Tag Archives | Real Estate Market Update

If You Haven’t Got Landlord Insurance You’re Nuts!

Landlord insurance is a vital risk management tool for professional property investors. Specific risks associated with owning investment property are covered by landlord insurance and the premium is tax deductable.

Landlord insurance will generally cover:

  • Malicious and accidental damage by a tenant
  • Theft by a tenant
  • Landlord’s legal liability
  • Loss of income should a tenant abscond
  • Rental defaults

Standard home and contents insurance do not cover such circumstances and it is important for investors to fully protect their assets. Landlord insurance is generally affordable and should be considered a “must have” for the professional property investor.

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The Rental Market on Its Way Up

Recently released figures reveal that rents across Brisbane are rising while days on market are falling. We’re happy to report that this certainly fits with our rental department’s experiences.

Please find the latest statistics for the month of August tabled below.

We believe that transferring one of our top selling sales agents, Ricky Grierson, to our property management department this month, has been a critical factor in us achieving a greater than average increase in rents for our owners.

Ricky’s experienced understanding of what’s needed to present a property for the greatest appeal, as well her ingrained sense of urgency to achieve results from years achieving in Sales and marketing has assisted us in renting our properties faster and for higher rents than ever before!

Ricky Grierson is contactable on 07 3510 5221 or via email profilerentals@remax.com.au  to discuss how we can increase your returns for your Brisbane property.

Brisbane, QLD August 2011 Annual Change
Median Weekly Rent – House

$380

2.90%
Median Weekly Rent – Unit/Apartment

$360

2.90%
Days on Market (Avg)

26.1

2.90%
Days Vacant (Avg)

16.9

4.80%

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The Ups and Downs of Rental Properties and Minimising your Losses

We all love it when we own a rental property and all’s going well. When the tenant is paying on time and looking after the place and no repairs are required and the property is going up in value – we wish we had another ten properties! But when things are not going so smoothly it is a different story!

This month we have lived through the frustrations of things not going well for one of our owners and I would like to share some of the learning’s from this experience for everyone to consider.

1.       Furnished properties – not something I would consider or recommend. If something like a fridge breaks down, no matter how new it was, you will need to replace or fix it. And if any of your furniture is damaged accidentally it is unlikely your insurance will cover you. As one of our owners discovered this month.

2.       Landlord Protection Insurance – Please check your policies!! There are so many different policies and exclusion clauses you need to be sure that the policy you have will protect you for what your needs are: such as loss of rent if the tenant is behind. You don’t want to find that your policy only covers you if your tenant is more than 5 weeks behind as this owner did! Also, you need to be covered for accidental damage. It is rare that tenants intentionally damage your property and it is more likely to be accidental so check that you’re protected.

No one likes it if a tenant does not pay rent on time. If the problem becomes a consistent one than you need to strongly consider if you want to continue the frustration of not knowing when you will receive your rent. Unless your property is hard to rent (in which case you need to consider other factors) I highly recommend giving the tenants notice (two months) at the end of their lease and finding another tenant. I would also recommend that you give notice to vacate if breach notices are not remedied by the due date to minimise your loss of rent. Failure to do so can also void your insurance policies.

The above comments may seem hard and please be sure that I empathise with any tenant or landlord going through difficult times. We do not want to see any of our customers and clients in this situation. However,in acting for you, our landlords, it’s important to me to provide you with advice that will protect your interests.

Christina

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How to Give Tenants’ Notice Without Grounds

A lessor rents out his investment property on a fixed term agreement which is due to end on 31 December. He decides to allow his student son to move into the property, which is near the university, on 1 February.

The lessor would like the current tenants to move out on 31 January, and he gives them written Notice to leave on 30 November.

After the fixed term agreement ends on 31 December the agreement becomes periodic, meaning the tenant can leave at any stage by giving two weeks notice.

When a lessor ends a tenancy agreement without grounds, they must give the tenant two months notice to leave. This applies to fixed term as well as periodic agreements.

The Residential Tenancies and Rooming Accommodation Act 2008 (the Act) allows a tenancy to end for a number of different reasons, such as non-liveability or abandonment. The Act also allows a tenancy to be ended ‘without grounds’ if the party ending the agreement does not give a specific reason.

A lessor cannot end a fixed term agreement without grounds before the agreement’s end date, unless the tenant agrees.

Fixed term agreements can end only when either the lessor or tenant gives written notice. When the fixed term agreement moves beyond its agreed end date – and if neither party has given notice – it becomes a periodic agreement.

A lessor or tenant can end a fixed term or periodic agreement. When a tenant decides to leave the rented property, they must give the lessor two weeks notice. However, if it is a fixed term agreement, a tenant cannot leave before the agreement’s end date unless the lessor agrees.

If a fixed term agreement is for a period of six months, the lessor and tenant should be aware that negotiations about continuing the tenancy agreement may sometimes begin three months before the end of the tenancy.

When a lessor presents a tenant with a Notice to leave (Form 12), giving the required two months notice, the tenant might choose to find a new rental property immediately, but in a fixed term tenancy, the tenant cannot leave before the agreement’s end date unless the lessor agrees.

More information about ending a tenancy without grounds is available on the RTA website.

Last Updated: 03 August 2011  Source RTA

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Rental Growth Versus Capital Growth Who is the Winner?

Over the last five years the debate about the affordability of purchasing a home has intensified. What is often missed is the fact that over this time capital city rental rates have increased at a greater average annual rate than capital city property values.

Over the five years to February 2011 capital city rental rates have risen at a faster average annual rate than capital city property values. Both rents and values have climbed much faster than inflation indicating that housing has become more expensive over the past five years, regardless of whether you choose to own or rent.

Over the last five years capital city house values have increased at an average annual rate of 6.2% and unit values at 6.7%. In comparison, rental rates have increased on average by 6.8% for houses and unit rents by 7.5% per annum. The result indicates that growth in house values and rents has been of a similar level however, rental growth for units has well and truly outpaced capital growth.

Over a similar period, December 2005 to December 2010, average end of year inflation has been recorded at 2.9%. The result indicates that housing costs have been increasing at a much faster pace than inflation.

Across the capital cities, capital growth performances have varied significantly during the last five years. Darwin has been the standout performer with property values pretty much consistently increasing until recent months. Over the past five years Darwin house values have increased at an average annual rate of 10.3% and unit values increased by 11.5% per annum. On the other hand, Sydney has been a laggard with house values increasing by 4.1% on average annually and unit values increasing by an average of 5.0% per annum.

 

As already mentioned, capital city rental growth has been stronger than capital growth over the past five years. Darwin was the best performing city for capital growth and has also recorded the strongest rental growth however, rental prices have failed to keep pace with capital gains. Over the last five years, house and unit rents have both increased at an average annual rate of 10.0%.

The cities and product types which have enjoyed the strongest capital growth have also tended to receive the greatest increases in rental rates. This is indicative of strong demand for housing in these regions over recent years with owners and renters preparing to pay a premium to secure accommodation.

 

On an annual average basis, rental growth over the past five years has been stronger in Sydney and Perth for both houses and units than the growth in property values. In all other cities average annual growth in property values has been stronger however, in most the differential is quite minor.

RP Data has stated for some time now that we expect that rental growth will accelerate during 2011 as property value growth continues to transition out of the market. As the first graph shows, rental growth has typically been strongest during the past five years during times when property value growth was limited.

Investors and first home buyers are largely remaining out of the market, housing affordability is stretched due to recent value growth, and above average interest rates and construction are likely to be quite weak during 2011. With this in mind, we anticipate that this will lead to increasing upwards pressure on rents through at least 2011. Also rental growth has been sluggish for quite some time and we expect there to be improvements due to owners requiring a superior rental return to that which they are currently receiving.

Source RP DATA

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