Land banking and option deeds: testing a Queensland land offer

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Kooky

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"Investing in undeveloped land can be high risk and there's little protection if something goes wrong." The sentence is Moneysmart's, from the page on land banking published by the consumer arm of the Australian Securities and Investments Commission and last updated on 1 September 2026. It is an unusually blunt line for a government money site, and it rests on a record of court action by the regulator against schemes that sold small pieces of rural land on the strength of housing estates that did not go ahead.

The Queensland Government repeats the warning on its own consumer pages, and the checks that answer it are Queensland ones: the council, the planning maps, the title and the contract. This guide explains what a land banking scheme is, what ASIC and Moneysmart have published about them, what the reported court outcomes show, how the planning status of land is checked in Queensland, and what an option over a lot does and does not give its holder. It describes the regulators' material for readers and for the agents and conveyancers who are asked about these offers. It is not advice on any particular estate.

What a land banking scheme is

Moneysmart defines land banking as investing in undeveloped land, where the return depends on the land rising in value, being rezoned, or being approved for development.

ASIC's own description, in a media release of 30 April 2018, is more concrete. Promoters buy large blocks of land, often undeveloped rural land, and sell portions of it to investors. The investors either buy a lot, or buy an option over a lot in an unregistered plan of subdivision, usually on the promise of high returns if the land is developed or rezoned.

Both descriptions turn on the same gap. What is sold today is priced by reference to something that has not happened: a rezoning, a development approval, the roads and pipes that turn a paddock into addresses. The Queensland Government's page on property spruikers and investment seminars, last updated on 31 January 2025, sums the idea up in a bracket, listing land banking among the schemes to be cautious of and describing it as land sold before it is approved for development.

Nothing in the regulators' material treats holding land for the long term as improper in itself. Their concern is the retail version: small parcels or rights sold to people who are not developers, on a representation about planning that they are in no position to test.

Moneysmart adds a note on how the sales are made. Lots and options are often promoted at property spruiking events or investment seminars, which it describes as potentially high-pressure.

Two things on offer: a lot or an option

A buyer in one of these schemes is offered one of two quite different things, and Moneysmart's first instruction is to find out which. Its guidance says to get independent legal advice to understand who owns the land, whether the purchase is of land or of an option, and what rights exist if the development does not proceed.

Neither column is comfortable. The owner of a small rural lot holds something real but perhaps unusable. Moneysmart says that without approval the investment may be unsaleable, or worth less than the price paid. The option holder is one step further back, holding a promise from a company about land that someone else may still own.

That last point is not hypothetical. In the 2018 matter described below, ASIC told the Federal Court that the companies selling options had never owned the land concerned.

What the regulators say can go wrong

Moneysmart sets out four risks.

The first is the land itself. Developers may mislead investors about the prospects of rezoning or development, or fail to disclose restrictions on development.

The second is the collapse of the scheme. Planning approval, Moneysmart says, can take years and cost a great deal, and option holders can lose everything they have put in if the operator becomes insolvent before a decision is made.

The third is the sunset clause. Option agreements may end if the rezoning or development has not happened by a set date. Moneysmart warns that investors may then lose their fees, and may not be refunded legal fees, commissions or other payments made along the way.

The fourth is advice that is not independent. Promoters may refer investors to advisers with whom they already have a relationship, or who have a personal stake in the development. ASIC makes the same observation in its 2018 releases: promoters often offer access to lawyers and financial advisers, and the regulator is concerned that these advisers may not be independent.

Moneysmart closes its account with a sentence of history. Several land banking schemes have collapsed, in Australia and overseas, without the promised development going ahead.

What ASIC's court actions record

ASIC's published releases give the detail behind that sentence. The matters below were all in Victoria and were heard in the Federal Court. None concerned Queensland land, and they are reported here as the regulator reported them, without the names of the people involved.

The first is media release 17-450MR of 20 December 2017. The day before, on 19 December 2017, the Federal Court in Melbourne had ordered the winding up of a managed investment scheme that owned land at Lara, together with an associated company. According to ASIC, at least 82 investors had put in about $800,000. The regulator's concerns were that the scheme was operating without a validly appointed responsible entity, that it appeared unviable with no progress on developing the land and no prospect of it, that its financial statements had not been prepared or lodged since 2012, and that investors' money had been moved to entities unrelated to the scheme. ASIC had applied for the winding up on 25 July 2017. Later notes on the release show how long the aftermath runs: in July 2018 the court was still making orders about how investors were to lodge their claims, with a deadline of 17 August 2018.

The second matter was larger. In media release 18-117MR of 30 April 2018, ASIC announced that it had applied to wind up companies connected with two land banking schemes, at Bagshot and at Brookfield, and to have two officers disqualified from managing corporations. Its investigation, it said, indicated that more than $15 million had been raised. ASIC alleged that the development companies had sold options to buy land, or off-the-plan contracts, over land they proposed to develop, that they had never owned that land, and that their attempts to buy it had failed.

The follow-up release, 18-221MR of 27 July 2018, reported the result. The Federal Court wound up four project companies on the basis that they were insolvent and that it was just and equitable to do so. A fifth company, which managed the projects, was also wound up. The court found that it controlled investors' money, mixed funds between schemes, kept poor documentation and took management fees out of investor funds. Two liquidators were appointed, and the court considered there was a clear public interest case for the orders. The release records ASIC's view that most of the money raised had been dissipated.

ASIC Commissioner John Price was quoted in that release. "ASIC will take action against entities that run schemes where investor monies are put at risk," he said.

Two things stand out for a reader weighing an offer today. On ASIC's account, the court orders came after most of the money had gone. And the release does not report the outcome of the disqualification application, only that it was heard and reserved.

When a land offer is a financial product

A sale of land looks like a matter for state property law, and partly it is. ASIC's releases explain why the federal regulator is involved as well. These arrangements, it says, may be a managed investment scheme, a financial product, or both, in which case developers and promoters should hold an Australian financial services licence and register the scheme with ASIC.

That is the reason for one of Moneysmart's questions: ask whether the investment is a managed investment scheme. Regulated schemes, it says, must provide clear information about risks, fees and rights. Where the offer is such a scheme, the document to read is the product disclosure statement, which should cover the key features, the fees, the commissions, the benefits, the risks and how complaints are handled.

The 2017 matter shows what the absence of that structure looks like. The scheme there had once had a licensed responsible entity. ASIC's release records that the entity's licence was cancelled and that it went into liquidation on 14 December 2016, and one of the regulator's stated concerns was that the scheme carried on without a validly appointed replacement.

On the Queensland side, the Property Occupations Act 2014 applies to the people doing the selling. Section 26 of that Act describes the work a real estate agent licence authorises as acting for others, for reward, to buy, sell, exchange or let real property or interests in real property, and to negotiate those transactions. One of the Act's stated objects, in section 12, is to protect consumers against undesirable practices associated with the promotion of residential property. The Queensland Government's spruiker page lists the consequences it attaches to two kinds of conduct: acting as a real estate agent without a licence, with a maximum of $23,560 or two years' imprisonment, and making false representations about a property, with a fine of up to $63,612.

What an option deed is, and what it does not give

The document goes by several names: option agreement in Moneysmart's guidance, option contract in the Office of Fair Trading's, and option deed is another name for the same kind of document. In each case the substance is the one Moneysmart describes, an agreement to purchase a plot later, usually once the council has approved development.

What it gives is a contractual right against the company that granted it. What it does not give follows from the regulators' material.

It does not give land. Moneysmart treats "land or an option" as alternatives, and tells buyers to establish which they are being sold.

It does not show that the grantor owns the land. ASIC's 2018 allegation was that the companies selling options had never acquired the land at all, having only entered contracts to buy it for rezoning.

It does not necessarily relate to a lot that exists. ASIC's description is of an option over a lot in an unregistered plan of subdivision, that is, a lot drawn on a plan that has not been registered.

It does not last indefinitely. A sunset clause can end the option on a set date if approval has not arrived, and Moneysmart says the fees paid may be lost at that point.

And it does not survive the grantor's failure in any reliable way. Moneysmart's wording is that option holders can lose everything invested if the operator becomes insolvent.

Whether a particular option gives its holder anything that can be protected against the land itself, and what that would be worth if the owner or the promoter failed, depends on the document and on who holds the title. It is the central question for the buyer's own solicitor, chosen by the buyer and not from a promoter's list.

No cooling-off on an option in Queensland

Queensland buyers of homes are used to a pause after signing. The Office of Fair Trading's guidance on the cooling-off period for residential property contracts, last updated on 12 May 2022, gives buyers five business days from the day they receive the contract signed by both parties.

The same guidance lists the contracts that have no cooling-off period, and options are on the list twice. There is none for an option contract. There is none for a sale contract formed from an option contract. A buyer who pays for an option at a presentation and regrets it the next morning does not have the statutory right a home buyer would have, and nor does a buyer who later exercises the option and becomes bound to the purchase.

Two other entries on the Office of Fair Trading's list are relevant to land offers. Buyers purchasing at least three lots at the same time have no cooling-off period, whether or not the lots are in one contract. And the period belongs to contracts for residential property. The Property Occupations Act 2014 defines that term in section 21 as real property used, or intended to be used, for residential purposes, and excludes property used primarily for industry, commerce or primary production. Which side of that line a grazing paddock marketed as future housing falls on is a legal question about the particular land, and one more reason the regulators' first recommendation is independent advice.

Checking the planning status: who decides

The representation at the heart of a land banking offer is about planning: that the land will be rezoned, that approval is close, that the council or the State supports the project. Moneysmart's instruction is direct. Ask the local council whether approval or rezoning is likely, and do not rely only on what the promoter says.

In Queensland that question starts with the planning scheme of the council for the area, the document that gives each parcel its zone. A promoter's brochure may show streets and parks. The scheme shows what the land is today, and ASIC's description of these offers is that the land is often undeveloped rural land.

A rezoning is a change to that scheme, made by the planning authority through its own process. It is not something a landowner or a promoter can grant, and no option deed can promise it. That is the plain reason Moneysmart frames the council's answer as the one that matters.

Some land in Queensland is planned by the State instead of the council, within priority development areas declared under the Economic Development Act 2012. A claim that a parcel is inside such an area, or about to be, can be tested against the State's own mapping, described next.

A buyer comparing a brochure with the official record should also ask a simpler question, which Moneysmart raises too: who owns the land. An option granted by a company that is not the registered owner depends on that company completing a purchase of its own.

The State's mapping tools and their limits

The Queensland planning department publishes two free online mapping systems, described on its mapping page, last updated on 10 November 2023, as repositories of the mapping layers used in the Queensland planning system. Neither replaces the council's scheme, and the page does not mention zoning at all.

The State Planning Policy Interactive Mapping System shows the matters the State treats as its own interests in land use planning, drawn as layers. The page explains that it is meant to help local government, the community and industry see where those policies apply. It also says the mapping is partial: some matters of state interest have several layers and some have no mapping.

The Development Assessment Mapping System helps a user identify the triggers that bring the State into the assessment of a development application, and the referrals that follow, under the Planning Regulation 2017. The page describes it as a single access point for mapping related to the State Assessment and Referral Agency, the Planning Regulation 2017, the Economic Development Act 2012, the State Development and Public Works Organisation Act 1971 and the Regional Planning Interests Act 2014. To work out whether an application needs State assessment, the page says the system should be used together with schedule 10 of the regulation.

The State attaches a disclaimer that a buyer should take at its word. It makes no representation or warranty that the mapping data is accurate, reliable, complete or suitable for any purpose. A layer that appears on a lot is a reason to ask a town planner what it means. A map with nothing on it is not evidence that the land is unconstrained, and no layer on either system records a promise of future rezoning.

The questions the regulators say to ask

Gathered from the Moneysmart page and the ASIC releases, the regulators' questions for anyone offered a lot or an option in land awaiting approval are these:

1. Who owns the land now, and is the seller of the lot or the option that owner?
2. Is the purchase of land, or of an option to buy land later?
3. What does the local council say about the likelihood of rezoning or approval?
4. What are the buyer's rights if the development does not proceed, and is there a sunset date?
5. Is the offer a managed investment scheme, and if so, where is the product disclosure statement?
6. Are the lawyer and the financial adviser independent of the promoter?

ASIC adds a question buyers have to answer about themselves. Its 2018 releases advise investors to understand the risks, to take independent legal and financial advice, and to assess their own tolerance for risk before committing money.

Where an offer has already gone wrong, the reporting routes follow the two layers of regulation. The Queensland Government's page directs people who have had unsatisfactory dealings with a property spruiker to notify the Office of Fair Trading through its complaints page, with as much information as they can give. ASIC is the regulator of managed investment schemes and of financial services licensing, and the releases described above began with its own investigations.

The Victorian cases are several years old and the land they concerned is a long way from Queensland. What carries across the border is the method, and the checks: the council's scheme before the brochure, the title before the option, and the buyer's own adviser before anyone else's.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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