Current potential Government thinking investors need to be aware of
Changes in property legislation and Government policy isn’t something property investors can foresee, but they can be aware of conversations and factor in.
Quite possibly the main issue affecting housing in Australia, is the lack of it.
As well as sky rocking house prices, Australia has in an extreme shortage of rental properties. Indeed, according to SQM Research, an investment research house, the current national vacancy rate is around 1 per cent, and there are just over 30,000 properties sat vacant.
Digging deeper into the data, at a local level, the SQM vacancy tool reveals the Hunter Valley region has a vacancy rate of 1.1 and currently just over 900 properties are vacant.
(We’ll just point out our vacancy rates are less than these!)
As a result, Governments at a Federal and State level are currently looking at ways to address this housing shortage, both for home buyers and renters.
What’s happening at a Federal level
Last year the Federal Government looked for feedback from landlords, to help it make decisions to address the extreme shortage and affordability of rental properties.
Recently one political party has suggested limiting negative gearing as a tax deductible benefit to just one property within five years; the thinking is, it will free up properties for people to buy.
However, we believe this thinking isn’t correct; not everyone is interested in saving for a deposit and purchasing a house. For instance, they may only envisage being in the area for a short period of time, and some people who rent don’t want to be bothered with maintenance and other responsibilities that come with property ownership.
Furthermore, the increase in the number of people entering into Australia and needing accommodation has also contributed to the crisis. For instance, ABS figures show in January 2024 there were 82,890 international student arrivals to Australia, an increase of 23,660 students compared with the corresponding month of the previous year.
A former treasury economist also pointed this out ‘record immigration and dismal housing’ for the rental crisis. He suggested the crisis ‘has been driven by a population increase of nearly 680,000 (in the year ending March 2023), and to make matters worse, housing construction is actually collapsing’.
‘The latest dwelling approvals data from the ABS says we are only going to build 163,000. Now that’s 77,000 below the Albanese government’s housing target… so we’re not even close,’ he said.
Additional tax implemented at a state level
Last year, the Victorian state government introduced a range of new property taxes; from January 1, 2024 Victorians with second homes or investment properties now pay a new flat rate tax of up to $975, plus an additional levy on the value of their land. Owners of short-term rentals have also been hit with a range of new taxes.
Through our industry networks, we know many agents in Victoria are saying around 25% of their rental properties on their rent roll are being sold or in the process of being sold. Unsurprisingly, this will have a huge knock-on effect on the rental market.
Here in NSW, to have a land tax payable on the unimproved value of the land that investors own, but apart from the usual tax responsibilities, investors are not hit with an additional tax for the property itself.
While we can’t predict what policies will be implemented a Federal, or state level, what you can be sure of, we will keep informed of what’s potentially on the table, and let you know what the potential impact could be and what you need to think about.
As members of The Real Estate Institute of New South Wales (REINSW), the peak industry body for real estate agents and property professionals in NSW we are part of the voice lobbying government, and raise issues and concerns affecting property owners on your behalf.
We do more than manage property. We are ensuring your issues and concerns are heard by Government, and give you information to help you make informed decisions about your asset.
We do all the training to ensure your property is legal and your paperwork is in order, and we work hard to ensure your property is leased with reliable and good tenants. We also take the stress out of marketing, managing and running your property, ensuring you get the best from your asset, and your asset is properly cared for.
Contact us now for more information about property management and property investment. Call us on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat to see how our property management services can help.
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