Sunday, October 23, 2011

The View Tax has to go

It is no wonder that Unit prices on the Gold Coast have taken a dive. Increased fees and charges have contributed to a significant devaluation of many investment properties. Add to that the fact that many investors have had to absorb a dramatic decrease in rental income as competition increases and rents drop.

The Gold Coast City Council came up with a new way to fleece unit owners in 2006 by increasing rates for owners above the 4th floor. This has been referred to as a VIEW TAX which just about sums up what the increases are all about.

There is no logical reason why the rates should be higher for someone who has a unit on the 4th Floor as opposed to the third floor. The increase in rates is indefensible and who can blame anyone for thinking that it was simply a callous and deceitful way to raise additional revenue.

It gets worse for owners on higher floors. The higher you go the more you pay. The end result is that Unit prices plummet. Prospective buyers take a look at the fees and charges, do a simple equation and work out that many Units on the Gold Coast are a poor investment with little possibility of a decent return on their investment.

We have Council elections in 2012 and whoever runs for Council should think very seriously about removing the draconian View Tax.

Wednesday, October 19, 2011

Pets in Body Corporate Communities

There are many reports of tenants who have pets in their units or townhouses without permission. The larger the Body Corporate Community, the harder it is to police. I have even heard of tenants moving their pets out of the building when it is time for their inspection by the landlord or manager.

Although many Body Corporate Communities have strict by laws about pets, the reality is that the laws are hard to enforce. Committees find the complicated process of going through the commissioner, or whichever other authority is current at the time, daunting and time wasting and often times they end up ignoring breaches unless they are forced to act.

Confusing and coflicting recent judgements about pets also make it difficult for committees to act and many end up adopting a laissez faire attitude to pets. As long as they dont cause a nuisance then they turn a blind eye.

Once again, this all comes down to the fact that Committees are made up of volunteers. There are limits to how much time they should expend on issues like pet approvals, etc. This is ultimately a weakness of a Body Corporate system that is in a mess.

Investment Units on the Gold Coast in Oversupply

The recent annual report of the Residential Tenancies Authority indicates that the vacancy rate on the Gold Coast is 5.5 per cent - much higher than other states. However, even more significant is the fact that many investors have been forced to reduce the rents drastically which results in many finding it hard to cover their repayments.

The holiday rental situation is dire with investors who are forced to holiday let their units through Caretakers having to accept reduce rents as competition increases.

Unfortunately, there is no sign of any change in the situation. In fact many experts predict that things will get even worse. Many investors would live to offload their properties but cannot afford to take a huge loss.

There is no doubt that many people regret make an investment on the Gold Coast.

The Costs of Apartment Living

There have been many recent reports indicating that the market value of apartments and townhouses in Body Corporate Communities on the Gold Coast has dropped significantly in recent times. The global financial situation has certainly contributed to this. However, another factor is the continuing escalation in fees and charges that are forcing many owners out of their homes.

The fees and charges that are crippling for owners and investors include:

1. Gold Coast City Council Rates - including the ludicrous "view tax" for units above the 4th floor.
2. Allconnex charges - an example of an extraordinarily ill concieved policy that led to increased charges to owners.
3. Body Corporate Levies - Although Committees are responsibile for ensuring that their money is spent in a responsible manner there are many examples where funds are mismanaged and Body Corporate fees are much higher than they should be.

There is no doubt that high fees and charges will affect the market value in Units and Townhouses. Whilst Body Corporate Committees have little control over Rates and Water charges, they should be doing everything possible to reduce Body Corporate Levies.