The government has once again decided to slug property buyers with another tax that they hope is going to raise them $90million a year. The newly conceived Sales Tax is to start on 1 July and is going to be calculated on all sales of residential property over $500,000. Any residential property sold between $500,000 and $1 million will attract a tax rate of 0.2 per cent, while above $1 million, the tax rate increases to .25 per cent for that portion of the property sale price.

So with the median property price in Sydney at $600,000, the tax that would be payable is going to be $200, while those homes at $1.2 million will be hit $1,500.

When we look at the actual numbers involved in an isolated manner they are small relative to the purchase amount but we still have to remember the whopping amount of stamp duty we are paying each time we purchase a property. A $600,000 property will incur a $22,490 stamp duty tax, a transfer fee of $190 and a mortgage registration fee of $95. So there has already been a fee for transfer and now it has more than doubled for the average NSW home buyers ($190 + $200).

We also have to remember when buying a property there many other costs associated with it which could include insurance, council rates, strata fees, solicitor fees, mortgage fees, valuation fees, Building inspection fees, depreciation schedule costs, defect inspection costs and lenders mortgage insurance. Buying a property is not a cheap exercise and adding any additional costs to the purchase process is only going to continue to defer some home buyers which is disastrous for them and the economy.

Buying a home or investment property in Australia has been a great way to build wealth and many Australians have done so over the years… Now the government just wants to take advantage again and slug those that have been the main contributors to society with another tax to bring them down. Home ownership, whether it be for owner occupied use or as a property investor, is critical to the NSW and national economy and to stop people buying by continuing to slug extra taxes and expenses on them is only going to hurt the NSW state in the long term.

The big question is… What if they raise the Sales Tax in the future!

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NSW Landlords are under threat from new changes that were brought to their attention in late 2009. At this stage these changes to the Residential Tenancy Act are just proposed and are yet to be introduced into the NSW Parliment. This is scheduled to occur in 2010 so if NSW landlords don’t like what they are about to read, then it is important that they make this know to their local members as well as the Real Estate Institute of NSW.

Some of the most significant changes that have been raised in the Residential Tenancies Bill 2009 include:

Fixed term tenancies – end of certainty of tenure for landlords and tenants. Section 98 of the Bill will enable tenants to break a lease, during the fixed term, without any special grounds, by giving 14 days notice to the landlord. This break clause will be subject only to the payment of a ‘break fee’, which will not exceed 6 weeks rent. Details of the maximum amount of ‘break fees’ for long-term leases (over 3 years) have not been released. What is the point of a landlord entering into a fixed term tenancy that will be unable to be enforced?

Periodic tenancies – ‘no grounds’ termination notices. Section 85 of the Bill increases the notice period required to be given by landlords to tenants (who are out of fixed term) from 60 to 90 days. While the section provides that the CTTT must now make a termination order if the notice has been validly drawn and served, the Bill still gives the CTTT jurisdiction to determine when vacant possession is to occur, if a tenant challenges the landlord’s termination notice. The Bill does not set a maximum time limit between the date the CTTT makes a termination order and the date it nominates that vacant possession is to be given up by the tenant. Once served with a 90-day termination notice by the landlord, a tenant can give vacant possession at any time. Section 110(2) of the Bill provides that a tenant will only be liable to pay rent until the date they give vacant possession.

Frustration of repossessions by tenants. Section 89(2) of the Bill provides a mechanism whereby tenants who are already (or habitually) in arrears, can further frustrate a landlord’s attempt to regain possession of their property. The effect of the section is that orders for possession and warrants for possession issued by the CTTT, will cease to have effect if the tenant pays their arrears at any time prior to vacant possession being given, or the warrant enforced. The tenant will not have to apply to the CTTT seeking the suspension of an order for possession or warrant. The section also makes no provision for the recoupment by the landlord of the costs incurred in obtaining the order for possession or warrant.

Cosmetic changes. Section 66 of the Bill provides that landlords must not unreasonably withhold consent “to a fixture, or to an alteration, addition or renovation that is of a minor or cosmetic nature”. While the section provides that the costs of installation are to be met by the tenant, no definition of what “a minor or cosmetic nature” is contained in the Bill. This section is backed by another provision (section 68), that a tenant may apply to the CTTT for an order that the tenant may install a fixture or make a renovation, alteration or addition to the residential premises without the consent of the landlord. While the Bill contains provisions concerning the removal, rectification and cost of repairs for such matters at the end of a tenancy, the potential for default or significant disputes concerning this area alone is enormous. Disputes will occur both at the beginning and the end of tenancies and landlords risk being considerably out of pocket as a result of these changes.

Partial transfers of tenancies or sub-letting. A landlord’s right to decide who inhabits a property will be able to be challenged. Section 75(5) of the Bill will enable a tenant to apply to the CTTT to review a landlord’s refusal of consent to a partial transfer or sub-letting to an additional tenant, or tenants, that the landlord would not otherwise accept as a tenant. The CTTT will be able to permit the partial transfer or sub-letting if the landlord’s failure to consent was unreasonable (the word unreasonable, is not defined). The scope for dispute here is obvious.

Rent control. Section 44 of the Bill does not, unfortunately, clarify some of the past uncertainty (and case law) relating to what matters the CTTT must, or may, take into account when hearing an application by a tenant that rent, or a rent increase, is excessive. For example, there is no compulsion in the Bill for the CTTT to take the market rent of the premises into consideration when making a determination.

I for one am against giving tenants this much control of your property. Make the fight today to ensure that these changes and others don’t impact on your investment properties in NSW.

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Why can’t the NSW State Government get their act together and start making some decisions that are going to benefit the people of Sydney rather than cause more chaos? They just can’t seem to get their transport agenda right. First let’s look at the new CBD Metro which they wish to build under the city… they bring in the experts and they make recommendations and then our Government doesn’t seem to follow them. Does this Government have any idea? They want to spend a small $5.3 billion (now rumoured to be over $7 billion) but don’t get it right the first time and they don’t listen to the real experts on the job to determine the best solution for Sydney’s crippling transport problems.
Transport around Sydney (and any other major city for that matter) is one of the city’s most important elements and has a direct impact on the value of property in surrounding and outlying areas.

Before we look at the Sydney CBD Metro, let’s understand exactly what a “metro” is. A ‘metro’ is a fast single deck passenger train with more doors than traditional heavy rail (CityRail). They are lighter than modern double-deck trains and can accelerate faster and handle steeper gradients. As they have more doors they can also load and unload passengers at a faster rate. Therefore, they can move more passengers than traditional heavy trains as they can provide a more frequent service and thus a more efficient people-mover solution over the short-medium distances. This, however, only really works for distances of 10km or less and the city needs to have a highly dense inner city population. This isn’t something that Sydney really has compared to most other major cities around the world that use the ‘Metro’ style transport system. For example, London’s population is close to 8m, New York have a population of 19.5m and Paris with a population of almost 2.5m, although the density of Paris is about 5 times higher than Sydney.

So what is the CBD Metro…

…it is expensive, it covers a short distance and only a few people will actually use it. This all sounds bad… but what’s even worse is the impact it will have on any vital CityRail expansion plans… IT WILL BLOCK THEM. CityRail has the ability to increase capacity by up to 50% meaning more services to the 250 stations currently in the network. They can do this by using a vital corridor under Pitt Street, however the new proposed metro will block the partial use of this tunnel in the future.

It seems everyone is against the development of the CBD Metro except the NSW government… so why won’t they listen? They didn’t listen when they built the Cross City Tunnel, which is hardly used, very expensive and has cost the state millions of dollars.

The most recent transport debacle has just occurred with the introduction of the new CityRail timetable on the 11th October 09. The NSW State Government has identified the Ku-ring-gai region as a major population growth corridor pushing for population growth of 25 -33% with an increase in housing density, which explains the number of new developments that are occurring in the area. Thousands more people have now moved into the newly completed developments and were all looking forward to extra transport
services… but the Government did the complete opposite by cutting 10% of the train services to the very suburbs where they were planning big population growth. I’m not sure if I am missing something in not understanding the lack of logic.

The new timetable – introduced to accommodate the Epping to Chatswood line – means more trains to the lower north shore, but fewer services from Waitara to Roseville, where up to 18,000 new homes are planned.

I really think the NSW State Government needs to sort themselves out and start looking out for all of us that live in the state and are subjected (on a daily basis) to their poor management of what is already a basket case situation. Instead, it seems their focus is more on their political positions.

I look forward to the time where our state infrastructure is capable and efficient enough to cope with the with the increasing population.

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The NSW Government has surprised the market with a NSW stamp duty cut for  property investors and home buyers. The NSW Government has announced in the budget today that home buyers (not first home buyers) and investors will be entitled to a 50% discount on NSW Stamp Duty costs for new property purchasers under $600,000. It is interesting to note that about 80% of NSW properties for sale are sold under $600,000. First Home Buyers don’t pay stamp duty for homes under $500,000 and there is a sliding scale up to $600,000 where the full rate is applicable.

The discount provided by the Reese Government is only available to 31st December 2009 and only for brand new homes including new apartments, new townhouses & new house and land packages. It is also available for those properties that have never been occupied or sold previously as well as for off the plan NSW purchases – the short time frame hoping to encourage home buyers and investors to move into the property market before the end of the year.

According to the NSW Treasury, 90% of First Home Buyers have been buying established property, so the additional boost is to help developers with the new stock that is currently being marketed.

First home buyers will now also receive an extra $3,000 for the purchase of newly-constructed homes until June 30 in 2010. First Home Buyers can now receive a total of $41,990 in grants and stamp duty cuts!

The downside I see to this stimulus is that it ends at the same time as the boosted First Home Buyers Grant, at the end of December 2009. What this means is that the market may become over stimulated during the next 6 months and take a hard fall when both stimulus packages are removed at the same time. It would have been smarter for the NSW Government to have an overlap of at least 6 months allowing the stimulus to carry us through to mid next year and encouraging further development which is so desperately needed in NSW.

It will be interesting to see how the cut to the NSW stamp duty plays out in the media and the markets over the next 6 months.

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It has been announced that NSW is the hot spot for first home buyers at the moment with a 50% increase in purchases by First Home buyers from February to March this year. There were 6084 First Home Buyers in NSW.

The total number of home buyers across the country rose from 12,664 in February to 17,265 in March. This is assisting with the recovery with the housing minister stating that there shuold be a flow on effect from next year.

The boost has been of great assitance, but dropping Sydney property prices plus increased rents has almost forced First Home Buyers to make the decision to buy instead of rent. Sydney median rents are now up at $390/week as of March 2009.

So if you are looking to buy a property, then make sure you have done your research, can attain a loan and when bidding, make sure you don’t allow your emotions to take control.

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