The Gold Coast Council are changing their rating system for apartments so now higher apartments with a better view pay more rates. Does Victoria have an apartment view tax like this?
Also we chat about when investors sell should they ask a tenant to move out or is it OK for them to stay.
Listen to hear Andrew Wood of Wood Property chat with Tony Moclair on 3AW
On 3AW afternoons, Talking Apartments with Wood Property.
Apartments make it possible, and Wood Property makes apartments easy.
Well, speaking of Wood Property, we’ve got Andrew Wood here, who’s the managing director at Wood Property, and he’s joined me in the studio.
G’day, Andrew.
Good afternoon, Tony.
How are you?
Well, I’m well, and I know you heard us talk about this proposal in The Gold Coast of a view tax.
Now, let’s say you’re in an apartment block and they’re 60 stories.
Once you get to story number 40, your rates go up based on the value.
Do we have that or is it likely to come to Victoria?
Well, we’re flat out trying to fix Victoria’s problems.
I’m not going to start on Queensland’s, but essentially, view tax is an interesting term.
We’ve already got it.
So essentially, the properties in Victoria are rated on what’s called a capital-improved value, CIV, basically takes into account the value of the property.
So if your property is higher and has a better view, then in Victoria, you’ll already pay more rates than someone that’s on level one because the value of their property will be less.
I mean, it’s interesting because conversely, and the rating valuations get done in Victoria every year.
So let’s say you own an apartment, it’s got a fantastic view and there’s a great big block of apartments gets built in front of you, then next year, maybe the value of your property goes down and you could actually appeal to the council to get your rating value adjusted.
Okay.
But you can’t do that under the Queensland law, can you?
Well, they’re just doing it on, I think, as I said, I’m not too full bottle on the Queensland rules, but it sounds like they’ve had, is it just a site value?
They’ve all been the same value and now they’re adjusting it.
Okay.
So they’re now moving and this is just the Gold Coast.
I think it’s just the Gold Coast Council for clarity, that are making this proposal, rather than all of Queensland.
And so they had a flat rating between level one to level 50 or 40 or whatever it would be.
So now they’re pretty much catching up with what the Victorian system is, I suppose, is the best way to explain it.
All right.
133693, something you are full bottle on is, no fault or no grounds evictions.
And if you’ve got any questions about apartments, about being a landlord or being a tenant, 133693, Andrew Wood is in.
So let’s talk about New South Wales removing no grounds evictions.
Does that mean the very concerned ladies who run the charity sector in Australia changing the law to be more, quote, equitable?
Is the pendulum swinging towards the tenant rather than the owner?
Well, again, New South Wales is catching up with Victoria, a little bit like my comment around Queensland.
So Victoria brought in these rules in a very similar form in about 2021.
So essentially what New South Wales are doing is really catching up with Victoria, South Australia, and I think Australian Capital Territory, where they’re basically saying, you just can’t kick a tenant out of a property or ask them to move out for no reason.
So you’ve either got to be moving in, you’ve got to be wanting to sell the property, doing significant renovations.
There’s got to be some grounds for you wanting to ask the tenant to move out.
So owning it is not enough?
No.
Well, no.
I mean, you’re basically a leaser that’s most fundamental, is you’re giving the property to someone else to occupy and they’re paying you rent.
So there are then rules around that tenure, when you can ask that tenant to move out.
Assuming they’re fully complicit with their lease, they’re not in arrears with their rent, they’re doing everything right, then really the owner has got to have some grounds for asking them to move out, which I guess it’s a balance, isn’t it?
You’re protecting the rights, it’s somebody’s home, you want them to be comfortable and secure and safe in their own home.
But at the same time, an owner would say, well, it’s my property, can’t I do what I like?
Well, within the rules, you just got to play within the rules, which basically means you need good advice about renting your property.
Okay, but will that incentivise people to enter the market?
By that I mean buy properties which they then intend to rent, which is a way of solving the housing crisis that we’re told we have.
So sort of a rent to own, do you mean?
Yeah, yeah.
Well, it could do, it could do.
And there are schemes around that where it is part of the program.
You rent the property within five years, you have the option to purchase it at an agreed price.
So that’s in place.
All right, but okay, well, let’s say if you want to buy the property with, and you want to hold on to it, but you want to rent it out and be a landlord, does this make it tougher still for prospective landlords who often negotiate these things?
They have a personal relationship with the tenant, and they can negotiate one on one without being compelled to buy the state government.
Okay, it does get blurry.
You know, if you’re going to rent a property, there are rules around it.
Things might start off with all the best intentions, but essentially you need to play by the rules.
It’s interesting.
A lot of the New South Wales press has written, gone, you know, lit up really recently, basically saying it’s making investment less attractive.
You know, it’s an asymmetrically unfair to owners.
But we heard all this in 2021 in Victoria, and it does shift the dial a little bit.
But over time, look, the real important thing, I reckon, Tony, is just trying to get the rules straight and keep them the way they are.
Then the market can adjust.
We all know the rules, and we can all play by the rules.
It’s when governments change them or even talk about changing them that people get twitchy and things start to change.
Okay, so we’re three years in the experience with the rules you’ve just mentioned.
So far, what do we know?
Well, I think it’s actually working quite well in Victoria.
I think it does give tenants a bit more security and safety in living in their home.
Most owners and agents now understand what the rules are.
They can set it up.
There’s a thing called a disclosure statement.
Essentially, when a tenant moves in, they’re given a disclosure statement, which is stated by the owner, which says whether they intend to sell it or not.
So you know up front, does the owner intend to sell this property?
I mean, the really interesting thing at the moment that we’re having many conversations with investment owners who are wanting to sell, is whether they should ask their tenant to move out or not.
And essentially, you’re an owner, you’ve got a tenant in there, you want to sell, you’ve got income.
If you’re going to ask the tenant to move out, then you’re going to lose that income, and it could be three or four months worth of income during the selling period, which is a reasonable cost.
But it really is important to make sure that when you’re selling, the presentation of the property is at its best.
As an agent, you can inspect it at the right time, those sorts of things.
And it also starts to impact things like the loan terms that a buyer can get.
If they’re a first home buyer and there’s a tenant in there, you can’t get the first stamp duty exemptions and first home buyer grants, those sorts of things.
Okay, 123 693, 123 693.
If you’ve got a question about, well, no fault or no grounds evictions or selling an investment property, especially if it’s an apartment, and you can speak to Andrew Wood, 123 693.
Those changes were made.
If you do want to sell it, you may have had a tenant in who can legally paint the place and has, and that’s a cost that you have to wear, isn’t it, as a landlord?
And surely you will want to recover those costs of having the house in the state that you basically leased it in.
Yeah, well, and the tenant is required to return the property in that condition.
So there’s a condition report, the tenant signs off on it.
So if they do want to paint it, sure, but you’ve got to paint it back if, you know, if you’re asked to, I guess, if it doesn’t improve it.
But the rules, the base case is you need to return it in the condition that it was in, save for the old fair wear and tear.
Yep, okay.
So legally, you can, at the end of the lease, if you own the property, say to the person, well, I’d prefer it if you weren’t here, or you can go either way on that, obviously.
No.
Oh, no?
Only in the first term of the lease.
This gets really technical.
But essentially, you cannot ask a tenant to move out, even if it’s the end of the lease or a further term of the lease, unless, of course, you meet one of those criteria, which is you’re selling, you want to move in, or you want to do significant renovations, those sorts of things, assuming the tenant’s complying with the lease and paying their rent.
All right, pay your rent, well, which is getting increasingly hard to do, obviously.
Andrew, thank you for your time.
That’s all right, that’s great, Tony.
Andrew Wood is Managing Director, Ed Wood Property.
And I’ll speak to you in a couple of weeks.
Sounds good.
Back in a moment.
123-693.
