Court ruling prompts warning for unit investors
Court ruling prompts warning for unit investors
Posted on Wednesday, June 05 2013 at 4:06 PM
A Victorian Supreme Court ruling has upheld a property owner’s right to rent out his unit to short-term occupants in a long-stay complex.
Action was brought against an owner in a Melbourne
residential tower who’s renting out his units for short-stay accommodation.
In the action, it was argued that
this use of the units contravened the occupancy permit that had been issued for
the premises by the local council.
In its decision to overturn a previous Building
Appeals Board ruling, the Supreme
Court didn’t regard the short-term stay of people in the units as relevant to the
classification.
Dr Kristy Richardson from CQUniversity’s property
program says the Building Code of
Australia operates nationally so the court finding has implications in other
states.
“Indeed, sitting behind the recent court appeal
were complaints made by permanent residents about the noise and other issues of
the short-term residents in the building. Those complaints were unable to be
resolved through body corporate governance mechanisms.
“Inspection of the body corporate by-laws are a
necessity to ascertain whether there are any restrictions on the use or the
minimum term for which the unit may be rented out.
“On the other hand, if a person is seeking to buy
a unit in an apartment complex for investment purposes, they need to take care
to ensure that the by-laws permit this and that the management of the complex
together with any disputes that might arise over any use of the apartment can
be effectively dealt with.”
Robert Johnson, a Queensland-based body corporate
manager with Matthews Real Estate, says that under their state’s laws, it isn’t
possible to restrict an owner’s use with body corporate by-laws as long as the
use complies with it’s council classification.
“A building is issued with a certificate of
classification by, or on behalf of, a local authority which says what usage
there may be at that building.
“You can’t discriminate how an owner of a lot uses
that lot as long as that owner is using the lot in accordance with the
certificate of classification.”
Matthew Ganter, a property valuer with Herron Todd
White, says some long-term residents will find having short-term neighbours a
detriment.
“There’s often no sense of community for the permanent
residents when there’s neighbours coming and going.”
Ganter says while the effect on a property’s value
would be negligible in many cases, there will be a percentage of potential
buyers turned off by having short-stay neighbours.
“Some people will be put off. When it comes to values,
you really are guided by the other sales in the building. That evidence should
factor in any detriments.
“The impact on a property from neighbours would depend
very much on the nature of the short-term residents in relation to noise and
interruption to the normal use of the property.”
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A decline in the value of city dwellings for the month of May could be a result of falling consumer confidence, according to RP Data’s national research director.
The results of
the RP Data-Rismark analysis come on the back of a fall in consumer confidence
over both April and May, says Tim Lawless.
The combined
capital city index fell by 1.2 per cent in May and 0.5 per cent in April,
although values are still higher than this time last year.
Lawless says the
combined capital city index is stock weighted, meaning that larger cities like
Sydney, Melbourne and Brisbane have a larger impact on the aggregated results.
“If we see
confidence levels remain in the doldrums, there is likely to be a similar
dampening effect on the housing market,” he says.
Lawless noted the
two months of lower dwelling values comes at a time when a number of metrics
such as auction clearance rates, vendor discounting, time on market and
transaction volumes are performing well.
“Auction
clearance rates have been nudging the 70 per cent mark on a weighted average
basis over the past couple of months, with average selling time improving and
vendors now offering up lower discounts from original asking prices in order to
make a sale. We have also seen the number of house and unit sales rise compared
with the same time last year,” says Lawless.
According to
Rismark’s chief executive officer Ben Skilbeck, the result may be due to some
market volatility associated with vendors acquiescing and taking the
opportunity to sell.
The analysis
also showed weekly rents across the combined capital cities were up 3.1 per
cent over the past 12 months. Values shifted slightly higher over the year, as
well as gross rental yields holding reasonably steady at 4.2 per cent for houses
and five per cent for units.
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Small developments to plug city’s shortfall
Small developments to plug city’s shortfall
Posted on Wednesday, May 29 2013 at 3:46 PM
A researcher says infill development will be necessary to cover property demand in an improving Brisbane market.
The National Property Research Company (NPR Co.)
has released information showing the Brisbane Local Government Area (LGA) will
require more dwellings than any other LGA in southeast Queensland.
According to NPR Co., the Brisbane LGA will
require 156,000 new dwellings by 2031 and 88 per cent will come from infill
development.
“We need to find ways to create affordable medium
and higher density communities that offer lifestyle benefits across a range of
age cohorts.”
NPR Co. say post-GFC recovery was
hampered by the 2011 flood, but recent infill projects in inner-city areas such
as Fortitude Valley, Bowen Hills and South Brisbane bode well for the market.
“NPR Co. believes that the
Brisbane property market has turned the corner and although it could be slow
and patchy, the outlook is for positive growth. In some areas where supply is
high there may be a glut of stock to work through before prices improve but
volumes are expected to start improving.”
Matthew Gross, managing director
at NPR Co, says it’s good government policy to promote infill development through
town planning.
“They want to use the existing infrastructure
to its maximum possible potential. By increasing the densities around key
economic and development area and transport nodes, they get more bang for their
buck out of existing infrastructure.”
Gross says a new town plan should be in place
by the end of 2013 and there will be opportunities under the proposed changes.
“Probably
the fact that we’re now moving away from planning based on GFA (gross floor
area) and looking more closely at form and function with increased heights – so
projects where you might have only previously been able to do two storeys you
might now be able to get into three storeys.”
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Rental shortfall triggers opportunity for homeowners
Rental shortfall triggers opportunity for homeowners
Posted on Thursday, May 30 2013 at 10:32 AM
A rental accommodation shortfall across Australia has resulted in a 14 per cent drop in short-term room rentals since last year, according to a recent survey.
Director of easyroommate.com.au, Jonathan Moore, says the number of
properties available for short-term rental has fallen from 34 per cent to 17
per cent in just 12 months.
He called on homeowners to consider short-term room rental as a way to
cash in on their spare rooms without any long-term commitment.
“With the number of individuals looking for shared accommodation in
excess of 18,000, demand for accommodation is far outstripping the number of
properties available,” Moore says.
“There are currently approximately three individuals searching per room
available. With such high demand, if potential landlords are considering
renting out their spare room but are not looking for a long-time commitment, short-term
rents can help provide them with a temporary income boost,” Moore says.
He says while a normal tenancy within a shared apartment typically lasts a year, a
short-term rental tenancy can last from one week up to six months and is typically
used to fill rental voids.
“The short-term
option is extremely popular amongst current tenants, with 72 per cent of the
current short-term rental listings on the site offered by existing flat sharers.
This was followed by live out landlords, who attribute to 24 per cent of the short-term rentals
available.
“A short-term tenancy is a fantastic way to allow people to move to a
new area without committing, and more and more property owners need to become
aware of this.
“Whilst short-term rentals are offered throughout the country, the
majority can be found in major the cities. This can be attributed in part to
increased numbers of people relocating for career purposes and requiring
immediate accommodation,” Moore says.
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Queensland courts cashed-up tourism investors
Queensland courts cashed-up tourism investors
Posted on Thursday, May 23 2013 at 1:49 PM
More than 100 local and international investors, developers and financiers converged on Brisbane last night to preview a portfolio of tourism investment opportunities.
Premier Campbell Newman hosted the cashed-up
guests at Parliament House as part of a drive to inject major new investment
dollars into the recovering tourism sector.
The inaugural Queensland Tourism Investment
Forum presented a total of 25 “showcase opportunities” that the government
identified as having solid investment or development potential.
“We’ve prioritised tourism and we know it
takes a whole-of-government approach to achieve further private sector in new
and revitalised tourism products,” Newman says.
Guests included major property developers,
tourism operators, wealthy investors and entrepreneurs.
Among the opportunities presented to the
crowd were short-term accommodation assets, resorts, leisure attractions, tourism experiences and government
infrastructure projects.
The
cache included the 2018 Commonwealth Games Village on the Gold Coast, Cairns
Aquarium, Daydream Island Resort, a to-be-developed hotel at Brisbane’s South
Bank and land in the Mary Valley, controversially acquired by the former Labor
Government for the later-abandoned Traveston Dam Crossing project.
Tourism
Minister Jan Stuckey also launched the Tourism Investment Gateway, an online
tool that includes spatial mapping that identifies the opportunities on offer.
“Queensland’s resilient and diverse economy, investment-friendly
business environment and fantastic array of landscapes and tourism experiences
provide opportunities that investors and financiers should seriously consider,”
Stuckey says.
The
event was part of a wider strategy that includes an ambitious target to double
annual overnight visitor expenditure to $30 billion by 2020.
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Brisbane inner city market undersupplied
Brisbane inner city market undersupplied
Posted on Friday, May 24 2013 at 3:54 PM
There’s a very limited supply of housing in Brisbane at present and auctions are increasing in popularity as sellers regain a more optimistic view of the market, according to one analyst.
James Freudigmann is the national manager
of Propell Buyers’ Advocates and believes an analysis of market data from
Brisbane shows some interesting trends.
For one, Freudigmann says one-third of all
properties listed for sale in the Queensland capital’s inner city suburbs are
under contract.
“To have over a third of properties going
to auction is a sign that the market is starting to heat up,” he says. “Agents
are taking them to auction to get exposure because of the shortage of supply of
quality stock.”
Inner city houses within five to seven
kilometres of the CBD and priced in the middle segment of the market are
especially in demand with both homebuyers and investors, he says.
Some pundits are still describing the
housing sector in southeast Queensland as subdued, but Freudigmann thinks
they’re missing the mark. He has analysed property listings to prove his point.
Across 37 inner city markets, there are
currently 218 houses listed for sale on realestate.com.au, he says. Of those,
77 are under contract already and 13 are actually units that have been
incorrectly listed as houses.
A further 30 are priced in excess of
$600,000, leaving only 105 houses for sale in that prime middle price segment,
he says.
“With 37 suburbs in total, that means on
average there are three houses under $600,000 per suburb.”
Of the 105 remaining, 37 are going to
auction and another 33 are what Freudigmann describes as “secondary”, or less
desirable than others given their proximity to main roads, train lines or even
a history of flooding.
“This leaves only 31 houses for sale (and
not going to auction) in these 37 suburbs in the inner city sub $600,000 price
point.”
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First homebuyer grant scrapped in Tasmania
First homebuyer grant scrapped in Tasmania
Posted on Friday, May 24 2013 at 2:27 PM
The Tasmanian Government will scrap its First Home Owners Grant for established properties and wind down a boosted incentive for new builds, as part of its frugal 2013 Budget.
The government believes it can get the
balance sheet back in the black in four years’ time, despite recording a record
deficit this year of $425 million.
In handing down the State Budget yesterday,
Premier Lara Giddings outlined her plan to carve a path back to a surplus.
Two cost-saving measures include the
abolishment of the First Home Owners Grant, a $7000 bonus for purchasers of any
property, and the winding back of the $8000 First Home Builder Boost for new
dwellings.
They’ll both be replaced by a single $7000
grant for first-time buyers of a new home only. The change comes into effect
from July 1.
The Mortgage and Finance Association of
Australia (MFAA) slammed the move, describing it as “a disaster for Tasmanian
young homebuyers trying to break into the property market”.
The body’s state president, Bryce Harding,
believes the grant rejigging is a “poor decision” made purely to help balance
the books.
“Not all first homebuyers can or want to
build their own home and this decision will make it even harder for young
couples and single people to put a roof over their heads and plan the future,”
Harding says.
Giddings blamed the state’s ballooning debt
on GST revenue losses, downgraded state taxes and the bill for disaster
recovery in the wake of the devastating January bushfires.
The only other piece of housing-related
news was an additional $500,000 in funding to continue a major overhaul of the
state’s planning system.
Reforms focus on reducing costs and
breaking down barriers to development and boosting housing supply, Minister for
Planning Bryan Green says.
“These reforms will minimise costs for
builders and developers by increasing the consistency, clarity and certainty in
the planning system,” Green believes.
This new funding will enable the Tasmanian
Planning Commission to push through its assessment of revised planning schemes,
he says.
Despite its debt burden, the government’s
election year fiscal plan includes funding contributions towards the Federal
Government’s major education reforms and the DisabilityCare insurance scheme.
There will be a renewed emphasis on jobs in
the year ahead, the government says, as Tasmania continues to battle a stagnant
economy and rising unemployment.
“(The Budget) provides funding for a range
of initiatives in the Tasmanian Jobs Package, as well as the first increase in
the payroll tax threshold since 2000 and grants for businesses that create jobs
through innovation and investment,” Giddings says.
There’s funding for new infrastructure in
the areas of health, education and irrigation, she says.
While Giddings says “continuing financial
discipline” will be the medicine that cures the Budget’s widening debt black
hole, projections for a surplus in 2016-17 are based on what commentators have
described as overly optimistic growth forecast.
The government forecasts trend economic
growth in 2013-14 will be around two per cent.
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More housing for Alice Springs
More housing for Alice Springs
Posted on Monday, May 20 2013 at 4:23 PM
At least 100 new lots are coming onto the market in Alice Springs, helping to ease prices and competition among investors.
The Northern Territory Government is calling for proposals
to develop the first stage of the new suburb of Kilgariff, which is the first
major residential development south of the Gap.
Chief Minister Adam Giles says stage one will boost housing
affordability and create new jobs.
“By develop Kilgariff, this government is ensuring there’s
land available to meet housing demand now and into the future, as the economy
and population of Alice Springs grows,” he says.
Giles adds the government is seeking expressions of interest
from developers for the 13-hectare site and more than $10 million is being
invested to deliver headworks.
A further $3.5 million will be granted to the successful
developer to support the construction of key infrastructure for the whole
suburb, including the main entry road, drainage and trunk sewer.
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NT Budget cash splash for housing
NT Budget cash splash for housing
Posted on Tuesday, May 14 2013 at 1:58 PM
The Northern Territory Government has detailed a raft of cost-saving measures in today’s Budget, in a bid to return the balance sheet to the black.
Despite the more prudish approach to
spending, the government has maintained funding for a range of housing
initiatives, including generous grants for first homebuyers.
Treasurer David Tollner outlined a series
of belt-tightening moves to “target the territory’s overall fiscal imbalance”,
which for 2013-14 sits at $1.18 billion in deficit.
“While the 2013 Budget continues to rein in
government spending and reduce this staggering level of debt, it also puts
Territorians first by maximising our great lifestyle,” Tollner says.
One area where the government won’t be
skimping is in housing, with the commitment of ongoing funds to support first
homebuyers, particularly in more affordable segments of the market and
strategic growth locations.
Grants of $25,000 will be on offer for
first homebuyers of newly constructed homes or land to build a home throughout
the NT, Tollner says.
Ignoring the tact of states elsewhere which
have eliminated grants for established properties, the government will also
provide a $25,000 grant for first-time buyers of existing homes.
However that particular amount will only be
on offer in regional and remote areas outside the capital, where new housing
stock is much lower.
In those metropolitan locations, specified
as being Darwin, Palmerston and Darwin fringe, first homebuyers who purchase an
existing home will be eligible to receive a $12,000 grant.
There’s also a $7000 principal place of
residence rebate for all other buyers of new homes or land across the territory,
he says.
“Budget 2013 also provides home loan
products and services to increase the supply of new, affordable housing and
provides more home ownership opportunities for Territorians who would otherwise
be unable to purchase their own home.”
The HomeBuild Access package includes:
- Low deposit government loans of
up to 17.5 per cent of the purchase price, allowing buyers to lower the amount
of funds required. - Loans to help fund the deposit
required when entering into an off-the-plan purchase contract. - A subsidised interest rate loan
to slash the amount of interest payable for the first five years of a mortgage
for eligible homebuyers.
In a bid to ease housing pressures faced
across the territory, the government will also invest significant funds in new
remote housing, new public housing in urban areas and specialist homelessness
services.
On the affordability front, funds have been
allocated to improve and fast track the roll out of land for 2000 new
affordable dwellings over the next four years.
When it comes to the economy, the
government is projecting growth in 2013-14 in the order of five per cent,
increasing to and peaking at seven per cent in the next year.
“Growth over this period is expected to be
underpinned by an acceleration of construction activity related to a number of
mining-related projects.”
The government will focus on growing its
“three hub economy”, which includes the mineral resources sector, primary
industries and tourism, Tollner says. It hopes to do this by encouraging
greater investment and cutting red tape.
Infrastructure spending in the next year
will total $1.2 billion, including $802 million for capital projects.
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Housing industry slams Budget
Housing industry slams Budget
Posted on Wednesday, May 15 2013 at 11:06 AM
First homebuyers and the construction sector have been largely ignored in Wayne Swan’s latest Federal Budget, according to lobby groups.
In handing down his fiscal plan for the
year ahead, the Federal Treasurer outlined the government’s long-term social
policy vision for Australia. It includes significant funds for education
reform, Disability Care, a major ‘nation building’ infrastructure plan,
employment services and specialist healthcare.
However, housing largely missed out, which
the Real Estate Institute of Australia described as a missed opportunity.
The body’s president Peter Bushby says the
government “has ignored the plight of many young Australians” by not addressing
housing affordability and the difficulties many face with getting into their
first homes.
Numbers of first homebuyers have plummeted
in recent years. In May 2009, one-third of all purchasers were first-timers,
but the figure from March this year was just 14 per cent, he says. That’s well
below the long-term running average of 20 per cent.
The Housing Industry Association was
equally unimpressed with the Budget. The lobby group’s chief economist Harley
Dale says more needs to be done to boost the ailing industry and increase
housing supply.
“It’s disappointing there are no measures
to address the excessive regulatory and taxation environment faced by
Australia’s residential building industry,” Dale says. “Such reform and
investment measures would generate a healthy economic dividend to the entire
economy, including a substantial boost to government revenue.”
Dale says continued funding for the
existing National Rental Affordability Scheme is welcome.
The REIA praised the allocation of $112
million in new funding for a trial program to support age pensioners who want
to downsize their homes. Under the initiative, eligible seniors who’ve lived in
their own home for at least 25 years and want to move on will receive special
tax concessions.
“(They would) need to put a minimum of 80
per cent of the excess sale proceeds from the sale of their former home into a
special account,” Bushby explains.
Those funds wouldn’t be taken into
consideration under the pension income and assets test for up to 10 years or
until a withdrawal is made from the account.
As well as benefiting age pensioners
financially, the trial program could lead to a “better utilisation of existing
housing stock”, he believes.
The Retirement Living Council welcomed the
pilot project but described the eligibility requirements as “overly onerous”
and not reflective of the needs or circumstances of most aged pensioners.
In other property-related Budget news,
investors who utilise trust structures should ensure their affairs are in order
and above board, with additional funds allocated to the Australian Taxation
Office (ATO) for compliance and enforcement.
The ATO will increase its capacity to
detect tax evasion by trusts by double-checking the information it receives
with third parties. This extra awareness is expected to rake in an additional
$379 million over four years.
Foreign investors with high-end properties
will be subject to a new 10 per cent withholding tax to apply to the sale of
dwellings worth more than $2.5 million.
One area in which the government didn’t
skimp is infrastructure investment. The Budget details $3 billion in new
funding towards a total $24 billion program to boost the “next wave of nation
building”.
It includes an injection of funds for the
Motorways Program in Sydney, including the M4 and M5 extensions, the Metro underground
railway in Melbourne, and the Cross River Rail project in Brisbane, to name
just a few.
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