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
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