Shake up looming in rental market
Thousands of Queensland landlords are set for potentially a double whammy, with renters in scarce supply and with new maintenance costs for older rental properties.
The state’s leading independent property analyst, Michael Matusik, is concerned that owners of older residential investment properties in Queensland are staring down the barrel of large and mandatory repairs and restoration costs. “A serious issue facing rental property owners is the pending Residential Tenancies and Rooming Accommodation Amendment Bill. The bill is still being debated in state parliament; however, if passed, it could have a far reaching negative impact on older residential investment properties across Queensland,” said Mr Matusik.
The bill proposes to amend the Residential Tenancies and Rooming Accommodation Act (2008) by imposing minimum standards for Queensland residential rental premises in relation to matters such as sanitation, ventilation, state of repair, safety, room dimensions, lighting, freedom from vermin infestation and energy efficiency. The bill requires landlords to ensure that the premises comply with the minimum standards before letting the premises to a tenant.
“Many of Queensland’s older investment properties will need to be substantially renovated to comply with the proposed new legislation. This will be costly and will also involve bureaucracy and lots of red tape… likely, loads more. Compliance might mean having to do without any rental income for months or perhaps longer as older rental properties are brought up to the new minimum standard.
“As to how this will affect rents and the vacancy rate, is left to be seen, however, it does strongly suggest that cheap old rentals are not going to remain such good investments. For Queensland, at least, new or recently renovated rental properties look better passive investments to me,” said Mr Matusik. “I think much of South East Queensland next year will remain largely a renter’s market, more so inner Brisbane, where the vacancy rate is reading ‘oversupplied’, yet the new apartment supply hasn’t even started coming out of the ground. So for rental property owners throughout South East Queensland, attracting the right tenants and keeping them should be the order of the day.”
Mr Matusik suggests considering the tenant profile of your property and that while it may appear attractive to have several tenants sharing the property, the property itself may not suit that arrangement. “While your income is less if, say, a couple rents out the property, when you factor in maintenance and potential tenant turnover, it might cost you less in the long-run than, say, renting your investment out to three or four independent parties.”
He also advises that to keep tenants longer, owners should offer lower rent. “Have them stay for years, not just six or twelve months. Regardless of the actual rent, the best performing investment property is one that is actually leased. Go for 100 per cent occupancy, not rolling tenants and vacancy periods.”
For rental property owners struggling to find tenants, Mr Matusik suggests widening the rental pool by allowing pets on the property. “Pets increase your rent and also help to keep tenants for longer.” However, owners must remain cautious, Mr Matusik warns. “Set out the details of pet occupancy in advance and treat the pet/s like a tenant. Regardless of what assurances a tenant with pets may give you, an active border collie in a one bedroom apartment is most likely going to end in disaster.”
In areas of increasing vacancy in rental properties, Mr Matusik emphasises that it is important to know what tenants are willing to pay a premium for. These include features such as a dedicated study area with high-speed Internet access, largely reduced energy bills, well-positioned and well-equipped and functional kitchen space with ample storage, proper en suites, large bedrooms and secure off-street parking.
