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What happens when the leasing market cools?

By | Leasing | No Comments

We often hear lots of talk around the housing marketing relating to sales, clearance rates and sold prices but very rarely do they talk about the rental market. It’s interesting because the two are related and when we see a slower sales market we often see the roll-on affect in the rental market.

The start of 2018 went off with a bang and properties were being snapped up for lease in record time, with properties not lasting more than 7 days and generally being leased after one inspection. In many cases tenants were offering higher than asking rentals and longer lease terms so that could secure their dream home. Typically at this time of year however, things start to slow down, less people at open for inspections and properties taking slightly longer to lease.

So just how do Landlords prepare for a shift in the demand? As with all things preparing for the worst and having financial savings to assist if a property becomes vacant is one way to do it, however we want to look at a more proactive approach and one that keeps those funds in your pocket.

Let’s go back to the start, when we secure a lease we always try and time the lease end date for ‘peak season’ that is typically from October – March. If a tenant is offering a six-month lease in June, then this might be a time that we would consider a shorter lease so that if it does become vacant it does so at a good time of year.

Consider securing a longer lease if possible, so similarly to the above example if a tenant is after a 12 month lease we can try and negotiate an 18 month lease which will bring the end date closer to the ‘peak’ leasing season. This also reduces the risk of the property becoming vacant sooner if you only secured a 12 month lease which would incur you more costs.

Owners should also promote the property to those in the building and close by via a brochure, the reason this is an effective strategy is that often we see current occupants in the building having a friend or family member that would like to lease in the building, but they may not necessarily be looking online all the time.

We also recommend Landlord’s use the quieter time in the market to do renovations or repairs to their property in preparation for securing a higher rental in the warmer months.

It is not just about ‘reducing the rent’ which some agents use as the only tactic to lease a property in a cooler market, it’s about planning ahead and looking at all options, not just the easy ones.

If you would like to speak to us about our proactive approach and how we focus on minimising vacancy, then feel free to contact us.

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Breaking a lease agreement, what happens next?

By | Leasing | No Comments

A few tenants have asked us lately what happens if they need to break their lease agreement. For various reasons someone might need to do this, reasons can include relationship break up’s, job changes resulting in moving overseas or interstate, financial reasons, new relationships and the list goes on.

Whatever the case may be it is important to know where you stand as a Tenant and Owner.

Tenants –
Are liable to pay rent until a new tenant moves in (up to when the Lease ends)
Are required to pay any advertising costs to find a new tenant (in accordance with the Landlords agreed fees with the agent)
Are required to pay a pro rata leasing fee (in accordance with the Landlords agreed fees with the agent)
Are required to leave the property in the same condition as when they moved in

Landlords –
Are required to pay the balance of the pro rata advertising and leasing fee (in accordance with the Landlords agreed fees with the agent)
Need to approve the new applicant before the new lease can be signed, once the new lease is signed the tenant transfer can take place.

Please note the following link to Consumer Affairs Victoria detailing the full obligations of the parties.

https://www.consumer.vic.gov.au/housing/renting/ending-a-lease-or-residency/if-the-tenant-wants-to-leave/tenant-giving-notice-of-intention-to-vacate/if-you-do-not-give-notice-if-you-break-the-lease

If you are thinking of breaking your lease have a chat with your property manager and make sure you are clear on all the costs involved. For an owner if this happens to you make sure your agent is doing thorough checks and is taking care of your interests whilst managing the process. Contact us today for a confidential discussion.

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The Land Tax Trap

By | Land Tax | No Comments

The State Revenue Office will this month be issuing Land Tax Notices to property owners that have a land value in excess of $250,000 and that is not their principal place of residence.

Some investors may be surprised at how high their Land Tax bills is due the valuation placed on their land. But what can you do about it if you disagree and think that the valuation and therefore Land Tax Amount is too high? Unfortunately, very little right now!

The State Revenue Office use your relevant Councils valuation to calculate the Land Tax amount payable by you. The council valuation occurs every two years with the last being in 2016. If you or your property manager passively pay your Council Rates and do not object to the valuation placed by Council valuers within the allotted time, usually 60 days of receiving the rates notice, you are stuck with that valuation and the higher Council and Land Tax rates. It’s a double hit.

So what can you do about it?  When you receive your Council Rates notice have your agent provide an estimate on the land value based on similar sales, hopefully your agent is already proactively doing this. If you both think it’s too high object within the allotted time.

We recently acted for a client and disputed the valuation and were successful in reducing the land rate by 25% based on comparable sales, location of the property and data that the valuer did not put into consideration. Values can change considerably from street to street, even block to block.

Don’t get stung by higher Council and Land Tax Rates than need be, review your Council Rates to avoid the Land Tax Trap.

Please feel free to contact me about this article or any other property related matter.

 

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Our Director Steven Lusi comments in the Australian Financial Review

By | Media | No Comments

Our Director Steven Lusi comments about the importance of buying a quality investment, in a convenient location, with access to amenities and value for money in today’s Australian Financial Review.

Click here to read the full article: http://www.afr.com/personal-finance/portfolio-management/property-buyers-need-to-look-beyond-lower-price-and-perks-to-location-and-gains-20180208-h0vrfo

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