Council Rates

[cazandpaul]

We have today received a 'courtesy' letter from the Council in which our IP is located advising they have created a separate rating category for non-owner occupied properties as such properties have a different land use.

This will increase our rates bill by approx $140pa.

Council did acknowledge the valuable contribution which investors make to the growing shire and the homes which they provide for the community

Does anyone else have this separate rating category or a similar type of charge?

Regards

Paul

 

[duncan_m]

We have today received a 'courtesy' letter from the Council in which our IP is located advising they have created a separate rating category for non-owner occupied properties as such properties have a different land use.

This will increase our rates bill by approx $140pa.

I'm not aware of any council in SA that's undertaking this sort of extortion.. this is disgusting and its incumbent upon all of us to make our thoughts known to our government.. they are out of control and seemingly beyond reproach at all levels, Local, State and Federal.

 

[D.T.]

That's crap, a tenanted property costs no more for a council than a normal one!

 

[Brenda Irwin]

Yep, they introduced it in Ipswich. Stinks hey?

 

[Delta]

Almost every year, we hear about the extravagant 'junkets' that Councillors take, often overseas, for 'fact finding missions', funded by rate payers.

Not sure whether anyone can do anything to stop such wastage of public money.

Rates rise every year. Non payment is not an option.

 

[wylie]

Rates charges in Brisbane are lower for owner/occupiers (for several years from memory). Have never really looked into it, but IP rates are always higher.

Wylie.

 

[Programmer]

I heard this somewhere else recently (just can't remember where)???. I have a feeling this is an awful council virus, and will catch on. It was of course, self-inflicted.

I've also heard on a number of ocassions that there is very little legally that the public can do with councils - and that they just implement anything they want to. It's really only the state gov's that can threaten/lean on them (even then, so I believe, its just a threat).

Any legal minds among us that can offer anything? Just maybe heaps of us need to make an 'example' of one council.

 

[landlubber]

Next time we draft a lease ... howabaout we pass the EXTRA rates on to the tenant ?

I understand ( but would welcome more experienced members advice) that in the US , for example, the tenants pay the outgoings, just like a commercial lease. Is this true ?

...the paradigm shift has to start somewhere , why not here & now ? We're coming up to a period of real tight vacancy rates where demand will exceed supply.

Comments ?

LL

 

[Programmer]

Next time we draft a lease ... howabaout we pass the EXTRA rates on to the tenant ?

I have a feeling this is/is going to happen indirectly anyway. Problem is it still makes it more expensive for investors and renters. As rates climb, so do the add-ons. Then, at some point vacancy rates will rise and getting competitive will make it even harder. It hits everyone, not just the investor.

The best way would be to KILL IT before it takes off (the disease spreads) in a big way. However, maybe we've 'missed the boat' already.

Anyone aware of how widespread it is at present?

 

[handyandy]

Again, it is a soft target.

Both the State and local council excel at soft targets that can't vote in relation to the object of the fee.

As investors, we pay the council rates yet are not entitled to even one vote (unless you happen to live in the same shire) for all the money we pay into the local goverments coffers.

I would certainly be interested in any legal challenge that anybody mounts as sooner or later all councils will adopt the same strategy.

Cheers

PS The only way that I see that you could tackle these problems at a voter level is to put out a letter via our realestate agents advicing our tenants what local goverment is doing and try and convince them to vote in a certain direction.

 

[alexlee]

They change the rules, we change with them. As Landlubber says, just raise the rent next time.
Alex

 

[handyandy]

They change the rules, we change with them. As Landlubber says, just raise the rent next time.
Alex

Rolling over and simply excepting these charges is exactly what they expect. Become the sweaky wheel and they will find another target.

Cheers

 

[Programmer]

They change the rules, we change with them. As Landlubber says, just raise the rent next time.

Or maybe, They change the rules, we figure out the true cost to us over time and make a decision as to how hard to fight, based on return on resources expended.

Look at rate increases in good times. I can't see the 'investor rate' being pegged because the 'poor' investors are going through some bad times.

I understand that you're simply being realistic - and we have to pick our battles. I just think it might be one battle worth fighting.

PS The only way that I see that you could tackle these problems at a voter level is to put out a letter via our realestate agents advicing our tenants what local goverment is doing and try and convince them to vote in a certain direction.

Yep Handy, that's along the lines I was thinking.

 

[geoffw]

We have today received a 'courtesy' letter from the Council in which our IP is located advising they have created a separate rating category for non-owner occupied properties as such properties have a different land use.

This will increase our rates bill by approx $140pa.

Council did acknowledge the valuable contribution which investors make to the growing shire and the homes which they provide for the community

Does anyone else have this separate rating category or a similar type of charge?

Sorry- I have land tax and rates totalling many thousands. My council rates have increased substantially as a result of the way the council has rated my property.

But the same properties have improved in value substantially. It's a "cost of doing business".

It's difficult to keep in front of.

In the longer term, there is more to be picked up by riding witrh the flow.

 

[alexlee]

Or maybe, They change the rules, we figure out the true cost to us over time and make a decision as to how hard to fight, based on return on resources expended.

Look at rate increases in good times. I can't see the 'investor rate' being pegged because the 'poor' investors are going through some bad times.

I understand that you're simply being realistic - and we have to pick our battles. I just think it might be one battle worth fighting.

I'm more thinking: What's more profitable for me, to fight this, or just accept this as a 'change of the rules' that occur frequently, and spend more time researching and buying well? Besides, the harsher the rules are, the more difficult it will be for amateur investors.

e.g. if negative gearing were to be abolished tomorrow, all the amateur investors will be killed and have to sell. The rest of us will be able to buy IPs cheap, and most likely dictate some really good terms from the vendors. That's not a bad thing for us.
Alex

 

[Dazz]

Next time we draft a lease ... howabaout we pass the EXTRA rates on to the tenant ?

...the paradigm shift has to start somewhere , why not here & now ?

Good luck....that ain't gonna fly at all.

Why not you ask....because the Act that dictates your activites and relationship with them, well in my neck of the woods at least, expressly forbids you as a Landlord from passing these costs on.

The paradigm shift you speak of is fantastic in theory and I'm all for it, but in reality you are beating your head against a solid brick wall. We tried that carry on for quite a few years and eventually gave it up as a bad joke.

Ask anyone on the forum who is currently renting why they are renting....one of the major reasons will be that they are typically able to rent a similar class of property for cheaper, or a better class of digs for the same price as owning.

Then ask them if they'd be keen on chipping in to pay for the LL's holding costs....they'll be packing their stuff and moving before you know what hit you. It would defeat their objective of renting in the first place (in the majority of cases).

We are actually seeing the opposite of that to which you allude. With an influx of new ressy LL's purchasing CIP's chasing better returns, they are more than willing to cut the Lessee some slack and pick up the holding costs....it's their 'normal' paradigm and they are the ones that haven't or aren't willing to make the shift.....for the same reason that they don't up the rent (as opposed to palming off the holding costs which they aren't allowed to do) and that is, they are scared witless of upsetting their tenant and fear that they will up and leave.

Competing against LL's with this ressy paradigm is a royal pain in the ar*e as they undercut everyone....and are happy to do it ços they still achieve more than owning houses.

 

[Programmer]

I'm more thinking: What's more profitable for me, to fight this, or just accept this as a 'change of the rules' that occur frequently, and spend more time researching and buying well? Besides, the harsher the rules are, the more difficult it will be for amateur investors.

Yep, agree that it's really easy to be pigheaded about changes and not look at the bigger picture. However it's even easier to simply accept changes (and there's been quite a few) that, in harder times, and in total, would erode the bottom line severely.

Change is of course guaranteed, no argument there. I'm not as naive to assume a handful of investors would change any council's decision. However property investors are an easy target (for councils), and don't feel it would cost much, or be a waste of time to fire off a few warning shots. I've seen time and again how reactionary both Councils and State Govs can be. I don't think it'd be stupid to place the preverbial finger in the hole to stop a flood. Non-reaction from the public is positive reinforcement.

I can still see the forest, but don't we also have to take a cursory look at individual trees in in order to keep the forest in good nick?

Argh! Too many trees!

Cheers,

 

[Bargain Hunter]

Sorry- I have land tax and rates totalling many thousands. My council rates have increased substantially as a result of the way the council has rated my property.

But the same properties have improved in value substantially. It's a "cost of doing business".

It's difficult to keep in front of.

In the longer term, there is more to be picked up by riding witrh the flow.

Geoff,

Love your work but I can't agree with your 'cost of doing business' philosophy.

How many ways can these leeches find to screw blood out of a stone. They can't balance their books, so they find those who can and have them foot the bill.

Yes, it is the price of doing business but how many 'costs' can we absorb before they become unacceptable (unprofitable), only time will tell.

By the way do I get a discount if the property is not rented for a time.

Regards

Andrew

 

[geoffw]

Love your work but I can't agree with your 'cost of doing business' philosophy.

Andrew

I guess that I'm saying that the name of the game is capital gain.

Expenses along the way hurt.

But, having benefited from the cap gains of the boom, the extent of those gains absolutely dwarfs the out of pocket expenses along the way.

 

[alexlee]

How many ways can these leeches find to screw blood out of a stone. They can't balance their books, so they find those who can and have them foot the bill.

Yes, it is the price of doing business but how many 'costs' can we absorb before they become unacceptable (unprofitable), only time will tell.

Agree that councils / govt are just looking for easy targets, and 'fat cat' proprety investors are always a popular target.

Re the second point, the more interesting question is how many costs can over-leveraged, first-time amateur investors who bought with the crowd absorb before they panic and sell? A lot less than long-term investors who monitor their leverage and bought some or all of their properties early in the cycle (or in a past cycle).

Personally, I would love a nice property crash caused by panicked sellers. Whether those sellers panic due to interest rate rises, a recession or higher council costs, I don't really mind. Surely as investors we want crashes to give us the opportunity to buy more.
Alex