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

I see yesterday they govt finally saw some sense and are now allowing a transition period for these excessive increases. you have to wonder what they were thinking when they thought up the increased fee (with no notice/allowances), the mind boggles.

To summarise for those that care, is you did say a 1 into 2 split, it would have previously cost 15k change of use fee. under the new rules that is now 60k. Or say 1 into 5 would have cost 33k previously, now 180k.

I think any blocks in rz2 or more will now be worth roughly less the increased fee amount for that blocks potential number of units. There are 2 lots of 2 adjoining blocks in Page currently for sale. Will be interesting to see what they go for. I went to the auction for 1 set weeks ago, no bids. I can't see much of a premium due to new fees.

 

i chatted with the agent that is selling the double block.. not a lot of interest due to the new tax rule.. completely wipe out the small developer out there according to him.. it seems like rz2 is no longer worth much.. sad...

 

Not worth much until they change (again) sometime in the future. That doesn't help the fluffies since there's no income to make land banking work.

 

I wrote in the Where To Buy thread that I just got my rates and land tax notice.

Land tax up over 50% to $742 per quarter. Rates up over 35% to $494 per quarter.

$5000 a year on a property worth $325k...

And I don't get a vote on it either...

 

Thanks for sharing Marty. It's insane what this government is doing. I suspect we're about to hear a lot more squealing when people receive their notices.

If anyone is interested I contacted Scott Hannaford (scott dot hannaford at fairfaxmedia dot com dot au) at Canberra Times to offer comment on this if they are ever looking for a story. He said Canberra Times are often looking for case studies to go with stories on rate rises and property prices, and so passed my details on to their real estate reporters.

 

It's quite disingenuous to value the property at $3.093m, apply the top marginal rate, and then divide by the unit entitlement.

So I've really got a land value of $173k, but I'm paying a marginal rate greater than a detached house with a land value of $1.9million???

How does that make any sense at all?

I don't mind paying land tax, but this is over the top stupid to say the least.

 

Just received rates notice for a 2 bedroom apartment in Kingston - rates have gone from $1291.11 to $1476 - an increase of 14.3%.

Same issue as @marty998 has identified - the valuation based charge has gone from $244.11 to $528.70 (116% increase) as the calculation is now based on the unit entitlement of the apartment x the AUV rather than as previous the value of the property.

What makes this even more stupid is that someone in the same complex with the same unit entitlement is paying the same rate I am even if their unit is worth $50,000 less.

 

At least someone is trying to do something to address these absurd rate and tax hikes.

Sign the Petition

 

It all comes home to roost. Rents are rising very fast in Canberra to help offset that. My unit recently lost its tenants and had multiple applicants with a $20 per week increase, even with one applicant offering over the listed price.

 

Apartments are the biggest trouble, very hard to make money on them, no land value, strata meetings. Minor capital growth if at all.

I am warning people against buying apartments as investments, bad idea.

You see everybody is in a rush to buy before the price goes high. But reality is, you don’t have to buy, you can wait and save in alternative investments. It’s this skill that Australians need to learn.

What the investor experienced in Canberra is a fate awaiting the thousands of people buying investment property apartments in Sydney, Newcastle and Wollongong and every between.

The average developer makes about 100% profit on apartment blocks. That’s the closer to true value, the cost price divided by the number of apartments plus some extra 10k for the convenience. The apartments being built are first class ****.

 

I get your point but I can also slightly understand the concept which the Guvment has applied.

If I am right, and I'm likely not, it's an attempt to tax apartments on the same basis as freestanding properties in Canberra.

Assume two freestanding houses. Both on the same size blocks next to each other and both have the same a unimproved land valuation. However, one home is in spiffing condition and the other is a dump. The spiffing one has a much greater sale value as opposed to the dump. So imposing a greater amounts of rates on the spiffing house is probably considered inequitable whereas doing it on unimproved value is.

The same concept is likely why the rate calculation formula for apartments has changed. Just a guess.

 

Fair points - it makes more sense to me with the example you provided and on further reflection. Apartments are no longer (IMHO) the value proposition they once were in Canberra compared with the costs of owning a standalone house.

 

Just signed!

Definite demand in the right areas atm- just had 30 applicants for my house (3/1/1) in Florey.

A colleague of mine had 10 or so for his 2br unit in Kingston recently too

 

Canberra unit rents surge to record high: Domain report
Renting in Canberra is nearly as pricey as Sydney

Probably supply and demand but also the effects of increasing rates and land taxes.