March 2013) of the Land Appeal Court they are bound to pay the freehold land value (again) to secure their property interest.

It is notable, that the Government structure for bringing the land into use effectively caused the sub-lessees to pay for the land in their sub-lease purchase, then pay land rent to lease the same land, rent which has been escalating well above inflation rates, and now pay the freehold value of the land again to convert to freehold.

At June 2013 freeholding work is in hand and was expected to take between 1 and 2 years to complete. The freeholding process has been long and drawn out. At December 2017 the Government offer to freehold expired, mainly because the sub-lessees, as well as paying for the freehold land are faced with an offer that requires they take over substantial liabilities attached to the head lease that are not the responsibility of the sub-lessees.

These liabilities largely involve public infrastructure being the seawall forming the north boundary of the harbour and boardwalks within the harbour. Both these structures include substantial design and construction deficiencies. In the case of the boardwalks they have been condemned after just roughly 15 years use.

The prospect of freehold is now in abeyance. Media reports (February 2018) indicated the Mantra Group and the relevant Department (DNRM&E) are seeking a “cost effective equitable solution”.