Hi all,
Warning, this is a rant. Brace yourselves investors and home owners… I've just received a council rates notice and insurance premium renewal in the post, and I must say, I near fell off my chair. Here is what you might expect to see when it hits your letterbox:
More than 10% hike in council rates, which on the notice directs you to observe the hike is largely in the garbage collection fee and that the carbon tax is to blame. Thanks Labour Government.
A 40% hike (that's right , 40%…. not 4%) on insurance premiums (at least on my premium… so the insurance broker will be getting a call in the morning to sort out a better deal for me). A 40% hike suggests that what, 40% of the country was obliterated (not slightly damaged, but obliterated) during the last year. What the????
There are really only three things to say about this:
The insurance ombudsman will likely get a lot of complaints. Perhaps we propertyinvesting.com folks should lead the charge.
Rents will have to be put up by a lot more than the standard $10 a year to cover these price-hikes, and then some more if the investor is to be moving forward at all. If you have a lease that is about due for renewal, you might want to think twice before you play mister nice guy and not put the rent up, or to put it up by only $5.
Pay attention to how your efforts to get ahead and pay for your own retirement through intelligent investment is being rewarded by wonderful government initiatives like the carbon tax. Remember that at the next election people. For the love of god, do not vote these fools back in again! Educate your friends and those around you about the same. Cause and effect. Put idiots in charge of the nation and expect to be paying for their mistakes out of your hip pocket.
Rant over.
All this said, if such costs are going up, then the cost of construction will surely have to go up to, which will also drag up the value of already-existing dwellings and buildings. Bring on the capital growth. Perhaps we should expect growth of 60% this year to make up for the enormous hike in holding costs hahaha.
Comments welcome.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Lol!
I got slammed on here when I bagged out the Labor party years ago, now it's in fashion!
JacM, something has to give, there is price gouging on pretty much everything atm, and there will come a tipping point.
We'll just have to see what tips!
Off you go now Swanny and Jules!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeShop around. My quotes for landlord insurance varied by 100% from the cheapest quote. Tip – try Westpac but you need to open an account and also GIO (the cheapest I was able to get). Saved me thousands over the major known insurers. And yes all my council rates went up by between 9-14%. Even my local council tip rates went up 50%
Thx Julia. Bring on the next election.
Shop around. My quotes for landlord insurance varied by 100% from the cheapest quote. Tip – try Westpac but you need to open an account and also GIO (the cheapest I was able to get). Saved me thousands over the major known insurers. And yes all my council rates went up by between 9-14%. Even my local council tip rates went up 50%
Thx Julia. Bring on the next election.
Incidentally, GIO is the company that has slapped the 40% price hike. I'm going to use an insurance broker. I am sick of discussing this policy with GIO. It's an unstrata'd unit block which confuses them greatly and they waste hours of my time and the planet's oxygen trying to get up to speed and understand what's going on.
Indeed bring on the election. These past couple of years have been the most spectacular mess of managing Australia's money I have ever seen. Horrible to note that at the end of the last term of government (less than 4 years ago) our great nation's budget was in surplus. Oh what a fine deficit mess we are now in. Goodbye Labour Government.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
While I'm no fan of the carbon tax or Lab for that matter I suggest not slitting one's wrist just yet. There is supposed to be a trade off with increased CT costs and tax reductions (increases to tax free thresholds) in other areas. It's also a tax deductible item I believe (because its not differentiated as part of your council rates bill).
Because your effectively a business for tax purposes you should be able to manage this without too much difficulty and very little cost if any over all.
The insurance thing is a result of insurance co's being literally smashed both here and in NZ ($5B+) with a series of major disasters that have cost them big. Their reinsurers have also taken big hits globally and many of the local insurers face significant increases in reinsurance premiums. Your risk will profile will certainly up your premium but even a low or unchanged risk profile will still see some of the risk burden distributed across the broader customer base.
There's also a change to flood cover and its definition after the debacle in Qld. Check to see what they're offering in that context.
You can only shop around and do the best you can. Everyone will be in the same boat.
My local tip fees went up 40% when the CT started. Hard to see why… all the methane, perhaps?
In that case there should surely be a large bill for our nation's capital!
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
And labour are patting themselves on the back while they tell us the sky hasn't fallen down yet because of the carbon tax. There's been very little time yet for the increased costs to become apparent and filter down to the end payer. The pat on the back should be delayed…. it will eventuate into a kick in the ass.
Can we pass on the increased costs to the end user being the tenant ?
(with no explanation as we are not allowed to say due to carbon tax rather due to the suppliers of services used to provide accommodation have increased charges to the Landlord which have to be passed on to the end user)
My rates last year went from $400 up to $600 due to my property value increasing. That is a 50% increase in rates.
How would the tenant react if I increased the rent by 50% ?
exactly. the issue is more that landlords across the board need to have the same view… put the rents up. otherwise those that opt to put their rent up will essentially be offerring a product way more expensive than the other dwellings around, and end up with a vacancy.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Just spoke to an insurance broker by the way, she is saying premiums across the board are going up minimum 35%. So in essence there is no getting away from it.
Pondering whether to send a courteous letter to my tenants explaining that rents will go up a bit more than the standard increase this year, and explain the reason why. They have contents insurance themselves so sooner or later they will see the hikes on their own premiums and know that they are not being taken for a ride by the landlord.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Take a deep breath Jac these increases won't bankrupt you anytime soon. In reality the cost increases are less than 1% of rents on average and you get to claw some of that back in tax deductions. What's that … couple of dollars per week? Didn't we just see 2 interest rate reductions. Did you let your tenant know interests costs have gone down so you're lowering rents to be fair.. I think not.
The reality of the situation is that all businesses are under cost/margin pressures. One could preserve margins if both sides of the ledger (tenant incomes) were rising together but they aren't. Landlords set rents based on what a market can tolerate. The quality of a tenant has value as well and that can be eroded or lost if rents are pushed above tolerance levels.
My guess is that it's going to be increasingly challenging to raise rents over the next 18 months. The tenant is also facing cost pressures along with employment security issues as well.
The idea of landlords acting together to collectively raising rents is fanciful. They all have differing priorities, cost/margin/income profiles. You're always going to compete with other landlords who have the most efficient/economical investment property. They can have good margins while still offering competitive rents. Welcome to the (almost) free market.
Freckle wrote:Did you let your tenant know interests costs have gone down so you're lowering rents to be fair.. I think not.No, though I also didn't let them know when interest rates went up. If rents are raised a little each year it generally balances out the ebbs and flows of interest rate impact.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I try and look at it from both sides but the landlords do bare the brunt of most of these issues. Tenants trash our places and are allowed to continue renting. You have to spend about 100hrs searching for a decent property manager who will put a decent person in our asset. Insurance companies know we need this for our properties and are practically holding everyone to ransom. I like the idea of a uprising off landlords fighting the banks/tenants who trash our assets and any other thieving company.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
We get hit for pulling it out of the ground and hit again twice as hard for putting it back in. Who says you can't get money for nothing?
Sounds like you've had a few issues DK.
You have to be realistic. Renting your property is a commercial transaction and always has a risk element. PM's and insurance companies reduce financial risk but do nothing to eliminate the chance of default or damage.
I feel sorry for PM's sometimes. Clients pay penny's in fees but expect 5 star treatment and service. A months worth of fees would barley cover one call out.
duckster wrote:Can we pass on the increased costs to the end user being the tenant ?(with no explanation as we are not allowed to say due to carbon tax rather due to the suppliers of services used to provide accommodation have increased charges to the Landlord which have to be passed on to the end user)
My rates last year went from $400 up to $600 due to my property value increasing. That is a 50% increase in rates.
How would the tenant react if I increased the rent by 50% ?
I probably will try as best as I can to pass on the increased costs to the tenant… that's how i'll try and solve the increase rates and premiums issue
I forgot to suggest you should read the comments below the article. The increases are widespread and exhorbitant.
moxi10 wrote:Good grief. This is really taking the mickey. I don't understand how this can be allowed to happen. What on earth are those muppets in government doing, allowing price hikes of this kind.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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