Cairns Council to apply increased rating category to investment property owners from 2023

In a time of rental property shortages and interest rate rises, Cairns Regional Council has announced a revenue-raising move that has seriously ticked off a number of property owners, and could worsen the region’s housing crisis.

IN a time of rental property shortages and interest rate rises, Cairns Regional Council has announced a revenue-raising move that has seriously ticked off a number of property owners, and could worsen region’s housing crisis.

Claire Gawler and Aaron Thomas have owned their Manoora townhouse, an investment property, since 2009.

It’s a nest egg investment, one that will provide financial security for their children’s futures.

But the couple, along with all others who own an investment property in Cairns as a non-primary place of residence (N-PPR), could be smacked with a rate rise from mid-2023 if CRC successfully adds their intended new rating category to their 2023/24 budget.

Council’s justification for the rate increase is to deliver a more equitable rating system to balance the cost of service provision.

In a recent letter sent to land owners, they point to commercial properties as examples of places that generate income and, therefore, deserve a higher rate in the dollar.

Claire Gawler and Aaron Thomas outside the land that contains their investment property. Picture: Isaac McCarthy

The council considers N-PPR properties to be similar in nature.

Ms Gawler is furious, and her objection to the proposal has joined a ballooning chorus of angry protests from investment property owners in the Cairns region.

“The justification in the letter is not clear,” Ms Gawler said.

“When they say it’s ‘income generating’, that’s not the case for us. We’re running at break-even and our property has even decreased in value since I bought it. It’s not been an income earning exercise.

“We’ll now have to review the rent we charge and possibly increase it if these rates go through.”

Ms Gawler said the council was “absolutely” taking advantage of the rental crisis.

“They know people can’t shop around for rental properties and have no choice to stay and pay the increases in rent,” she said.

Claire Gawler and Aaron Thomas are furious that their investment property will be slapped with a targeted rate rise from Cairns Council. Picture: Isaac McCarthy

“Our property is in a unit complex, so the council is obtaining four lots of rates from that one bit of land anyway. If it was a house, they’d be getting just one lot.”

Amanda Boccalatte, director property management at Edge Hill LJ Hooker, said the rate increase was difficult to understand as it would discourage investment in Cairns in a time of housing shortages and interest rate rises.

“It’s a bit of disaster for tenants,” Ms Boccalatte said.

“We’ve had many years where we’ve struggled to attract investors, especially with prices going down after the GFC.

“That’s why we’ve got such short supply now. Since 2008, so many investors have sold and owner-occupiers have moved in, so we’ve lost so many of our rental properties.”

Edge Hill LJ Hooker director property management Amanda Boccalatte. Picture: Stewart McLean

Ms Boccalatte said the council’s “equitable” justification doesn’t explain how the council would be sure every N-PPR owner is making money on their investment.

“I’ve done this for 30 years; I’ve come across a lot of people who are really struggling … it’s really for no government to decide why people have an investment … It might be something they really can’t afford to sell because of costs and their mortgage,” she said.

“There’s no definitive way they could say everyone is making money from their investment and you certainly can’t compare residential to commercial, which is a whole different scenario.”

The exact percentage increase has not yet been confirmed but Cairns Council CEO Mica Martin said the increase will only apply to the general rate levy “which typically makes up about 40 per cent of the total rates bill”.

She said by charging a higher rate in the dollar for these properties, the council can offset costs applied to primary places of residence.

“Council flagged the introduction of this new rating category at its budget meeting in June 2022 and last week started the process of contacting the relevant property owners,” Ms Martin said.

“Council will provide property owners further information as required, with the N-PPR rate to be advised as part of the 2023/24 Budget.”

Originally published as Cairns Council to apply increased rating category to investment property owners from 2023