It all started in 1998 when a local estate agent asked if I was prepared to look over some documents relating to Hamilton Island. Initially the document required some study. Hamilton Island documentation has that effect on people who are new to leasehold structures!
The first opportunity I had to put my research into action was with construction of the initial staff accommodation on Hamilton Island, Pandanus Apartments.
Looking back now, this was a fairly simple arrangement with the sublease regulating a great many matters including use of the apartment and the constitution of the company setting out the rules governing the operation of the complex.
Unlike mainland properties, Hamilton Island leasehold properties are not affected by the Queensland body corporate legislation. Consequently, body corporate bylaws as well as obligations regarding levies have to be incorporated into the documentation.
I remember the sale price of a unit was $160,000.00. At the time I thought the investment would have been particularly speculative and did not proceed. History proves how wrong I was.
Numerous off the plan sales during the development phase on the Island produced properties which went on to sell for considerably higher prices. Many people benefited financially over the years.
Hamilton Island continued to build staff accommodation by allowing private developers to create title and sell units.
Hand-in-hand with that then came further extensive development of units, houses and land subdivision. The modern units and properties in general operate on what is known as a sublease. This is an arrangement where Hamilton Island holds the Crown lease and leases to a party the land or unit for a period until 31 March 2078 with a 99 year option, subject to the consent of the Minister for Lands. A company then holds a sublease of the common property.
The older style properties, although not exclusively, are at the Catseye Beach side of the Island and are held under what is known as company title. The original development company acquired the land from Hamilton Island Enterprises Ltd and created a large unit development. The company then sold shares in itself and with the shareholding went the right to hold a unit.
Effectively if, in the early days, the unit was purchased for $176,000.00, 176,000 ordinary shares in the development company were granted and one sub-sublease. The constitution of the company set up the rules and regulations governing the running of the development and awarded a specific property unit to the holder of the shares. Although loans over the company title properties can be harder to obtain, I honestly see no particular problems as the lenders can simply take security over the property unit as well as a security over the shareholding in the company. The advantage of company title to the purchaser is that there is no stamp duty chargeable (other than on the value of the furnishings included in the sale) as effectively the sale involves transfer of a marketable security. The buyer should always remind the solicitor involved that the value of the shareholding should be maximised with a nominal value of $1 attributed to the sub-sublease. The value of furnishings is a matter for discussion with an accountant generally for capital gains tax purposes.
Over the years I have helped develop the modern sublease after years of refinement and debate with the solicitors for Hamilton Island in the early years. One of the biggest issues related to the definition of the use clause i.e. who could occupy the apartment and what constituted holiday letting.
I believe the current sublease used for modern developments is therefore reasonable. In the early days, the State Government saw the opportunity to treat leasehold property on Hamilton Island under the conveyancing duty heading for stamp duty. This allowed them to charge at a much higher rate than stamp duty on a lease.
The government were very enthusiastic in proceeding on this basis but I did point out that, if duty were being charged under the conveyancing heading, concessions for first-time buyers and for a principal place of residence would also have to be granted. Like all good governments seeing an opportunity for raising more tax, this was resisted as this meant giving money back to the taxpayer.
After some healthy debate in State Parliament by our then local member, the government saw the logic and eventually conceded so that first-time buyer’s grants and principal place of residence concessions, where appropriate, are now granted on Hamilton Island. Development on Hamilton Island has, in my view, always been easier than on the mainland. I have guided various developers through the process and, in the early days, town planning approval was not an issue as the local authority took the view that Hamilton Island did not fall within the town planning regulations as this was State leasehold property.
Effectively this meant that obtaining a building permit from the Council and State Government approval (which was simply a case of having subleases approved) was all that was required to develop.
Hamilton Island had in place its own representative who oversaw the development on behalf of the Island to completion.
I believe now Council (following a case some years ago) considers that the Island falls within the town planning scheme although I do not believe town planning approval for development is required as the property is State Leasehold.
So much for the legal aspects of Hamilton Island.
Traveling to Hamilton Island is always a welcome breath of fresh air. The Island is simply a paradise. I always maintain that selling property on Hamilton Island is not really a job but simply a means of facilitating a dream for so many buyers from all over the world.
For those who do not know, Hamilton Island is also an integrated tourist resort which means that no Foreign Investment Review Board consent is required for purchase. This means people from all over the world can buy without consent.
Some years ago I had telephone calls on two separate occasions from the same lady in the National Australia Bank in Hong Kong. She was acting for two independent purchasers of properties and, as I thought this was something of a coincidence, I asked her how she became involved.
It seems the bank was acting for Cathay Pacific airline pilots and this was the connection. She asked me if I was familiar with the internal protocol of the bank relating to structures. Modestly, I had to tell her that I was instrumental in writing the protocols for the bank in the early days.
Hamilton Island also has various concessionaires who run businesses.
This is another aspect of commercial work on Hamilton Island. Although I do not believe there are so many concessionaires now, the same issues will no doubt still arise.
Hamilton Island has been a journey over many years and I am pleased to say that I feel I have contributed in various ways to the historic development.
I continue to be approached for advice from banks and solicitors outside the area.
My Hamilton Island client base is extensive. I continue to work with existing clients and always welcome the opportunity to acquire new clients.