Canberra apartment owners set for 7 per cent rates rise from July 1

yeh crazy isnt it..i've been ranting about rates / land tax for years to anyone that will listen..particularly at election times

will now cost 60k fee to do a simple 1 into 2 split!!!

rental prices (for landlords) will be the winner!

 

Yeah I hope so. I just got my unit in Hawker rented for 310 per week (1347 per month) allowing the tenants to keep a very small chihuahua. Once property manager fees come out it will be about 1260. I'm hoping to put away 400 each month just to cover the rates and taxes each quarter. The rest will barely pay monthly interest. Other expenses will be out of my income. I never chose to invest in property. I had to move myself and household out due to problems with a neighbour. Either way this thing has put a fork in housing affordability. I expect we'll hear a lot more about this in weeks and months to come.

 

sigh - at least developers should think twice before building more units

 

In Canberra rents have gone no where, but the fixed cost(strata/LT/insurance/maintenance etc.) keeps increasing, Previously Interest rate falls hid the increase in fixed cost, but with IR looking upwards especially those holding IO loans, the holding cost is starting to bite especially when there has been no CG in last couple of years for apartments.

I was renting a lake facing 3bhk apartment at 470 in 2010, last month a similar sized apartment in same building was rented at 450/wk.

 

Eh? I was under the impression - only from reading - that the Canberra rent increase was the best in the country and was about 10% last year. Corelogic say "Rents in Canberra are growing at their fastest pace on record (extending back to 1996)"!

 

Mine is a personal example of what I use to rent an apartment for in 2009/10 and what it is renting now, same block, lake facing, next to mall/Eateries and other facilities.(On chandler st)

What exp other Canberra investor have in terms of increase in rent in last 7yrs?

 

I own 2 x 2 bed apartments in Braddon in Canberra and rent them fully furnished. They were renting back in 2010 for $550/week, dropped to about $520-30 week and have come back up to $550/week now. So a similar experience, no real increase in 7 years. Rates and land tax have increased significantly in that period. Throw in BC rates which are generally fairly high in Canberra and the annual cost to hold one of these apartments is now $6,500. Bought the apartments in 2008 for $430k and valued at 490k now. Not great investments but renting fully furnished at least the yield has been good. I think the unit market has almost hit the bottom in this cycle and oversupply (apartment from the gungahlin town centre area) is now almost flushed out. I think we may see some better growth in apartments in selected areas over the next few years because developing is becoming tougher with all the charges and their is less land available now, but i could be wrong. Vacancy rates still tight, under 1% for most areas for apartments. Rents for detached houses have increased significantly the last few years though in Canberra.

 

Have they?
A mate of mine use to rent his Gungahlin house for 550/wk in 2010, he still is, Infact he had to scale down a bit just to be occupied, And this is a highly desirable location just a stone throw from lake.
His other investments (detached houses) in tuggies(monash & isabella) is suffering similar fate.

Its also not as quick to rent as it was in 2010, limited interest? high availability at market rate?.

Again I am not making a blanket statement, its just from my personal exp from people I know. I am sure core logic is not making this up

 

Well I know a fair bit about Hawker as I rented a 2 bedroom unit on Springvale Drive for $250 per week in 2008-09 before buying the other unit on the same street (basically next door). That same unit that I was renting was recently advertised at $300 per week (pretty much original though some new carpet and paint job) and took a little while but it is now rented. Not sure how much though. But as I said, I just had my unit (the one I bought) rented on a 12-month lease for $310 per week, so that's not too bad. I'm guessing that would of been about $250 per week back in circa 2010.

 

My IP (soon to be PPOR - a house) in central Belconnen got rented out in two days last year

 

hawker: http://www.sqmresearch.com.au/weekly-rents.php?postcode=2614&t=1
gungahlin: http://www.sqmresearch.com.au/weekly-rents.php?postcode=2912&t=1
Belconnen town center: http://www.sqmresearch.com.au/weekly-rents.php?postcode=2617&t=1

Just change the postcode in link for your suburb

Depending on suburb in Canberra rents have peaked anywhere between late 2010 and mid 2012,
The reported increase in rent seems relative to what it was 1 to 3 years back and not what it was in its peak (between late 2010 and mid 2012).
So looks like from its peak in last seven year rents have not increased in Canberra.

 

ACT Labor government faces union challenge to greyhound ban

ACT Labor government faces union challenge to greyhound ban

At least the greyhound community will challenge the ACT government through their union. Too bad property owners/investors don't have the same reaction. I was talking to a lady at work who owns a unit and it is rented to their son. She said no one talks about it openly though they despise the rate and tax increases.

 

Rents are just getting near what they were around 2010. Our place was around 450pw back then. Last year 410pw. This year would be 440pw or 450pw with pets. Detached house, weston creek (good suburb - good location), house in fair condition. We always had leases finishing around December/Jan.

So while Cbr rents did go up 10% last year - theyre recovering lost ground.

Meanwhile rates etc through the roof. Same with land tax (no threshold for investors). And you pay the canberra premium for repairs and maintenance.

Still a good place to invest but you need to know the suburbs and future school zones really well (ie street near us - west section commands around 100k premium over eastern). Some school zones changing next year for the top ranked schools to be a lot tighter.

 

My original plan was to get a unit as a starter IP after buying a PPOR but with the oversupply of units plus rate and fee hikes it isn't worth it for me. I'd be looking at detached houses now.

Dunno why these high-rises keep getting built - wasn't impressed with the quality of the ones I looked at while househunting and the body corp fees end up being ridiculous. Geocon is touting their Belconnen high-rise as an opportunity to enjoy a "rich precinct lifestyle" - whatever that means.

 

Well some updates just in....

My rates were a bit under $1400 per year this past financial year. Increased to $1728 this financial year. Up 23.5%.

My land taxes this past financial year were $420 per quarter. Just learned that for the first quarter of this new financial year it will increase to $628.00. Up 49.5%.

What dirty spineless grubs.

This will be the first time I pay land tax as I've only just became a property investor, but not by choice. Was more or less forced out of my home due to a violent neighbor and the police did nothing. To say I feel annoyed is an understatement.

 

I just checked the act revenue website with the new calculator just published. Surprisingly .. land tax is actually decreased with little increase in rates Overall I reduced my payments for an IP. I wasn't expecting this. You can calculate current and last year for comparison. Let's me know your side of story..

 

Hey mate I haven't received by rates and land tax notices from act revenue yet. But based on what is on the website both rates and land tax percentages have increased for 2017-18.
Land tax percentages:
2016-17 (for each of the 4 thresholds): 0.41%, 0.48%, 0.61%, 1.23%
2017-18 (for each of the 4 thresholds): 0.50%, 0.60%, 1.08%, 1.10%
If your AUV is over 2mil then you value above 2mil gets a saving from last year (1.10% vs 1.23%).

Rates percentages (residential):
2016-17 (for each of the 5 thresholds): 0.2746%, 0.39%, 0.48%, 0.54%, 0.575%
2017-18 (for each of the 5 thresholds): 0.2960%, 0.4088%, 0.513%, 0.6013%

Then if you factor in any increase in fixed charges, and the levies pretty sure most peoples will be going up. Only reason for a decrease would be if your AUV is way down from last year.

 

No I haven't received the rates and land tax too.

I was looking just looking for the percentage at revenue website that you provided but could not found so I checked using the calculator using the same AUV for 2016-17 and 2017-18. Land Tax seems to have gone down.

Even in your percentage you see that land tax is gone down from 1.23% to 1.10%. Investors are actually saving a small amount.

Calculating rates

1 July 2017 - 30 June 2018

• Total Rates $3,419.97
• Total Land Tax $5,506.99

1 July 2016 - 30 June 2017

• Total Rates $3,249.90
• Total Land Tax $5,779.49

This calculation is based on
Financial year: 2017-18 Property type: Residential AUV: $540,000 Trust or corporation ownership: No Rental property: Yes

 

Actually it is not over 2mil as you mentioned, higher slab was at $275,001.

Land tax for 2016-17 - ACT Revenue Office

Land tax for 2016-17
Fixed Charge: $1,090
Marginal Rates that apply to property AUV:

AUV up to $75,000 0.41 %
AUV from $75,001 to $150,000 0.48 %
AUV from $150,001 to $275,000 0.61 %
AUV of $275,001 and above 1.23 %

 

Ah yep i can see why now. They have changed to brackets. From 0-75k, 75-150k, 150-275k and 275k+... to... 0-150k,150-275k, 275-2mil and 2mil+