Queensland's Land Tax Changes Shelved - For Now

September 30, 2022 Edward Dever

In a backflip worthy of a competitor at the 2032 Olympic Games in Brisbane, Qld Premier Annastacia Palaszczuk has now ditched the 2023 land tax changes which sought to assess land tax based on land holdings throughout Australia.

Shelved at least for now but perhaps not forgotten.

Earlier this week, the Qld Treasurer Cameron Dick was adamant the changes would proceed.

"It is understood Ms Palaszczuk made the decision on Thursday night to shelve the scheme after speaking to her interstate counterparts."

NSW, NT and Tasmania were not particularly keen to co-operate.

The Qld Treasurer claimed the tax was to close a loophole used by people in Sydney to flip properties in Qld. However, this side stepped the fact that it applied equally to people in Qld who owned an interstate property. The Government's own example of "Lena" on its website related to a person who owned a property in Qld who then buys a property in Victoria.

The Qld Treasurer also claimed that investors use the tax-free thresholds in each State to avoid paying land tax. While this may be the case, he offered no details on how widespread this practice is.

He also stated that rents in Qld would not be affected by the land tax changes. It seems reasonable that any landlord impacted by the land tax changes would have tried to pass at least some of that cost onto their tenants. The timing of the land tax changes, in the midst of a rental crisis, was unfortunate.

The now scrapped changes would have resulted in a person already paying land tax in another State being assessed on that property again by the Qld government. No credit was to be given for the land tax already paid in that other State.

It would be interesting to see the Qld government's evidence that investors use the tax-free thresholds in each State to avoid paying land tax. I would be surprised if land tax avoidance is the primary broad-based reason for interstate investment property decisions. But, if that is the case, perhaps something can be (better) tailored to deal with it.

Qld shelves controversial land tax plan

September 2022

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Qld's 2023 Land Tax Changes - Industry Response

September 9, 2022 Edward Dever

In the past week, much has been said and written about the Qld Government's 2023 land tax changes which will calculate land tax based on the total value of all Australian land (not just Qld land) held by a land owner.

Here is a sample:

Antonia Mercorella, CEO, REIQ - “It is irreconcilable that the Treasury expects to legitimately raise tax on the basis of value of property held outside of Queensland for the purpose of funding infrastructure within Queensland,”

Leisa Rafter, Chair of the Tax Institute’s Queensland committee - “The changes to land tax are likely to increase the compliance costs for taxpayers as well as the administration costs for the Queensland revenue office – there is a potential for the combined compliance and administrative costs to outweigh the revenue collected.”

Hayden Groves, President, Real Estate Institute of Australia - “It’s a dangerous move and if other states see Queensland pulling in revenue from around the country they could follow it. It has never been done before and for good reason.”

"The REIQ has called for repeal of the ‘illogical’ new land tax regime, while the Tax Institute has also warned that the ‘increase in compliance costs may disproportionately impact individual and smaller taxpayers, especially those who reside in other states and now find themselves liable to land tax in Queensland’.”

Qld Parliament resumes next week with the State Opposition calling on the Government to release its modelling on the new tax. The Government is under further pressure from the State Opposition and the Murdoch media to hold an emergency housing crisis summit.

Queensland’s property levy scheme could backfire

September 2022

Will Qld's 2023 Land Tax Changes Drive Away Interstate Investors?

September 7, 2022 Edward Dever

Only time will tell. However, it seems reasonable that a residential property investor with multiple interstate properties and only one or two Queensland-based properties will sell them to avoid the reach of the Qld Revenue Office. (Equally, an investor with predominantly Qld-based properties may sell off an interstate property to avoid a land tax hike.)

If Qld properties are retained, investors are likely to want to increase rents to try to recover some or all of the additional Qld land tax.

Either way, it is likely to exacerbate the already difficult rental climate in Qld. (Not forgetting the Greens plans for nationwide residential rent controls.)

Under the 2023 Qld land tax changes, Qld land tax will be calculated based on:

1. the total of your taxable land located in Queensland. and 2. the statutory value of your interstate land.

Qld land tax is calculated based on the taxable value of Australian land which is then applied to the Qld portion of the land holdings.

The Qld Revenue Office's example has the fictional Lena's Qld land tax bill increasing from $1,950.00 to $8,422.37.

There is no credit given for land tax payable in another State.

It is surprising that it has taken this long for the issue to be picked up by the media and many investors will be unaware of these changes. However, for the moment, the Qld Government is holding firm. Also, once implemented in Qld, how long until other States follow suit?

Fears over land tax changes to include interstate investors’ holdings outside of Queensland

September 2022

Rent Control - Failed in Queensland, Try Canberra

August 29, 2022 Edward Dever

Federal Greens MP for Griffith Max Chandler-Mather has announced a proposal to freeze residential property rents for a two year period followed by a maximum 2% increase each two year period thereafter until wages catch up to rents.

The proposed national rent control measures are to be backdated to 1 August 2022. Any residential properties not rented at that time (including new builds) can only be rented at the suburb's median rent. Rent stays frozen even if a landlord renovates the property between tenancies.

The Greens propose that the Federal government force each State and Territory government to impose these rent control measures while at the same time ending negative gearing and CGT concessions for residential property and calling on the Reserve Bank to halt interest rate rises.

Missing from the proposal was any discussion of a corresponding freeze and subsequent caps on government charges such as council rates, water rates and land tax. No comments either on whether (somehow) a freeze should be enacted on insurance, strata levies and maintenance costs.

Also missing was any comment that a similar proposal was made in Qld in 2021 by Greens MP for South Brisbane Amy MacMahon as a Private Members Bill. One of the provisions of the Residential Tenancies and Rooming Accommodation (Tenants’ Rights) and Other Legislation Amendment Bill 2021 stated that rent increases be limited to CPI increases.

This proposal was rejected by the Qld Parliament and the Bill was discharged on 14 October 2021.

The Greens claim Victoria froze rents for six months during the Covid-19 pandemic and this justifies their rent freeze proposal.

However, the pandemic rent freeze in Victoria was accompanied by cost related measures such as deferrals and interest waivers on costs such as council rates and water rates. Similarly, Qld residential property investors were able to access discounts, deferrals and reductions on costs such as council rates and land tax. The Greens propose no such equivalent measures.

The Greens proposal seems to have a few hurdles. As PM Anthony Albanese said recently - "It's not clear to me short of nationalising property how that could be achieved and I haven't seen any proposal."

It is not clear whether the PM will seek to impose the Greens rent control measures on the State and Territory governments.

Update - Meanwhile, Greens MP for South Brisbane Amy MacMahon plans to resurrect her failed Bill, update it for the proposed more restrictive rent control measures and submit it to Qld Parliament for consideration.

Proposal for rent control put forward

Report No. 8, 57th Parliament - Residential Tenancies And Rooming Accommodation (Tenants' Rights) And Other Legislation Amendment Bill 2021

Greens Push To Freeze Qld Rents

August 2022

Residential Tenancy Vacancy Rates Plummet and Rents Rise

June 27, 2022 Edward Dever

Australia is in the grip of a residential rental property crisis (or boom, depending on your position as a tenant or landlord) with very low vacancy rates and rising rents.

There are some interesting comments in the linked article. Based on ABS survey results, there are apparently around 577,000 investment properties sitting vacant across Australia.*

There are likely to be numerous reasons why residential vacancy rates are currently so low. The recent boom in residential property prices has encouraged some investors to exit the market with increased owner occupiers purchases. Changes to tenancy laws may also be a factor in investors selling. Covid-19 resulted in enhanced internal migration to regional areas with the normal internal migration to major cities temporarily reduced. Short-term lettings are also a factor, taking properties out of the normal tenancy pool.

Tenants do seem to be less willing to move at present, with tenants in well maintained and fairly priced properties renewing their tenancies well in advance.

Encouraging some of these 577,000 vacant investment properties into the rental market would no doubt assist the current shortfall.

Meanwhile, Brisbane City Council has announced it will apply a 50% rates surcharge to residential properties used for short-term letting, including on platforms such as Airbnb. Properties subject to the surcharge will be changed to a transitory accommodation rating category. The surcharge will not apply to the letting of individual rooms, granny flats or share accommodation nor where the short-term letting is restricted to less than 60 days per year.

Council will rely on owners self-identifying with neighbours also encouraged to report their neighbours short-term letting activities.

* Note - ABS subsequently clarified to the Courier Mail that “the data includes properties used for other purposes, such as holiday homes, second residences, dwellings occupied rent-free by family members etc”.

Matusik - Housing Demographics

Brisbane City Council to hike rates on short-stay properties

June 2022

Will Landlords Need To Provide References To Tenants?

March 23, 2022 Edward Dever

There is a motion before the ACT Legislative Assembly on 23 March 2022 which "calls on the ACT Government to consider whether prospective tenants should be given the right to receive references from landlords’ previous tenants."

The motion is broadly framed and does not outline what might be required.

In practice, allowing prospective tenants to request references from previous tenants may not be particularly helpful if those tenants do not wish to, or cannot, provide references in a timely manner. A better approach may be to provide details of the ACAT (or QCAT in Qld's case) matters involving the landlord in the past three years.

The ABC reports that "If the motion is passed, prospective renters in Canberra would have the right to request a landlord reference from a previous tenant, detailing their treatment by the landlord."

Not exactly. The motion calls on the ACT Government to consider the issue and "report back to the Assembly on this matter during the November 2022 sitting period."

Any change in ACT would seem a long way off.

In any event, landlords who treat their tenants fairly and make necessary repairs in a timely manner should have little to fear.

New ACT Legislative Assembly motion seeks to allow prospective renters to request a landlord reference

Legislative Assembly for the Australian Capital Territory - Notice Paper - No 40 - Wednesday, 23 March 2022

March 2022

Property and Extreme Weather Events

March 15, 2022 Edward Dever

Interesting insurance company research on the likelihood of extreme weather events and the impact on property and insurance.

Plenty for landlords, strata committees and Governments to ponder.

Insurers brace for rising flood damage amid climate change, and they warn you should too

March 2022

Qld's New Rules On Pets In Residential Tenancies Commence 1 October 2022

February 25, 2022 Edward Dever

Queensland’s rental reforms regarding pets in residential rental properties commence on 1 October 2022.

From that date: "If a renter requests to keep a pet, a rental property owner must have reasonable grounds to refuse and respond in writing to this request within 14 days. Reasonable grounds include if the property is unsuitable, and if keeping the pet would breach laws or by-laws.

Rental property owners can also place reasonable conditions on pet ownership, including that the pet is to be kept outside or that carpets are cleaned, and the property is fumigated at the end of a lease. A rent increase or bond are not reasonable conditions. The laws also clarify that fair wear and tear does not include pet damage.

Minimum housing standards for Queensland rental properties will start applying to new leases from 1 September 2023 and to all rental properties from 1 September 2024."

Date set for remaining Stage 1 Rental Reforms to commence

February 2022

Qld Parliamentary Committee Green Lights Pet Tenancy Amendments

August 30, 2021 Edward Dever

The Community Support and Services Committee has released its report on the examination of the Housing Legislation Amendment Bill 2021. It has also released its report on the Greens' sponsored Residential Tenancies and Rooming Accommodation (Tenants' Rights) and Other Legislation Amendment Bill 2021.

In short, the Committee has backed the Government's Bill and rejected the Greens' Bill.

In terms of tenancies and pets, once enacted, landlords will have 14 days in which to respond to a pet request otherwise the request is deemed approved. Pet requests may only be refused on prescribed reasonable grounds. Landlords can impose reasonable conditions on pet approval. Rent or rental bond increases are not considered reasonable conditions. Fair wear and tear under a lease will not include pet damage.

The Government expects the proposed implementation time frame for the pet amendments to be 12 months from the date of the Bill's Assent.

The Bill also implements amendments to ending tenancies, establishing minimum housing standards and protections for vulnerable tenants.

QCAT anticipates that the overall tenancy reforms will "increase the number of non-urgent residential tenancy matters by 53 per cent, which is around 2,500 additional applications. QCAT also estimates that there may be an 8 per cent increase in matters that go to the QCAT Appeals Tribunal."

Housing Legislation Amendment Bill 2021
Report No. 7, 57th Parliament, Community Support and Services Committee, August 2021

Residential Tenancies and Rooming Accommodation (Tenants' Rights) and
Other Legislation Amendment Bill 2021
Report No. 8, 57th Parliament, Community Support and Services Committee, August 2021

August 2021

Queensland Tenancy Reforms Draw Near

July 8, 2021 Edward Dever

On 18 June 2021, the Qld Government introduced the Housing Legislation Amendment Bill 2021.

The Bill sets forth the long awaited reforms of tenancy legislation which were the subject of a lengthy public consultation process.

Part of the draft reforms relate to tenants' rights regarding pets.

It was expected that Qld would follow the southern States approaches.

The Bill falls short of Victoria's keeping pets as of right approach . (The Qld Greens Private Member's Bill is closer to the Victorian model.) Further, Qld strata schemes would be entitled to use their by-laws to restrict pets which seems contrary to the position in NSW following the Cooper case.

It is not clear at this stage whether a blanket 'no pets are allowed' strata by-law will be acceptable to the Qld Government given that a landlord will be unable to use 'no pets are allowed' as grounds for refusing pets. But it seems unlikely.

Proposed Section 184E(1)(f) is quite broad. However, the days of complete strata pet bans seem over and not destined to make a return.

The Qld Government may take the view that QCAT (or an appeal court) will confirm that the use of blanket no pet by-laws in Qld strata schemes is "oppressive or unreasonable" and therefore adopt a similar approach to the NSW Court of Appeal in Cooper. In the past, strata by-laws that have prohibited pets have been ruled as oppressive and unreasonable by QCAT and, prior to that, by the CCT.

This may be the reason the Qld Government has not moved to amend the Body Corporate and Community Management Act 1997 to exclude no pet by-laws and align this Act with the prohibition on complete pet bans in Section 184D(5) of the Bill.

The Bill has been referred to the Queensland Parliament Community Support and Services Committee with a report due by 6 August 2021.

The closing date for written submissions to the Committee is 12.00pm, Tuesday 13 July 2021.

Participate in the Committee process

Housing Legislation Amendment Bill 2021

Housing Legislation Amendment Bill 2021 - Explanatory Notes

Greens Private Member's Bill - Residential Tenancies and Rooming Accommodation (Tenants’ Rights) and Other Legislation Amendment Bill 2021

Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250

July 2021