Showing posts with label rates. Show all posts
Showing posts with label rates. Show all posts

Friday, June 15, 2012

Newman Targets Property Owners for Tax Increases


Any further financial imposts on property investors is likely to see them pull up stumps and sell their rental properties, according to the Real Estate Institute of Queensland (REIQ).

The release of today’s audit on the Queensland Government’s finances shows property owners, and investors in particular, have once again been earmarked to financially salvage the State’s fiscal woes.  The audit has outlined potential revenue-raising measures including: imposing a $100 levy on all property owners; reducing or removing the concession on land tax; applying a premium transfer duty rate; and increasing the landholder acquisition duty rate.

Acting REIQ CEO Antonia Mercorella said property owners were sick and tired of having to bail out the government.  ‘‘Property owners - and investors specifically - seem to forever be targeted by all levels of government when they are short of cash, whether it is through higher council rates, one-off levies or higher rates of stamp duty,’’ she said.  ‘‘The additional legislative and compliance obligations on property investors over recent years, coupled with weaker returns on investment, has resulted in many opting to sell their rental properties.’’

Australian Bureau of Statistics (ABS) data shows the number of investors active in the Queensland property market has halved in the last five years.  Ms Mercorella said this number was likely to decline even further if investors were slugged with additional costs.
“We are currently starting to see the impact of this reduced investor activity with vacancy rates tightening and rents increasing across the State. If more investors left the rental market, then this situation would undoubtedly worsen,” she said.  “If land tax thresholds are reduced or removed, the added costs would put an end to the glimmers of renewed investor activity we have seen in recent months and would also likely be passed onto tenants via increased rents.  Also the unit and townhouse market in particular is yet to see investors return significantly with the additional costs associated with this type of housing deterring investors.”

Newman was unfriendly to property owners as Mayor of Brisbane -- he substantially increased rates for apartment owners, and did nothing to reduce spending by Council or the number of council administration workers.

Sunday, March 4, 2012

Campbell Newman and Apartments

Campbell Newman, when at Brisbane City Council, introduced the "parity factor", in relation to rates paid to the Council by Brisbane apartment owners.  Until this time, all rates in Brisbane were calculated based on the unimproved value of the land (regardless of the house or buildings on the land).  Under the "parity factor", apartment owners are now assessed taxes at a high rate than house owners.  In effect, house owners are taxed based on the unimproved value of the land, but for apartment owners, the tax takes into account the improvements on the land.  This doubled or tripled the rates for a number of apartment owners.

For houses, if I build a $2 million house on land worth $400,000, and you build a $250,000 house on the block of land next door also worth $400,000, we both pay the same rates in Brisbane.  But if you build an apartment building with 8 one-bedroom apartments, then the rates over all for those apartments will be higher than for the $2 million house.

I guess Campbell Newman will be looking at ways to increase taxes if he becomes Premier, and I doubt that he will be friendly to apartment owners.

Tuesday, December 6, 2011

Rent Money is Dead Money - part 3

Another interesting comment from a reader regarding the prior post Rent Money is Dead Money:

I am a number of months into my apartment owning experience, and your colum on buy versus rent this weekend was very interesting. 
 
It has surprised me how relatively expensive apartment living is in comparison to houses.   Unencumbered by the facts, you would think that apartment living would be cheaper due to massive economies of scale:
 
·         Two pools supported by 400 units not one pool by one house
·         Four large garbage collections from four points rather than traversing a neighbourhood with 400 different pickups – council gets the benefit of this one – and nobody would use tip vouchers.
·         Maintenance of larger grounds, but offset by 400 units supporting, versus grounds per house
·         Economies of scale on hot water heating by using much larger units
·         Economies of scale on water requirements
·         Economies of scale on heating and cooling due to insulation from two sides, roof and floor not being open to environment.
 
Obviously the above benefits are eroded by the cost and maintenance of elevators, the onsite manager, profit margin for developer, security, etc.
 
For my apartment, annual fees for rates etc are not $5k per your note but $9k, comprising $6k body corporate and insurance, $2k rates, and $1k water.
 
The $6k for the body corporate was not particularly out of line for similar units when I was looking around.
 
The $2k for rates is just as a result of robbery by Brisbane City Council.  My home rates are only $1.4k.  Rates for my apartment should be only $1k but a 2.1 parity factor was put on by the Council when they went through that rate adjustment exercise.
 
Obviously at home in a house, I have no body corporate, but realistically I should consider the $45 I pay a fortnight for lawns mowed as equivalent, and I look after my own pool.
 
So I am paying $1.2k/yr for lawns mowed, if I got the pool looked after I am guessing that would be $40 per month or so.  Say that’s $2k per year.  Home insurance is probably $600 per annum, can't tell as it is bundled with contents.  There are other costs with the pool, all the chemicals, the pumps/chlorinators etc and some provision for outdoor maintenace , say another $1k per year.  So in fact that is $3.6k per year, maybe a bit higher than I thought it would be.  And there are probably other episodic costs that I haven’t been quite fair to my unit on.  I just had to spend $3k to get my home pool fence up to spec.  Maybe the comparison is not as bad as I first thought.  If I am honest there would be other expenses on my house that would be covered by Body Corp for equivalent unit.
 
But still, even with all this, it seems evident that the apartment is still more expensive than house and all those economies of scale are eroded.
 
Obviously the other cost savings that you really need to be taking with an apartment are as follows:
 
·         Dropping Gym memberships and using shared facilities at the common areas.
·         Dumping at least one car – that would give a pile of savings, that are only going to get higher.
 
I don’t see the power bill for my unit, but this is an area where I suspect apartments are losing out to houses.  I've had for over a year solar hot water and solar panels for elec gen on the roof.  These have paybacks of around 5 years or so based on current elec price and are only going to get shorter payback as power bills increase.  How are apartments getting onto the bandwagon of sustainability.  I am sure it is impossible to get a pile of owners to cough up more money to install solar hot water or solar panels.

Sunday, November 27, 2011

View Tax

Apartment owners in Queensland are often taxed by local councils at higher rates than those of land owners or house owners.  People are starting to get upset by this.  In many cases the councils don't care, because the apartment owners don't live in the area and therefore can't vote.  See Sunday Mail story.

Thursday, May 28, 2009

Brisbane Rates

Saturday, January 31, 2009

Lawsuit Against Council over Brisbane Apartment Rates

BRISBANE unit owners have launched a Supreme Court challenge against the validity of the Brisbane City Council's rating parity factor scheme.

The scheme was introduced by Lord Mayor Campbell Newman in the 2008-09 Brisbane City Council Budget and has been strongly opposed by unit owners, particularly in inner city areas.

Paul Cassels and Darryl Penfold, the president and vice-president of the Brisbane Association for Rates Equity (BARE), filed documents in the Supreme Court in which they seek a court order declaring the new rates scheme unlawful and invalid. The action has been brought by Mr Cassels and Mr Penfold on behalf of all BARE members, who are owners of lots in community titles schemes in Brisbane.

Outside court Mr Cassels said the Lord Mayor had tried to set the rest of Brisbane against unit owners by declaring they were millionaire "penthouse owners".

He said that wasn't true and the BARE was made up of average people who were opposed to rate hikes of up to 500 per cent. "The actions of the Lord Mayor have been disgusting," he said.

Mr Cassels said he hoped the Lord Mayor would reconsider his stand before the matter had to go to a court hearing. He predicted the issue would be a major factor in the next state elections.

Mr Cassels said the parity factor was a controversial rating mechanism that dramatically increased the general rates on thousands of units and townhouses throughout the city along with commercial and retail strata title property.

He said while the initial impact of the scheme would be felt most in inner city and near city areas, the exponential value formula on which the scheme was based meant that every year more and more units throughout Brisbane would be automatically "caught." BARE has already been instrumental in a substantial re-working of the scheme.

However, BARE has made it clear that it wants the scheme dropped and the rates cap on owner-occupied CTS property (also removed last year as part of the parity scheme) reinstated immediately.

Source: Courier Mail

Wednesday, December 10, 2008

Rate Increases For Brisbane Apartments

"A ceiling on rate increases for Brisbane's CBD unit owners under Brisbane City Council's controversial new rates policy will be debated at today's last council meeting for 2008.

Lord Mayor Campbell Newman promised to introduce the policy from the third quarter of the 2008-09 financial year, which starts on January 1.

The scheme was proposed at June's Brisbane City Council budget and - suggested lifting the general rate paid by unit owners so they pay an equivalent rate to home owners in a property of the same value."

Brisbane Times

Saturday, November 1, 2008

Which Buildings Have More Owner Residents?

The Brisbane City Council has released a list (in relation to rate increases) that includes the number of owner occupied apartments in Brisbane apartment buildings. The full list is here. My view is that the higher number of owner occupiers in a building, the better the investment in that building.
Community Title Scheme Name Number of Units Number of Owner-occupied Units Percentage Owner Occupied
ADMIRALTY QUAYS 173 59 34%
ADMIRALTY TOWERS 151 49 32%
ADMIRALTY TOWERS II 193 71 37%
ALLEGRO APARTMENTS 117 16 14%
CASINO TOWERS 214 34 16%
CENTREPOINT 51 20 39%
CHARLOTTE TOWERS 415 29 7%
CORONATION RESIDENCES 48 22 46%
CUTTERS LANDING - CUNNINGHAM 33 14 42%
CUTTERS LANDING - FLINDERS 84 53 63%
FELIX 254 48 19%
FESTIVAL TOWERS 401 51 13%
KOKO APARTMENTS 110 36 33%
LEXICON APARTMENTS 89 16 18%
OXYGEN 191 34 18%
PARK AVENUE AT SOUTH BANK 56 32 57%
PARKLAND BOULEVARD 400 168 42%
PRECINCT TOOWONG 46 19 41%
QUAY WEST BRISBANE 136 28 21%
QUEEN STREET 570 127 9 7%
REGATTA APARTMENTS 59 17 29%
RIPARIAN PLAZA APARTMENTS 48 23 48%
RIVER PLACE APARTMENTS 314 76 24%
SKYLINE APARTMENTS 185 37 20%
THE AURORA TOWER 472 128 27%
THE GARDENS 107 23 21%
TRILOGY RESIDENCES 121 8 7%
WILLAHRA TOWER 106 16 15%

Thursday, October 30, 2008

Rates Ripoff in Brisbane

CITY Hall will drag five times the amount of general rates out of Kelvin Grove Urban Village this financial year.
Information released by Brisbane City Council after a question with notice shows some inner city buildings will collectively pour 400 per cent more in general rates in to the city’s coffers than last year, with Kelvin Grove Urban Village facing the biggest rise. The Village’s 213 unit owners paid a total $83,411 in general rates to council in the previous financial year, the information shows. But this will jump to $443,750 for the 2008/09 financial year after changes are introduced in January, designed to increase rates for some of the city’s most expensive inner city apartments. The changes, which take effect in January, will lift the general rate for the average unit owner in the Village from $392 last financial year to about $2100 for this financial year. But just a fraction of those living in the Village are owner-occupiers, meaning all but 23 units are owned by investors.
Other addresses to be hard hit by the new ``parity scheme’’ include the Parkland Boulevard building in Brisbane’s CBD, which will collectively pay 364 per cent more in general rates than last year, increasing the building’s total contribution to $753,000. The building contains 168 owner occupied units and 232 investment units.
Council will collect 300 per cent more in general rates for the year from Riverplace Apartments in Brisbane, where 76 of the building’s 314 units are owner occupied.
Owners of units in Admiralty Towers II in Queen Street will fork out 310 per cent more than last financial year.
Riverscape West unit owners in MacDonald St, Kangaroo Point, face an increase of 150 per cent over last financial year.
The information shows just under 1000 owners of units in 116 inner-city apartment blocks will together boost council’s kitty by $6.3 million this financial year under the changes, representing a 127 per cent overall increase for the addresses.
Central ward Councillor David Hinchliffe (Labor) said the changes would take a toll on residents of Kelvin Grove’s Urban Village, which he said was ``not the most salubrious address.’’ Cr Hinchliffe said the impact on unit owners would be about an 800 per cent increase from one quarter’s rates bill to the next.
But council Finance chairman Adrian Schrinner said the information put to rest once and for all claims people were facing 1000 per cent rises in their rates bills. He reiterated a previous commitment to issue letters to unit owners showing the individual increases they face ahead of the January changes.
See City News

Wednesday, October 1, 2008

Brisbane Association for Rates Equity

There is now an association of apartment owners that is fighting the Brisbane rate increases for apartments. It is called Brisbane Association for Rates Equity, or BARE.

See www.brisbaneratesrort.com
and
http://brisbaneratesrort.blogspot.com/


Saturday, June 21, 2008

Protest at Council Tax Increases

"More than 100 angry inner-city apartment dwellers attended a public meeting at City Hall today to protest "unfair" rate hikes in the order of 150 to 300 per cent."

Brisbane Times

No relief for Brisbane apartment renters

http://www.abc.net.au/news/stories/2008/06/20/2281399.htm

Brisbane Labor Councillor David Hinchcliffe says according to his calculations, which are based on the Council's budget figures, rates on some inner-city apartments will rise by up to 700 per cent.

But Lord Mayor Campbell Newman has rejected such figures.

"There have been some significant increases for a small number of properties around the CBD and CBD frame," he said.

"Typically the increase... for the hardest-hit people is around about 150 to 160 per cent."

"The worst increase for any unit in the whole of the city of Brisbane is 300 per cent."

Saturday, June 14, 2008

Rates and Rents to Increase

"TENANTS will be slugged with rent increases as council rates, high property demand, and interest rates take a hold on the industry, analysts say.

The Brisbane City Council's Budget imposed a rate increase of 8.76 per cent and extra tax for luxury innercity apartments, will sting renters already under pressure from a 55 per cent rise over the past five years...."

See Courier Mail article

"The rates increase for unit owners will rise from 7.9 per cent for a unit on land valued at less than $1 million, to 9 per cent for land valued between $1 million and $5 million, by 16 per cent for land between $5million and $10million and 60 per cent on land worth more than $10million.

These rates are higher for apartments that are investment properties."

See Brisbane Times article

See also Brisbane Times article

These increases will not only increase rents, but will make buyers think twice before buying an apartment in Brisbane.