Removing negative gearing would hit landlords, tenants hard.

By REIWA President – Damian Collins     https://reiwa.com.au/

Changes to negative gearing and capital gains tax are a hot topic for debate in this year’s Federal Election. The Australian Labor Party has made its intentions clear, having announced its plans to make changes effective January 1, 2020 if elected.

REIWA strongly opposes the decision to meddle with one component of our national tax system. Changing negative gearing and capital gains tax without properly considering all the consequences is a reckless decision, one that will significantly impact everyday Australians and further stifle Western Australia’s already struggling property market.

History has already shown that removing one component of a complicated system does not work. In the 1980’s when negative gearing was removed the impact was so great across the country it was reintroduced just two years later.

One of the biggest myths in property is investors are wealthy moguls with extensive investment portfolios. The reality is the vast majority are ‘mum and dad’ investors with less than two rentals who are utilising property investment to help secure their future. According to data from the Australian Taxation Office, 330,000 Western Australians own at least one investment property and of those, 215,000 rely on negative gearing to help offset losses incurred through owning a rental.

If prospective investors are no longer able to use this mechanism many will reconsider if property investment is financially viable, causing them to withdraw from the private rental market or seek alternative investment options.

This will have huge implications on the WA property market. We’ve already seen the value of investor loans decline 69% since 2015 due to the soft market conditions and subdued consumer confidence levels. Any changes to negative gearing or capital gains tax will only serve to further deter investment in the WA property market, which is the last thing we need.

Our local vacancy rate has declined to 2.3% from a high of 7.3% in a little over 18 months. If landlords are deterred any further from investing in the WA property market, it will be tenants who will ultimately bear the financial burden of this financial change, with a shortage of rental supply guaranteed to push up rent prices and reduce affordability – which is exactly what we saw happen in the 80’s.

A report released last month by SQM Research detailed how the Australian Labor Party’s plan to abolish negative gearing would negatively impact tenants. It showed rents would rise across the country by between 7% and 12%, with tenants in Brisbane and Perth likely to be the most affected.

Those vying for our country’s top positions seem to have little regard for the WA property market when considering such dramatic shifts in property taxation policy. This election, REIWA is calling for all contesting parties to commit to not tinkering with negative gearing or capital gains tax until a full government review into the implications has been conducted.

A nice garden can add huge value to your home

West Real Estate   The Weekend West   (14th April 2019)

How much value do you place on your lawn when you are getting ready to list your home for sale? According to a recent survey conducted by Turf Australia and Raine & Horne Real Estate Agents the answer should be “fairly high” as the survey revealed gardens can add more than $100,000 to the value of a home.                                                                                                                                             While this figure might sound too high to be true, the basis for the result is quite simple.

Forty percent of agents surveyed believed a nicely presented lawn could boost the value of a home by more than 20% whilst almost one quarter (23.3%) said it could add more than 30%. Based on the Australian median dwelling price of $524,478 according to CoreLogic, a 20% increase equates to over $100,000.

One of the key markers to pay attention to when looking for this increase was “a nicely presented lawn” meaning the lawn needed to be bright, luscious and green to really hit the spot. Professional renovator and interior designer Bonnie Hindmarsh said re-turfing a front or backyard had the power to provide an instant facelift and could transform a space without costing the earth. “Lawn is a wonderful drawcard for buyers when selling your home,” she said. “Gardens and lawns are nearly always a second thought when renovating, but they can have a powerful impact and can make a great first impression – lawn renovations are a relatively small investment in comparison to other renovations around your home but can have a huge impact on your overall house appeal when selling,” she said.

Among the results from the Turf Australia and Raine & Horne survey, 24% of agents said potential buyers always or usually would not buy a house without lawn, whilst 50% of agents surveyed had advised clients to add lawn to their home pre-sale. According to the real estate agents surveyed, the main attractions of lawn for buyers were the improved look and feel of a property, added lifestyle and relaxation appeal and a safe playing area for children.

In addition to revitalising the lawn, Ms Hindmarsh had other budget friendly renovation tips for preparing a home for sale. “Simple cost effective changes like soft furnishings are a wonderful way to give your home that fresh feel – new cushions for your lounge, some crisp new linen for your bedroom or decluttering are inexpensive ways to freshen up a space,” she said.

“Sprucing up your front door with some new hardware and a coat of paint are fabulous ways to add interest to your property and the cost can be kept low by doing it yourself,” she said.

Another tip from Ms Hindmarsh was to spray the façade using a spray gun. “Paint always gives you the biggest bang for your buck and changing the whole colour of your exterior can happen in as little as two days with the right preparation and tools,” she said.

Her parting piece of advice for getting the house ready for sale was not to get too worked up if things did not quite go to plan. “Renovations are always going to throw a curve ball at you at some stage – roll with it, deal with it and move on,” she said.

“It will make the whole process easier as no matter how much you plan and budget, not everything will be perfect – don’t let perfect get in the way of better,” she said.

Time to abolish heavy burden of stamp duty

by Damian Collins – REIWA President     https://reiwa.com.au/

If you’ve ever purchased a property, you’d be well aware of what a financial impost stamp duty is.

Widely regarded as inefficient, stamp duty presents a significant hurdle for first homebuyers, trade-up buyers and downsizers throughout their property journey, impacting immensely on affordability. It can be as much as 5% of the purchase price of a property.

As part of its “What about WA?” federal election campaign, REIWA is calling for all federal political parties to commit to providing funding for states and territories to undertake a full feasibility study into how phasing out stamp duty could be achieved if elected.

For most buyers, stamp duty eats away at their deposit for a property, meaning they are forced to borrow this amount on top of the loan to purchase the property. This means they are paying interest on the stamp duty cost across the whole life of their mortgage.

For example, if a family saves $50,000 for a home deposit, which is no easy feat, and is looking to buy a home at the current median house price of $512,000, $18,783 of that deposit will go towards stamp duty.

That family has now lost nearly 38% of their deposit and they will need to borrow more. In addition, they will almost certainly be required to take out Lenders Mortgage Insurance, which will cost them another substantial amount on top of their loan.

This not only hinders affordability, it impacts the ability for households to make appropriate housing decisions in accordance with their lifestyle choices, changing needs or economic reasons like employment.

Stamp duty is also not the lucrative tax it once was for the Western Australian Government. Transactional activity in WA has declined considerably in recent years, with the number of annual property sales falling from over 71,000 in 2013 to less than 40,000 in 2018 – the lowest level of transactions recorded since 1990. This has impacted significantly on the state, with far fewer transactions resulting in far less stamp duty revenue for the WA Government.

By abolishing stamp duty and implementing a broad-based land tax system, the cost of property taxes would be spread across many years, creating a steady stream of reliable income for state and territory governments.

It would also remove the upfront financial burden from homebuyers, helping to make homeownership a reality for more Australians.

Plenty of positives in the 2019-20 Federal Budget

by Damian Collins – REIWA President         https://reiwa.com.au/

REIWA welcomes the 2019-20 Federal Budget handed down by Treasurer Josh Frydenberg on Wednesday 2 April, which predicts a budget surplus of $7.1 billion by the end of the 2019-20 financial year.                                                                                      REIWA President Damian Collins said the country’s improved fiscal position was a good indicator of economic recovery and he hoped WA would not be overlooked by the Federal Government.

“For too long WA has been a mere afterthought of our federal political parties. The country’s improved financial position presents the Federal Government with a good opportunity to increase its investment in Western Australia and help our local economy recover and prosper,” Mr Collins said.      In addition to the projected surplus, the budget includes no changes to property taxes or increases to taxes at all.

“This is welcome news for real estate agents, particularly those operating as a small business who can take advantage of the increase to the instant asset write-off threshold to $30,000. This budget also provides tax relief for those earning less than $126,000, which is welcome news as well as a change in the tax rate to 30 cents in every dollar for those earning between $45,000 and $200,000 from 2024,” Mr Collins said.

“The Federal Government has also recommitted to the Perth City Deal, which REIWA welcomes and is a key advocacy component of the Institute’s 2019 federal election campaign. It is imperative that the Perth City Deal be a priority in 2019-20. Perth has waited more than two years for its City Deal that will provide additional funding for METRONET and other projects that will provide local jobs.”

While overall, the 2019-20 Federal Budget is positive, REIWA is disappointed with the decision to cut overseas migration from 190,000 to 160,000 annually over the next four years. “This policy is aimed at reducing congestion and overcrowding in cities like Sydney and Melbourne. Western Australia on the other hand has seen a decline in overseas migration but needs migrants to fill demand for housing, increase housing construction, create jobs and stimulate economic growth,” Mr Collins said.

“Any plans to cut migration on a national level will further hamper the recovery of the WA economy and property market. REIWA would like to see Perth back on the Regional Migration Scheme to ensure we have the population to support a strong property market and wider economy,” he said.

The Federal Government has also pledged a total of $40 billion to national infrastructure projects, however WA has only been assigned $1.6 billion of this funding.

“WA has yet again failed to receive its fair share of funding. Our state is home to 10% of all Australians and we produce almost 15% of the country’s economic output, so we should receive at least the same percentage in federal infrastructure funding,” Mr Collins said.

REIWA will continue to advocate for a fair share for WA of federal funding, as well as a commitment from the Federal Government to provide funding for the states and territories to conduct a feasibility study into abolishing stamp duty.

UDIA lays out priorities for government

by UDIA WA President – Nick Allingame            www.udiawa.com.au/

UDIA recently launched its 2019 policy priorities document ‘Developing Great Places to Live, Work and Prosper’, with a particular focus on improving housing affordability and providing greater housing choice in every suburb.

The document outlines recommended actions for government across six areas, including housing affordability, streamlining approvals systems, housing choice, infrastructure investment, liveability and environmental outcomes.

Housing affordability remains a significant challenge in Western Australia despite recent declines in the average price of housing.                                                                                                                                              Homeowners remain out of reach for many on low to moderate incomes and this is an issue that must be addressed.

One of the key aspects of tackling housing affordability is providing a range of housing options throughout the metropolitan area so we are offering people options close to public transport links, services and amenities.

Some of the immediate actions in terms of affordability we have outlined for government include increasing the threshold for Keystart loans by 25% so more people can access this important service, facilitating more ‘build-to-rent’ projects and incorporating an affordability impact statement into all relevant cabinet decisions to ensure cost impacts on consumers are minimised and addressed when making new policy.

In the longer term, we would also like to see the abolishment of stamp duty and the introduction of a fairer and more equitable broad-based land tax system to enable more people, such as downsizers, to transition to more appropriate housing.

In terms of creating more housing choice, UDIA has requested the government encourage investment in new housing supply and rental stock by using appropriate housing taxation policies.

A public education campaign around the benefits of increasing housing choice in every suburb, including infill locations, is also needed to bring the community on board with increased density in appropriate areas.

A clear policy framework to deliver quality medium density housing products is also required. That is why UDIA is advocating for the introduction of a medium density housing code, which is part of the next stage of Design WA.

Looking at the longer term future of Perth as a more liveable city, UDIA has been leading the call for a clearer ‘brand Perth’ that will attract people to the state and support the development of our economy.

We would also like to see incentives for local governments to develop and achieve housing strategy density targets.

These are just a taste of the range of actions UDIA has suggested the government needs to take to ensure we are working together to achieve smart, sustainable and liveable communities into the future.

UDIA – the Urban Development Institute of Australia

Buyer’s agents give clients an edge when purchasing property

By REIWA President – Damian Collins     https://reiwa.com.au/

Whether you are looking for your first house, an investment property or a new home to suit your growing family, it can be challenging to navigate the Perth market and the buying and selling process alone.

This is where a buyer’s agent can make a big difference. A good buyer’s agent will work with you, from helping you scour the market for your dream home or investment to negotiating the offer and liaising with the seller and their agent.

Buyer’s agents are still relatively new in Perth, but they can have a significant impact on the success of your purchase. You only need to look at the growing popularity of buyer’s agents in Sydney and Melbourne and indeed other parts of the world like the USA, to recognise these services give buyers and investors an edge when searching for property.

As the name would suggest, buyer’s agents act on behalf of the buyer, helping them to locate their ideal property and negotiate the lowest price with the best terms and conditions the seller will accept. They do all the groundwork and necessary research for you, so you can be sure you’re 100% informed when making the decision to purchase.

On the other hand, seller’s agents, or real estate agents, ultimately work for their client – who is the seller. Their goal is to sell property at the highest price in the shortest timeframe, negotiating contract conditions which benefit the seller. They have to be fair to the buyer but their ultimate duty is to their client.

Buyer’s agents are not tied to any listings. Their focus is on the buyer’s wishes and they can review all properties available on the market, pointing out their strengths and weaknesses.

Hiring a buyer’s agent takes some of the emotion out of the transaction. A buyer’s agent will fairly assess the property’s worth and recommend the appropriate price the buyer should be willing to offer and the conditions a buyer should attach to the contract to buy the property.

Having a buyer’s agent on your side keeps you objective and helps prevent you from overpaying for a property or making mistakes.

Through extensive research, networking and experience, a buyer’s agent will save you money, time and effort. They know the real estate market inside out and understand how different properties can best meet a buyer’s investment strategy.