Dual Living/ Dual Key/ Dual Income/ Renting Granny Flats - Mostly Unlawful in QLD

Discussion in 'Innovative Property Investment Techniques' started by RPI, 22nd Nov, 2018.

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  1. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    Hi All

    I have commented on this on various different threads and talked about some specific areas we have been dealing with at the time, like the 100 odd properties in trouble in the Bundaberg Council area we are currently dealing with (about 30 of them and growing are our clients).

    Despite only selected areas allowing these properties, they continue to be built and marketed on mass, primarily to southern investors. We received emails at work from 3 different agencies/ marketers this week alone flogging these things.

    Moreton Bay, Logan, Ipswich allows them to be rented separately, although Logan has made and Ipswich is making changes due to the proliferation.

    They are perfectly legal to build in most council areas, but need to be rented to a single household which defeats the purpose they are being marketed too.

    Sunshine Coast has streets in some estates that are almost all dual key/dual income (Looks like a 5 bedroom house from front but in reality is 3 bed on one side and a 2 bed on other with a firewall down middle). Loads are being flogged in Woombye now.

    Many builders, agents and marketers seem to think that because a certifier signs off on the built form then they are ok. Simply not the case and councils are cracking down. Hervey Bay is starting, Sunshine Coast are looking.

    We have a fix in Bundaberg, Hervey Bay promising, but Sunshine Coast will be problematic for those built in clusters.
     
    David_SYD, New Town, Empire and 5 others like this.
  2. abbyfresh

    abbyfresh Well-Known Member

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    So if these new ones meet all the building and council approval laws / signs-offs - then the real final issue is whether 2 separate leases are permitted or not?

    Does it fall under the granny flat laws or something else? What if your agent just did one master lease and sub-leased the rest to a whole lot of flat mates to the legal limit. Would that be one way around it?
     
  3. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    It comes under the dwelling house code, these are primary and secondary dwellings.

    A secondary dwelling must be USED(apart from a few councils in QLD) by a single HOUSEHOLD.

    A household (for non relatives) is a group of unrelated parties (no more than 5 usually due to fire regs and most councils include this limit somewhere in scheme) that come together with the intention of living together long term (>3 months) and share the common necessities of life, eg food, electricity, shelter.

    Some councils go further and say it must be food, some limit it to only some things. Regardless, you can't get around it under the dwelling house code if the agent or the owner organizes the individuals that are coming to live together. Also if the council inspectors turn up and each side doesn't have a key to the otherside, fairly clear indicator that they are not a household. We have had lots of different people try different ways to sneak under the radar.

    Generally it is a disgruntled former tenant (I might have punched holes in the wall but you didn't give me my bond back) or a neighbour (they parked out the front of my house) that makes the complaint. Council then gathers evidence, gets a warrant, turns up with 2 police officers and an electrician and inspects the properties, takes photos etc. The owner will then have to appear in Magistrates Court for prosecution and sentencing. Fines and criminal convictions apply. I doubt anyone in Australia will not employ you because a criminal conviction says you broke planning law, but the USA and other overseas Visa systems don't discriminate between those convictions and others. Costs $15-$20k to defend in mags court and we generally don't a conviction recorded and the fine is reduced to $2-$5k.

    If people aren't sneaky about it, then it is show cause notice and enforcement notice. Enforcement notice tends to give 2 months to evict one side, appealing same costs $18,500 plus GST which stays the notice (eg you don't have to evict), but then you have to regularise the use through a DA of some sort in that time, or at least try to.
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    What is the appeal to marketers and buyers of these types of properties? I noticed there were a bunch in Ipswich and surrounds, some had 3 bedroom 2 bath one side, 2 bed 1 bath the other side - Only 'appealing' thing I can think of is increased rental incomes?
    Would a buyer be better off with one standalone 4 bed 2 bath house on same size block in the same area (for Capital Growth)?
    My uncle is a builder in these areas and has been approached by marketers saying they want the him to do these Dual Key houses "because they can sell them easier" - I can't see why that would be.
     
    Last edited: 22nd Nov, 2018
  5. hammer

    hammer Well-Known Member

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    I was targeted by marketers to buy one of these.

    The pitch was that it was 2 rental incomes/positively geared from day one etc....

    I am glad that I didn't take them up on their "offer"....
     
    Lindsay_W likes this.
  6. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    The appeal is the rental return.

    So one of my clients gets $350 for the 3 bed and $320 for the 2 bed. They get just under $400 per week for a 5 bed house in the same street. Little more cost to build, lot's more rent.

    I have seen others that are $350 for a house and then $300 for the 3 bed and $280 for the 2 bed. Regardless of breakdown it seems like much higher rents
     
    Whitecat likes this.
  7. gman65

    gman65 Well-Known Member

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    Is the onus on the owner to enforce this if is a rental? For instance entire property is rented to one individual, yet they go and sublease the flat/outhouse to another party.
     
  8. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    They should put a special condition in the lease to cover that sort of situation.
     
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  9. iinvestor

    iinvestor Active Member

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  10. euro73

    euro73 Well-Known Member Business Member

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    This is why I don’t go near SE Qld . Any idea that starts off well just ends up being cannibalised there ... If you want a dual occ - stick to NSW where the AHSEPP makes them perfectly legal and perfectly rentable to seperate unrelated parties .
     
    David_SYD likes this.
  11. radioactive

    radioactive Well-Known Member

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    If we had to summarize, would be okay to say that in the said councils:

    1. Perfectly legal to build a dual occ/dual (side by side or detached design)

    2. Can be leased out to two separate parties


    It would be great if you can share some critical due diligence points in regards to the same.
     
  12. Jtee

    Jtee New Member

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    Does this apply for older 2 storey houses that are split with one rental upstairs and one below?
     
  13. Louise Beckingsale

    Louise Beckingsale New Member

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    hello

    Hello,

    I am a prospective investment buyer in sunshine coast. I have been investigating dual lease (and all those terms) properties for some weeks now. I cannot believe the amount of misleading advertising around and information by sales agents who know differently to what they are saying. I nearly bought what I was told was a duplex that could be strata titles until I found out the dwelling was only dwelling and secondary dwelling according to the Sunshine coast Council and changing the MCU would not necessarily be a straight forward process or even possible. This means it cannot have two leases on it. The agent went from assuring me it could be strata titled, to assuring me it could be on two leases to the very weak assurance that the property managers have no problem. Then he told me to basically go jump as I had two many concerns. No, I had discovered he had told me incorrect information and had been caught. I ask what is the situation up in Bundaberg and Hervey Bay now. Can a secondary dwelling situation be rented on two leases? I am at a loss as to where to do. I would like to buy a place that can be dual leased but do not want to be caught....and have all those fines and anguish and loss of money. Thank you in advance.. Louise.
     
  14. Marg4000

    Marg4000 Well-Known Member

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    Your best bet is to phone the council in the area you are interested in, and ask for current and correct advice.
     
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  15. gman65

    gman65 Well-Known Member

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    Report the agent to reiq and sunshine city council...giving misleading or quasi legal advice is frowned upon.

    Probably will have little affect, but hey, at least you did what was right.
     
    KateSydney likes this.
  16. Talicska

    Talicska Member

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    @RPI - is it still an issue with BCC if it is a dual occupancy, and the owner is living in one half and rents out the second half? (say e.g. to a family, or less than 5 individuals)
     
  17. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The BCC development application will guide this. A code assessable application may be required for changed use (activity) or to either dwelling.
     
  18. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    Yes. A single household group across the lot unless approved as a multi. Chat with Brett at PRO town planners. 33994969. He won't charge you for a chat about it.
     
  19. Hebro

    Hebro Well-Known Member

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    Yes, but are there grey areas?

    Can you rent part of a house? Or a room/s in a house?

    Eg, can you have a share house, where residents are entirely to use separate areas?

    There are lots of share houses, which council does not pursue?
     
  20. Hebro

    Hebro Well-Known Member

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    And also, should the heading be QLD, lots of different approaches from different Councils, Logan, Gold Coast?
     

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