The Australian property market has always been exciting and ever-changing, but the last few years have introduced a whole new level of complexity for investors. Whether you're a seasoned property investor or just getting started, there are new rules, regulations, and government interventions you absolutely must understand to protect your investment. Some of these changes could cost you thousands if you're caught unaware!
Here are the key points every landlord should be across.
The end of "No Reason" evictions
Back in 2020, there was a huge shift in property legislation, which fundamentally altered the balance between landlords and tenants. The ability to issue a "no reason" notice to vacate was removed, meaning landlords could no longer evict tenants without providing a legally permissible reason. This change aimed to give renters more stability, especially during uncertain times like the COVID-19 pandemic.
But how has this affected landlords? In states like Victoria, the legislation became significantly stringent, offering tenants greater protection. A landlord can now only ask a tenant to vacate if they're selling the property, are moving in themselves, or the property is undergoing substantial renovations, among other reasons.
The removal of this "no reason" notice to vacate Australia-wide signifies a broader shift in the power dynamics of the rental market, which continues to ripple through state legislation.
According to Brad Wearne, General Manager of Meridian Australia, this rule change means longer tenancy durations for landlords with minimum notice to vacate periods being reinstated. “While this is not an entirely bad thing for the most part, the process of regaining control of your property is now more complex,” he warns.
“It’s essential to ensure you have your legal bases covered with appropriate reasoning, or you could face high penalties or a drawn-out dispute. This means being tuned in to how your property is performing and being aware of notice periods, lease expirations and other market factors so that you can time or schedule the sale more effectively.”
The increasing weight of Government interference
Remember, Our qualified team at Meridian Property is always on hand to help you get started and guide you along your journey to expand and diversify your portfolio.
Government intervention in the property sector is increasing by the day. Recent legislative changes in Victoria, New South Wales, and Queensland have added layers of compliance, forcing landlords to ensure they’re across ever-evolving rules. On the surface, many of these changes aim to protect tenants in an increasingly competitive rental market. But, for investors, the burden of meeting compliance can feel like overkill.
“These changes don’t just stop with tenancy laws,” Brad explains. “Presently, there is wide speculation that the federal government is testing the waters as to whether it introduces tax reform policies that could affect how property investors claim deductions, particularly with regard to capital gains tax and negative gearing. Navigating these ongoing reforms can be tricky, so property investors must be vigilant. With an election year looming, investors should be wise to the policies of those they vote for. If you’re not, your returns could be severely impacted.”
The implications of meeting compliance and minimum standards
In recent years, landlords must meet certain minimum standards before they can lease a property. These cover everything from heating and energy efficiency to safety features like smoke alarms and secure windows. In Victoria, for instance, there are strict mandates on the type of heating that must be provided in rental properties. Meanwhile, in Queensland, minimum standards target structural soundness and weatherproofing.
This is undoubtedly a positive move toward providing quality living conditions, but for landlords, meeting these standards often means expensive upgrades.
“Failing to comply simply isn’t an option with hefty fines for those who don’t,” Brad warns. “For new investors, the cost of upgrading an older property to meet these standards could eat into already slim margins, adding an extra financial burden.” “Before purchasing an investment property, it is imperative to go in with your eyes wide open as to what renovations or future works may be required.”
The impact of a changing rental market
The rental market has transformed dramatically in the wake of COVID-19 and the rise of remote work. Vacancy rates have tightened in most major cities, driving rents higher, but this comes with its own set of challenges.
Brad says that with more people renting, competition is fierce, yet the rules governing landlords have become more restrictive.
“In some areas, rental caps are being introduced to limit how much rent can be increased annually. So, for investors looking to capitalise on the rising rental demand, this could potentially curb growth,” he explains. “On the flip side, a property in a high-demand area still presents a lucrative opportunity, as long as landlords are strategic in their choices and stay compliant with ever-evolving laws.”
Is property still worth investing in?
It’s a fair enough question: is property investment still worth it? In short - yes, but with a caveat. Investors need to be more strategic than ever. While the regulatory environment may seem increasingly tricky to adhere to, property fundamentals remain strong, especially in markets with solid infrastructure, population growth, and demand.
However, as the rules tighten, working with the right professionals becomes crucial. Property investment has always been about playing the long game, and while the landscape has changed, the opportunities for wealth creation are still very much alive.
Ready to navigate these changes?
As the rules change, so must your strategy, but you don’t have to do it alone. At Meridian, our dedicated team of experts is familiar with the legislative minefield and can guide you through these changes, helping you avoid costly mistakes to maximise your investment returns. Contact our office today to learn how we can help you stay ahead of the curve.
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