PAY UP OR GET OUT!!

PAY UP OR GET OUT!!

In an to attempt to best describe the current rental crisis the best analogy that we can suggest, is to compare it with Warragamba dam with less than ten per cent capacity. 2006 is the year of the landlord – where in some instances rents have been bumped up $50.00 per week. Rental increases for tenants are simply not negotiable, as landlords are happy to go to the marketplace, given the market urgency. Across Sydney, rents have increased up to forty per cent and we now have the lowest vacancy rate in history. NSW Department of Housing figures for new rentals identify that median rents have been increased $20.00 per week ($1,040.00 per annum).

To many that is a large amount, especially as these increases will become an annual event – certainly not in line with wage increases. The median rent for a four bedroom house in Mosman increased by twenty per cent ($300.00 per week) to $1,500.00 per week. This week our rental list fell to just three properties and today we can offer just eight. To put this into perspective, with a management of five hundred properties, the usual rule of thumb is that between five and ten per cent would be vacant. Today, it is less than one per cent and the advantage is certainly to the landlord.

Investors today are not the least bit interested in investing in residential real estate, simply because they have no faith or trust in the State Government. Year after year, it has introduced hairbrained new taxes such as the now removed Vendor Exit Tax. The government bungled Land Tax when in one year, it removed the threshold which brought a voter backlash, only to introduce it the next year (so much for sound economic policy). In 2007 it will now be averaged out based on previous years.

Land tax threshold – 2007 tax year
The way the land tax threshold is calculated has changed. For 2007 and future land tax years, the land tax threshold will be averaged. The threshold will be the average of the ‘indexed amount’ for the new tax year and the previous two land tax years, as calculated annually by the Valuer General.
The threshold cannot fall below that of the previous year and where the average threshold is less than the previous year’s threshold, the previous year’s threshold will continue to apply.
The average threshold for the last three years is calculated as follows:

As the average threshold ($350,000) is below the land tax threshold for 2006 ($352,000), the previous year’s threshold of $352,000 will continue to apply for the 2007 land tax year.

A recent article in The Daily Telegraph “Extra $100 each in tax” revealed “The average tax burden for every man, woman and child in NSW will rise by $100 this year with new increases in taxes, levies, or charges imposed at a rate of more than one a week”. Now spare a thought for those renting who will be hit with annual increases. The tax burden today, places NSW as the most expensive state in which to reside in and according to budget papers, the annual tax paid to the government each year now stands at $2447.00 per head. “The Government’s own forward estimates predict the tax take to top $16.719 billion this year – a $700 million rise on 2005/2006. The increases over the past year include 24 new taxes or increases on those existing, hikes in 53 different types of administration charges or Government imposed fees and nine increases in services like transport and energy.

Today, landlords can mirror the State Government and drive rents to record highs. We predict the first quarter of 2007 to be a rental nightmare. No wonder NSW is witnessing record departures to other states and today, when you refer to the lucky country, most would agree that NSW is the one state left out !! Cheers ^__^

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