Queensland Rent Controls Revisited

October 28, 2022 Edward Dever

The Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022 is The Greens' latest attempt to impose rent controls on residential rental properties in Queensland.

Under the proposed Bill:

- a two year rent freeze will be implemented with the maximum permitted rent being the relevant property's rent on 1 August 2022..

- landlords who shift a property to the short-term accommodation sector during the rent freeze period will be fined over $7,000.

- newly built properties during the rent freeze period are subject to rent caps based on the suburb's median rent.

- future rent increases (after the two year freeze) are limited to 2% every two years with no end date.

There are no plans to implement any form of freeze on expenses such as rates, water rates, land tax etc.

After the furore over the Qld Government's now shelved plans to assess land tax based on combined Qld and interstate land holdings, this Bill is generally flying under the radar

Stakeholder submissions are sought by 31 October 2022.

Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022

Residential Tenancies and Rooming Accommodation (Rent Freeze) Amendment Bill 2022 - Submissions

October 2022

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

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

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

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

Covid-19 Land Tax Relief - How Qld and NSW Programs Differ

September 18, 2020 Edward Dever

Covid-19 has shown that Australia is a collection of States and Territories rather than one nation.

Australia has become a quagmire of different rules for travelling between States. We have seen different rules apply to similar events such as funerals depending on your State.

Land tax relief is another example of State differences.

In Qld, land tax relief is offered to landowners where the ability of the #tenant to pay rent is affected by Covid-19 (and their rent is reduced) and also where the landowner's ability to secure tenants has been affected by Covid-19.

Qld relief is self-assessed. (Subsequent auditing is likely.)

Qld is also extending the relief to the 2020-21 land tax liability (applications close on 26 February 2021).

(Qld Land Tax Relief Measures)

In NSW, relief is offered to landowners whose tenants can prove Covid-19 financial distress and have been provided rent reduction.

No relief is currently provided to landowners where their ability to secure tenants has been affected by Covid-19.

NSW is approval based rather than self-assessed.

Relief is currently limited to the 2020 land tax liability.

(NSW Land Tax Relief Measures)

Qld clearly has the more generous relief program at this point.

Update - 23 September 2020

NSW has now extended its Land Tax relief program until 31 December 2020.
Rental support measures in NSW to be extended for six months

September 2020