Section 83 of the Land Act 1996 governs rent on State leases. It is short, and every subsection has a practical consequence for a lessee.
Section 83(1) — rent is as prescribed
The rent on a State lease is as is prescribed — that is, by regulation, rather than negotiated lease by lease. Rent is calculated by reference to the unimproved value of the land: the value of the land itself, disregarding the buildings, clearing and other improvements on it.
Two lease types sit outside this. Sections 83 and 84 do not apply to a special purposes lease (s 100(7)) or to a special agricultural and business lease (s 102(6)). A mission lease is rent free under section 98, and an SABL is rent free under section 102(5).
Section 83(3) and (4) — re-assessment every ten years
The unimproved value of the land comprised in a State lease shall be re-assessed every 10 years, calculated from the commencement of the term of the lease — except where the Minister, for some special reason, fixes an earlier date from which the ten-year periods are calculated.
A re-assessment takes effect from 1 January next following the giving of notice of it by the Departmental Head to the lessee.
The increase does not bite on the date of the re-assessment. It bites on the next 1 January after you are given notice. Diarise that date when the notice arrives, and budget for it.
Remember that the ten years runs from commencement of the term as calculated under section 81 — that is, from gazettal of the successful applicant, not from the date the title issued.
Section 83(2) — the Minister may impose lower rent
Notwithstanding subsection (1), the Minister may — not earlier than 10 years after the commencement of the term, where in a particular case he thinks fit, and after considering a report of the Land Board — impose such lower rental as he thinks proper, as specified in the section 68 notice (if any) for the lease.
Three conditions: ten years must have run, the Minister must think it fit in the particular case, and there must be a Land Board report.
Section 83(5) — remission and postponement
Subject to section 116, where for any special reason he thinks fit, the Minister may — on the application of the lessee and after considering a Land Board report — remit or postpone, in whole or in part, for such period and on such terms as he thinks proper, payment of rent.
Remission and postponement are available on the application of the lessee. A lessee in genuine difficulty — drought, flood, disruption, a project that has stalled for reasons outside their control — should apply in writing with evidence, rather than simply falling into arrears.
Unpaid rent is a breach of a lease condition and a ground of forfeiture. A granted postponement is a defence; silence is not.
Section 83(6) — when rent falls due
Rent up to the next 1 January is payable:
- on the granting of an application for a State lease; or
- on the termination of any period of remission of rent granted,
and afterwards annually in advance on 1 January in each year.
So the first payment is a part-year amount bringing you to 1 January, and thereafter it is a single annual payment in advance. A lessee who takes a lease in, say, September pays a short first period and then a full year on 1 January.
Sections 83(7) and (8) — the arrears list
As soon as practicable after 31 December each year, the Departmental Head shall:
- (a) prepare a list of the names of lessees from whom rent is due; and
- (b) publish a notice in the National Gazette that the list has been prepared and may be inspected.
Once the list has been notified in the National Gazette, it shall be received in any court as prima facie evidence in each case that the rent is due and unpaid, and that payment has, where necessary, been lawfully demanded.
That is a significant procedural advantage to the State. In forfeiture or recovery proceedings, the State does not have to prove non-payment or demand from scratch — the gazetted list does it, and the burden shifts to the lessee to displace it.
Check the annual list. If your name appears wrongly — because a payment was misallocated, or the lease was transferred — take it up in writing immediately and keep the receipts. Rebutting prima facie evidence is much easier with a contemporaneous record than years later.
Section 84 — paying for improvements already on the land
Where there are already improvements on land to be leased, the lessee may be required to pay an amount fixed by the Minister after considering a Land Board report. The Minister may permit payment by annual instalments, and the rate of payment and the rate of interest are as prescribed.
While any amount (including interest) remains unpaid, section 85 requires the lessee to insure the improvements, with an approved insurer, in the joint names of the State and the lessee, for full insurable value against fire and any other risk required — to pay the premiums punctually, and to hand every policy and receipt to the Departmental Head.
Insurance moneys are applied, at the option of the Departmental Head, towards rebuilding or repairing, or towards paying off the outstanding amount, with any surplus to the lessee. If the lessee fails to insure, the Departmental Head may insure and recover the cost as a debt. Section 86 requires the lessee to maintain those improvements in good order and condition.
Sources
- Land Act 1996 — ss 68, 81, 83–86, 98, 100, 102, 116; Part XV
- Valuation Act — PacLII 1986 Revised Edition
- HQH Enterprises Ltd v Wangbao Trading Ltd [2023] PGSC 69; SC2419
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.