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Labor’s proposed property changes: why investors shouldn’t wait to buy

Over the last few months it’s been difficult to ignore articles discussing Labor’s controversial plans to scale back negative gearing for investors who buy existing property and halving the capital gains tax (CGT) discount.

What’s happening?

In short, if elected Labor plan to cut back the CGT discount from 50% to 25% for newly-purchased property assets held for more than one year, meaning for those assets three quarters of each gain will be taxed instead of one half.

Changes to negative gearing would also restrict tax deductions for mortgage payments to newly built properties.

Only existing houses, flats and commercial premises would be excluded from the scheme.

When will it happen?

Even if the polls are half right, Bill Shorten will be Australia’s 31st prime minister.

With the federal election likely to be done and dusted come the end of May, it is looking very unlikely the Morrison government will recover from their horror 2018 paving the way for Shorten’s Labor to take charge.

Once elected, the ALP will likely try to fast track their changes through parliament. If successful, they could be in effect as soon as July 2019.

How will the changes impact you?

Let’s look at how these changes might impact the average investor pre vs post implementation.

 

 

Now is the time to act

The reality is these investor benefits will soon be a thing of the past as the ALP are keen to level the playing field for first home buyers.

However, as the proposal includes a grandfathering provision, those who act quickly can still get ahead of those who wait around.

Savvy investors know to run toward the storm when the headlines spell doom and gloom. A correction in the market is to be expected and should not discourage those looking to get started.

Pockets of Melbourne and Brisbane (even Sydney) are currently experiencing some fantastic results.

Don’t wait around to get stung by Labor’s proposed changes. Seek advice from one of The Hopkins Group’s property advisers and request an appointment via the form below!

Disclaimer: The information contained herein is general in nature and does not take into account individual situations, needs or goals. It should not be relied upon and persons should satisfy themselves through independent means that any decisions based on this material are appropriate. We recommend that you consult with your adviser who will be able to make a recommendation based on your specific circumstances.

Pets in your rental property – how the rules are changing

In September 2018 The Residential Tenancies Amendment Bill 2018 was passed through the Victorian Parliament, with the aim to “increase protections for renters, while ensuring rental housing providers can still effectively manage their properties.” While these changes don’t come into effect all at once, they will be implemented by July 1 2020.

Of the more than 130 reforms to be introduced, one particular change has had many people talking; the new rules applying to a tenant’s right to a pet.  In fact it’s made many landlords worried that they will get no say into whether a pet can be housed at their investment property; however this fear may be unfounded.

If you read the new legislation carefully it actually stipulates that potential tenants will need to apply for properties with their pets listed on their application – or should they wish to get one at any time throughout their tenancy, they will need to submit a formal request to their landlord. A landlord then cannot unreasonably refuse the request for a pet unless a valid reason is given (such as the dog is a large breed for a small one bedroom apartment or the property owner has an allergy).

If a pet is approved, tenants will still be required to sign a pet clause. If the request is denied, your tenant will have the right to submit a request to VCAT allowing a member to review your refusal. Failure by the landlord to supply a response to a pet request within 14 days will result in automatic approval to the tenant – however the landlord can still make an application to VCAT to have an order put in place to refuse the request or have a pet removed should there be damages or issues in your tenants home caused by their pets.

While this change does explicitly provide tenants with the right to a pet, it also makes landlords rights clear; something which was previously missing in the Residential Tenancies Act. Previously there was nothing in the legislation regarding pets, a fact which often negatively impacted landlords rather than a tenant. From personal experience most cases that ever made it to VCAT regarding the removal or denial of a pet in a property were always skewed in favour of the tenant’s interests, with the argument made that as there is nothing in legislation that says a tenant can’t have a pet, then a landlord can’t discriminate against them.

With this change coming into effect within the next 12-18 months, landlords will now have the right to legitimately refuse a pet in their rental property and have their voice heard in VCAT if necessary. There is also the provision to allow for a pet to be removed from a property if it’s causing damages or a nuisance, as opposed to the usually three breach method which is often ineffective and does not usually result in a pet’s removal.

I’ll admit – when I first heard that these pet laws were changing, I was nervous. However after taking the time to analyse the change and learn what the legislation really says, my concerns have been relieved. I believe that including wording around pets in the Residential Tenancies Act goes a long way to providing our landlord clients with clear rights to support them moving forward.

Have questions about the upcoming changes to the Residential Tenancies Act and what they might mean for you? Get in touch with a Property Portfolio Manager at The Hopkins Group today!

Disclaimer: The information contained herein is general in nature and does not take into account individual situations, needs or goals. It should not be relied upon and persons should satisfy themselves through independent means that any decisions based on this material are appropriate. We recommend that you consult with your adviser who will be able to make a recommendation based on your specific circumstances.

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