Survey suggests landlords selling up as costs mount

Shock new research suggests landlords have been bailing out of Queensland property in massive numbers - helping to explain the dire lack of rentals on the Gold Coast. Here's why they're quitting the business.

RESEARCH by an investor advocacy group suggests landlords have been bailing out of Queensland property in massive numbers - helping to explain the dire lack of rentals in areas like the Gold Coast.

According to a survey of 1618 investors by the Property Investment Professionals of Australia (PIPA), 45.1 per cent reported selling at least one property in Queensland in the two years to August this year.

That compares to 24.1 per cent in New South Wales and 19.1 per cent in Victoria.

PIPA said independent analysis of the data found that 65 per cent of the properties sold were bought by owner-occupiers, meaning about 162,000 dwellings may have been lost to the rental market in Queensland in just two years.

PIPA Chair Nicola McDougall said the organisation believed many investors had bailed because of the high levels of expenses they faced.   

“From Coolangatta to Cairns, investors have deserted the Queensland market over the past two years, with more rental pain on the horizon as well,” Ms McDougall said.    

“We had an inkling that investors had been selling their holdings over the past year or two, but these results show that even we had under-estimated the volume of rental properties that have been jettisoned from the market.

“The fact that 45.1% of investors sold at least one property in Queensland is mind-blowing – especially since this was mostly a period when the ridiculous new land tax wasn’t even law.” 

PIPA chair Nicola McDougall

The survey also found that 19 per cent of investors are considering selling in the next 12 months, indicating rental stocks may be depleted further.

The survey comes in the wake of controversy over the state government's changes to how it collects land tax, which will impact interstate investors with Queensland properties.

The Palaszczuk government will hold a housing summit next month to workshop ideas for tackling the housing crisis. On Friday, it announced measures intended to encourage people to rent out vacant granny flats.

PREVIOUSLY: ASTONISHING COST OF OWNING A RENTAL

AN interesting aside has come to light in the Bulletin’s coverage about ratepayers unwittingly paying too much on the Gold Coast. Why, one wonders, are rates so much higher for a property if it is rented out, rather than lived in by the owner?

The same property, with the same land value, and same level of services provided by council, will cost 40 per cent more in general rates if it is an investment.

This strange state of affairs is not unique to the Gold Coast. It is the same in Brisbane and a number of other Queensland councils. But it is by no means replicated in all of Australia.

Investors typically also pay higher mortgage rates, higher insurance premiums and significantly higher stamp duty.

At current rates, stamp duty for an owner occupier on the purchase of a $500,000 property is $8750. For an investor it is $15,925.

The scene one Gold Coast landlord faced when tenants left her rental.

Added to this the state government is planning changes to how it calculates land tax that are expected to further add to the costs of many investors.

Currently, investors pay the tax if they own properties with a combined land value of worth more than $600,000 in Queensland.

In a unique and deeply controversial move, Queensland will from June 30 next year include property held in other states when calculating the tax owed.

How the land tax bill is calculated is somewhat complex, but using an example put forward by the state government themselves, someone holding property with a land value of $745,000 in Queensland and $1,565,500 in Victoria will see their Queensland land tax rise from $1950 to $8422.37.

While few battlers will shed a tear if seemingly wealthy property owners see their tax bills go up, real estate professionals are adamant it will be yet another incentive for investors to bail out of the market at a time when rentals have never been more scarce.

BuyersBuyers co-founder Pete Wargent said it was the “death of a thousand cuts” for investors, making being a landlord “incrementally less attractive”.

Shadow Treasurer David Janetzki. NewsWire / Sarah Marshall

Shadow Treasurer David Janetzki said renters would ultimately be the ones to suffer.

“Ten months ago the State Government announced a land tax which has now been exposed as hitting renters in the hip pocket,” Mr Janetzki said.

“Since then, we haven’t heard any detail or justification from the Treasurer.

“This tax makes no sense and shows a government so desperate to raise revenue that they’re chasing any idea without thinking about how it might affect Queenslanders.

“... We can’t be driving up rents at a time when Queenslanders are struggling to put food on the table.”

Gold Coast landlords, who must also deal with costs resulting from problem tenants, have previously told the Bulletin many of their ilk were quitting the business due to escalating costs and strict regulation.

“We have had enough and sold our properties,” one said. “And you wonder why there is a housing shortage.”

Queensland Treasurer Cameron Dick. Picture: NCA NewsWire / Dan Peled

There is some evidence in census figures that investing in property has indeed become progressively less attractive in recent years.

While the population of the Gold Coast rose from 569,997 in 2016 to 640,778 last year, the number of rental properties only rose by 4727. In contrast, that number climbed by 7445 in the previous five-year period, when the rise in population was less steep.

Landlords must seem an easy target for money-grubbing bureaucracies, grasping at every possible source of revenue. Few will man the barricades for people they see as wealthy property owners.

But the question has to be asked if, amid a cost of living crisis, going after landlords is actually hurting people on a lower rung of the economic ladder. People who don’t qualify for either social housing or mortgages. People who must rent, and are now bearing the brunt of enormous jumps in weekly rental rates.

That 40 per cent extra charged for general rates on the Gold Coast if a property is rented is but one example of an egregious trend.

It has had an unintended consequence for hundreds of ratepayers who have found themselves overpaying.

But it seems that with rates, and the land tax, there may be other unintended consequences.

Ones that could hurt ultimately hurt those least able to afford it.

Originally published as Survey suggests landlords selling up as costs mount