» New South Wales

Proposed stamp duty changes in NSW and what they mean for residential investors

BMT team — Sun, 07 Mar 2021 22:29:43 +0000

The New South Wales 2020-21 budget announcements included a number of measures aimed at boosting the economy. One of which was the first major stamp duty reform in over 150 years. Stamp duty in New South Wales was introduced in 1985 – a time when property prices were much lower, and people moved around less. With this in mind, many argue that the current policy is outdated and does not serve its original purpose in the world we now live. But what do the proposed stamp duty changes mean for residential investors in New South Wales? What is the proposal and what does it mean for investors? Before we get started, it’s important to note that this change is still a proposal and subject to change following community feedback. But for the sake of this discussion, we will consider what it currently means for investors. The current proposal will give those looking to buy a home two options: 1. Pay stamp duty upfront and ongoing land tax (i.e. the current compulsory arrangement) 2. Pay an ongoing annual property tax These options are available for everyone looking to buy a residential or commercial property, including investors. The rate of the property tax changes between the groups, so the tax rate for an owner-occupier won’t be the same as it would be for an investor. What does this mean for residential investors The current proposal is available for property purchased for residential owner-occupiers, investors, primary producers and commercial owners. The proposal includes a rate framework, where the property tax rate changes depending on the purpose of the land. The suggested annual property tax rate for investment properties is as follows. $1,500 + 1 per cent of the unimproved land value Investors will still have a choice. One of the biggest drawcards for investors is that the proposed annual property tax will be tax deductible in the financial year it’s paid. While currently land tax is also tax deductible, stamp duty isn’t directly. Stamp duty is classed as a capital cost. This means it isn’t a deductible expense but is instead included in the property’s overall cost base. Case study – proposed stamp duty reform Martha is a first-time property investors and is deciding whether she will go down the traditional path of stamp duty and land tax or pay the new property tax. She has a relatively short investment strategy and wants to sell the property in four years’ time, based on the market growth. Therefore, her overall aim is to go with the option that will save her money at the very beginning when her financial outlay is higher. The table below shows the scenario of both options Martha decides to go down the property tax route. This resulted in a first-year cost of $6,600, instead of paying upfront stamp duty of $33,585. Over the four years of ownership, the total property tax payable would be $27,593. She will also benefit from claiming property tax as a deduction each financial year. BMT Tax Depreciation is here to help you in every stage of your property investing journey. The BMT team works with you, your accountant and your property manager to ensure you claim the most depreciation deductions possible. To learn more about BMT, Request a Quote or call the team on 1300 728 726.

The post Proposed stamp duty changes in NSW and what they mean for residential investors appeared first on .

Streamlined rules for Airbnb in New South Wales

BMT team — Thu, 10 Nov 2016 04:10:26 +0000

The laws surrounding short lets in New South Wales are about to change and it is expected that unified legislation will make property sharing sites such as Airbnb and Stayz legal and much more common from next year. Considering how unclear legislation for short lets in New South Wales currently is, we thought we would explain the Airbnb situation in New South Wales at the moment, what the inquiry is about, the expected results from the inquiry and the pros and cons of short term accommodation in a sharing economy. What is Airbnb and how are people using it? Airbnb is a peer-to-peer online homestay network where ‘hosts’ rent their whole property or a spare room to those looking for short-term accommodation, often at a fraction of the cost of a hotel. The price per night is set by the owner and the company receives a booking fee from both the guest and the host. All transactions – including bookings, conversations between hosts and guests, and the processing of payments – occur online through the website or Airbnb app. First launching in 2008, Airbnb now has over two million listings in 34,000 cities and 191 countries and was recently valued at $30 billion, giving it a higher value than many leading global hoteliers. Headquartered in San Francisco it is privately owned and operated and also self-regulated. Airbnb first came to Australia in 2012. It now has more than 80,000 listings across the country with the majority of these located in New South Wales. In addition, approximately 20 per cent of Australian adults hold an Airbnb account. Airbnb hosts list their properties for a number of reasons, most related to the additional cash flow it provides them. They might put the funds towards a holiday or new car or, quite often, towards mortgage repayments. The latter is becoming more common as property prices continue to soar in our capital cities in particular. Others are using Airbnb as a new form of investment and don’t actually live at the property themselves. Instead of having occupants pop in every few weeks, they aim to have their property fully booked all year round. There are even agencies that facilitate this process by handing over the keys and cleaning the apartment afterwards so that the host never has to meet the guests in person. This form of ‘investing’ also allows the property owner to take advantage of nightly rates, which generally gives them greater returns than they would get from weekly rent on a traditional, long term lease. What are the current rules regarding short lets in New South Wales? At present the legality of short term lets in New South Wales is not clearly defined. Different council areas have different rules, making things such as Stayz and Airbnb a very grey area, with many hosts not realising they are actually letting their home out illegally. Currently only twelve New South Wales council areas have rules allowing for homeowners to lease out spare rooms or full properties on sites like Airbnb. In some council areas it is welcomed and in others it’s illegal, but in most cases, people are uncertain what the rules actually are. Despite the majority of areas not allowing for short lets, there is still a high number of listings in these areas. Aside from this confusion, what is drawing a lot of criticism is that quite a lot of listings are for whole properties without an owner present, often fully booked with a constant rotation of guests. In Sydney, around 60 per cent of listings are for entire homes. Many opposed to these short lets – particularly hoteliers and traditional bed and breakfast operators – say these owners are operating their homes as a commercial business as opposed to a residence, and without the appropriate permits and commercial licence to do so. But it is likely this is all about to change and become legal as a result of a New South Wales parliamentary inquiry. What is the inquiry into short lets and what are its recommendations? In response to this lack of clear legislation on short lets and the recent growth of Airbnb, there has been a parliamentary inquiry into the short term accommodation market in New South Wales. Eighteen months in the making, the Legislative Assembly’s Inquiry Adequacy of the Regulation of Short-term Holiday Letting was tabled in parliament on the 19th of October this year with some clear recommendations. The recommendations were based on the conclusion that the sharing economy is an essential and growing part of our society today and that it should be allowed to thrive given appropriate safety and occupancy controls. First and foremost, it called for a clear set of laws in New South Wales to regulate this industry. It also recommended owners should legally be allowed to make their whole properties or spare rooms available on short term lets as a blanket rule, with no limit on the maximum number of nights they can rent it out for. Pros of legalising short lets The first drawcard of legalised short lets is that it provides more budget accommodation options for travellers. It also offers more flexibility for families or larger groups who want to stay together when travelling. In turn, this can help boost tourism in regions not typically considered tourist areas by offering unique local experiences and more accommodation options for those who may not be able to afford traditional hotel accommodation. Some argue that this boost in tourism will increase spending in our economy. A benefit for Airbnb hosts or those thinking of opening up their homes to short lets is that it helps them save money or pay off a mortgage in a market that’s becoming increasingly expensive, where housing affordability is proving an ongoing concern. Cons The major concerns about legalising short lets in New South Wales relate to the impact it will have on neighbours, strata dwellings and the traditional traveller accommodation industry. First of all, there are concerns that […]

The post Streamlined rules for Airbnb in New South Wales appeared first on .

Key New South Wales strata law reforms – how will you be affected?

BMT team — Fri, 14 Oct 2016 00:27:39 +0000

More than 90 updated strata laws will come into effect in New South Wales on the 30th of November, affecting millions of residents and apartment owners across the state. Many believe the changes passed by Parliament last year have been a long time coming – the current laws are forty years old and no longer adequately reflect the reality of modern apartment living. A recent influx of apartment construction in the state and in Sydney in particular means that strata laws will soon affect more people than ever. It is estimated that by 2020, over half the population of New South Wales will be living or working in strata buildings. Here are some of the more notable changes we’ll soon see. Strata building collective sales Perhaps the most controversial change, new laws will allow a strata building to be sold if 75 per cent of owners approve. Currently, 100 per cent of owners must agree to the sale, so there has been criticism this new rule will force the most vulnerable out of their homes. Owners corporation meetings To encourage owner involvement, if there is no quorum at a general meeting (25 per cent of owners represented), the meeting will still go ahead thirty minutes after the scheduled start time instead of being adjourned as they currently are. Tech friendly meetings Finally recognising the times we’re living in, owners will be able to attend meetings via telephone or internet. Voting will also be opened up to email or even old-fashioned snail mail, recognising that owners don’t necessarily live in the places they invest. Tenant committee members For the first time, tenants will have the right to attend owners corporation meetings, but their involvement will be limited. They cannot vote unless they hold a proxy vote and will be excluded from discussions about finance and by-law breaches. Furthermore, if at least half the lots in a scheme are tenanted, a tenant representative can be nominated as a non-voting member of the strata committee. An easier process for cosmetic and minor renovations Renovations are about to get a whole lot simpler. Any works under the newly defined “cosmetic works”, such as putting nails or picture hooks into walls, painting or installing new carpet, do not require approval from the owners corporation. The concept of “minor renovations” has also been introduced. This covers works such as kitchen renovations, installing hardwood floors and rewiring, and this now only needs general resolution approval (50 per cent of entitled voters). For more complex works relating to waterproofing, structural changes or changes to the external appearance of the building, special resolution approval will be required (75 per cent of entitled voters) before works can commence. Schemes more pet friendly Reforms have aimed to make strata schemes more pet friendly. It will now be easier for owners corporations to allow the keeping of pets as opposed to automatically prohibiting it. Under the new model by-laws, the request to keep a pet cannot be unreasonably refused. Parking Owners corporations will have more control over unauthorised parking on common property. They can enter into agreements with local council to manage unauthorised parking, which means council may erect parking signs, patrol the car park and issue tickets to any breaches on common property. The new rules mean that even residents who park over the lines of their allocated spaces or leave their vehicles in visitor parking, for no matter how long, can be ticketed for it. Smoking There are two options related to smoking under the new model by-laws. The first option is a complete ban of smoking on common property areas, and the second allows for designated smoking areas and for written permission to be given to smoke on common property. Occupancy limits In a bid to prevent overcrowding, new rules will allow owners corporations to adopt by-laws setting occupancy limits for apartments. It can be set at any number provided it is not less than two adults per room. The exemption is if all residents are related, so not to discriminate against larger families. Laundry on balconies It has been an issue for renters for years, but now the ‘natural’ dryers have come out on top and will finally have greater rights to dry laundry on their balconies. For post 1996 schemes, laundry can be hung to dry anywhere on the lot except for the balcony railings, for a ‘reasonable’ period of time. Strata management contracts Previously limited to ten years with an automatic rollover, this has now been reduced to one year in the first year of a new scheme and then three years thereafter. This is to give the strata manager sufficient time to prove themselves in the first year, and make it easier for the owners corporation to appoint a new manager in the subsequent three years if it doesn’t work out. Fines now paid to owners corporation Almost all fines will now be paid directly to the owners corporation in order to renumerate the committee (to cover expenses for common property repairs, for instance). But far from being a cash cow for committees, the same tribunal process will still apply. The maximum penalty of breaching a by-law will be increased from $550 to $1,100 per offence. Developer’s bond required Developers must now lodge a 2 per cent (of the contracted price of the building) bond at the commencement of a project, in a bid to ensure any defects are addressed early on in new developments. Developers will also now need to appoint and pay for an independent building inspection of their work. For the full list of amendments, visit the Fair Trading website.

The post Key New South Wales strata law reforms – how will you be affected? appeared first on .

New South Wales property market scorecard

Simon Pressley — Wed, 23 Sep 2015 04:12:03 +0000

You would have made more money investing in Narrabri than Bondi, Liverpool Plains outperformed Liverpool and Parkes beat Parramatta. These are just some of the findings from a property market study conducted by Propertyology. Metro Sydney (10%) and Western Sydney (9%) account for a combined 19% of Australia’s population. Approximately one third of Australia’s total population resides in the state of NSW. Yet, when it comes to historical property market performance, almost all of Greater-Sydney locations are ranked in Australia’s bottom 40%. Propertyology conducted a study to compare the historical property market performance of each of Australia’s 550 local government authorities between 2000 and 2014. Given that some property markets have higher rates of growth and others have higher rental yields, Propertyology calculated the ‘total return’ (average annual growth rate plus rental yield) and we then ranked the LGA’s from 1 to 550 based on this performance. Of the 166 LGA’s in NSW, Coolamon in the Riverina region (near Wagga Wagga) was the best performed property market, ranked 6th in Australia. Coolamon’s median house price increased from $50,000 to $162,500 over the last 15 years (an average of 10.5% per annum). Average rental yields are 7.7%. With a vibrant economy, quality lifestyle, and affordable housing, the Northern Inland region was the state’s cream of the crop. Gunnedah and Liverpool Plains both ranked 38th out of Australia’s 550 LGA’s. Tamworth (163rd) and Armidale (173rd) are the main service centres for the region. Narrabri (49th), Glen Innes (70th), Moree Plains (81st), Guyra and Inverell (both 92nd) all made the Top 100. The state’s largest region by land mass, Orana, also performed well. Scraping into Australia’s Top 40%. With a very diverse economy, Dubbo ranked 217th. Regional neighbours Cobar (15th), Wellington (30th), and Narromine (154th) were impressive. In Hunter Valley, the industrial powerhouse of Newcastle (174th) and retail hub of Maitland (129th) were stand outs. In spite of a recent downturn in coal prices, Singleton (195th) and Muswellbrook (217th) still managed to make Australia’s Top 40%. Of New South Wales’ 43 capital city LGA’s, Blacktown and Camden (both 276th) were the best performed. Campbelltown (303rd) and Marrickville (316th) were also amongst Greater-Sydney’s best LGA’s. Liverpool (341st), Ryde (347th), Waverley and Parramatta (both 356th), and Leichhardt (361st) might be big on profile but their property market performance relative to the rest of Australia over the last 15 years was underwhelming, ranked in Australia’s bottom 40%. View infographic: NSW Property Market – State Scorecard

The post New South Wales property market scorecard appeared first on .