FURIOUS at the lack of control over our investment property in QLD.
* Our expenses have skyrocketted on our rental property in QLD. Despite this, when it was time to renew our tenant’s lease, we chose to keep it about $30/week below market value and only increased her rent by $5/week due to her being a good tenant for the previous two years.
* Tenant is now in breach, and that breach is costing us a substantial amount more in our outgoings and increased wear and tear. I’m super p*ssed off because we kept her rent below market value thinking she was doing the right thing by us too.
This is the really shitty part… in QLD since mid last year, you can NOT increase the rent under any circumstance within a 12 month period. You can’t even increase it for a new lease and new tenant. If we evict her based on her breach (which she will continue to do), we lose money in re-letting fees and at least a week’s rent in the tenant changeover and then can’t even increase the rent until September this year. On the other hand, if we want to agree to new lease terms to allow her to keep her current circumstances, we still are NOT allowed to increase the rent even if it’s been agreed to by both parties.
After abusing us (via the PM) for breaching her and calling us greedy after explaining the financial cost to us, she’s now basically begging to pay the increased market rent in order for us to allow her to stay with a modification to the lease so she’s no longer in breach. But this is not allowed under QLD Law. So WTF do people do in these situations? It’s LOSE / LOSE for us no matter what we do!
Sorry, feeling all the frustration right now of an incredibly flawed system that makes me want to leave the residential rental space entirely after 25 years of being a landlord on and off. When we bought this property in 2022 we had calculated it to be comfortably positively geared after renovations. We entered at 3% interest and allowed for an increase to 5%. At the highest, we ended up at just shy of 9% interest and it completely obliterated our +geared / neutrally geared plan. Pulling my hair out trying to make this all work and wondering if it’s actually worth it….
Hi Firefly,
Yeah the previous Govt certainly made several brain-dead moves in this space over several years up here. I’ve talked of these very things in other topics. I’ve also heard of landlords bailing from the Qld market as many of those law changes impacted them.
The big one in your case though (obviously) would be the ballooning Cash Rate, leading to similarly ballooning mortgage rates. I go nuts over that in this topic from a couple of years back – https://www.propertyinvesting.com/topic/5083103-how-does-an-increase-in-the-rbas-cash-rate-help/ – see especially the later pages where I show just how much this “4%” increase is costing (I bet you know, Firefly – 4% is so NOT 4% eh?)
Those other changes imposed by the State Govt, though annoying, are really minor in the overall scheme of things. What I’ve viewed over the last two years here in Brisbane, I’d have thought your last increase could have likely been $50 a week to match every other rental I know of. You were very sweet to say just $5. Of course, I don’t know your case, your numbers, the area in which you own property, but Brisbane has gone boom in both values and rents. That also means that your Equity would have boomed too – I know, I know, you can’t eat capital gain, but hey it must help at some point. If nothing else, it justifies the higher rents surely?
Re “where to from here?” I would think there might be a way to lock in a suitable increase for September now that will make up for what you are losing now, AND allow for next year’s increase too. It sounds like your tenant might have checked out “other places” and figured you really are doing her a favour (hence her request to ‘put up her rent please’).
* Tenant is now in breach, and that breach is costing us a substantial amount more in our outgoings and increased wear and tear.
What you don’t say above is just HOW her breach is costing you? And of course, it is up to you whether or not to share such info on a public forum. The increased wear and tear might mean she is subletting to others (?) – or is she trashing the place?
Other “what now?” thoughts
– check out QCAT to see if there might be a way that you and the tenant can do what you both want to do. Perhaps the tribunal can pull some strings to bypass any laws where both parties are in agreement. This link may help – https://www.rta.qld.gov.au/disputes/qcat-dispute-options – (apologies if you have already been down that path).
– can you hold on till Sept to allow a possible lease and rent change to make up the shortfall?
– any chance of refinancing to perhaps limit the bleeding? There may be lenders offering great honeymoon rates just to have you switch (see a MB).
– fingers crossed for the RBA finally coming to their senses in Feb… but don’t hold your breath !! :p
– and of course we have had a change of Govt recently – which “may” lead to some law changes in areas where the conservatives deem that Labor went too far – but such changes could take time anyway….
– weigh up whether the Capital Gains you are seeing are more than covering the rental losses by enough of a margin to “hang in there” till Sept.
I hope some thoughts help a bit…. Good luck,
Benny
Hi Benny,
Thank you for weighing in and understanding my pain!!! Sometimes it just helps for people to ‘get it’.
We’re on the Sunny Coast which has also gone through the roof as you’d be aware. We bought a small beach shack within 1km of both the beach and the new CBD as a buy and hold but worked out a way to have two tenancies in the property (which originally would be positively geared) whilst keeping the house to a single dwelling standard. Due to our set up, we pay a portion of electricity and all of the water.
One tenant is approved for one cat and herself. Prior to xmas during an authorised repair, we also found 3 dogs and a boyfriend. Our water useage has doubled through 2024 and the electricty useage has increased over 50%. I chose not to breach her so close to xmas as it felt cruel but notified our PM to have the discussion when they were also fully back on deck. During a routine inspection this week, the PM also found the extra dogs and immediately breached her. Our other tenant has also complained about the boyfriend being there all the time. So that’s the increase in wear & tear and outgoing expenses! I wrote to her yesterday explaining that when we were notified of market rent in June 2024 it took into consideration that she was a single person and a good tenant so we chose to keep her rent as low as possible despite needing the funds for our own increasing liabilites. That I would have considered adding pets and a person to the lease prior to the renewal where I could have allowed for the additional expenses. Of course she chose not to absorb any of that information and instead hurled abuse back in the form of threats to go to council, calling us greedy and dodgy. It’s so disheartening when we always do right by our tenants and fix things immediately and have only raised the rent by $5 in two years.
So she ended up sending 4 emails back yesterday, and by the 3rd and 4th she was begging for us to put her on a modified lease for the market value amount which includes two dogs. As you suggest, I think the RTA / QCAT is the only way to get formal approval to make this happen. But what a collosal waste of everyone’s time for two agreeing parties. But if we don’t go through the RTA & QCAT for approval, then at any point she could say we forced the outcome and we could get fined. There seems to be zero space for situations like this, it’s absolutely insane!! I also do not want to keep her there at the current rent with the additions.
Our land tax has also gone up from $2600 in 2023 to $4000 in early 2024 to $6210 due now. Three bills in under 18 months and upon taking this up with state revenue their response was, ‘we can bill whenever we want’. More ludicrousy from government!
It’s like they want to rid QLD of investors, they’re making it so bloody hard when all we are trying to do is secure our future retirement and not rely on government funds. And to make it worse, due to thinking this property was going to be +geared, we put it in a trust and can’t get a single benefit from the property being well and truly in a negative space. Really trying to hold on until after the CBD is built though.
Thanks again for your reply :)
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