Queensland Legislation regarding raising rents.

A big warning for investors. New legislation in Queensland is now in place allowing landlords to only raise rents once a year for existing tenants.

I would strongly suggest that with this in place, you sign up your tenants for 6 month leases only to start with. This means that if we have another year where interest rates start to bite, you will have an opportunity to recoup your margins from rents that will slip if left to be only once a year. We all seek returns, and in this highly letigious environment, lets do simple things to cover our bases first.

Investor Behaviour

A great statement from Terry Ryder that is so true, the strong determined ones will take action at the right times.

One of quirks of investor behaviour is the tendency to take action at the wrong times. Right now it’s clear the property market is coming to the end of its recent growth phase – not surprisingly, given the loss of consumer confidence amid poor federal leadership on both sides of politics, the calling of an election and the Reserve Bank’s earlier mistakes with interest rates. This is the time for investors to become active: price growth appears to have stopped, market activity has declined and interest rates are stable. This constitutes a buyers’ market. Most people, however, will do the opposite: they will retreat into their shells and refuse to come out until the market is raging again – which is the wrong time to be buying. Remember this: no one ever became wealthy by following the pack. The pack always runs in the wrong direction.

Superannuation fund enters property lending

Funding options for building societies have broadened with superannuation fund AustralianSuper’s entry into commercial property lending, according to The Australian Financial Review.

AustralianSuper – the country’s largest superannuation fund, with $32 billion under management – has agreed to lend $200 million to a property debt portfolio controlled by Challenger Financial Services Group, and is seeking to increase its property lending portfolio, the paper reports.

“This is the first step we’ve taken to what we think could be a new asset class for superannuation investors,” AustralianSuper chief investment officer Mark Delaney told the AFR.

Mr Delaney said the fund is optimistic on the outlook for the country’s property sector.

“We quite like property because in the current environment because property prices have come down,” he told the paper.

“Cap rates are up substantially. The Australian market is recovering slowly.”

“It’s a good time to invest in property so we’re not worried about property values.”

Building Approval Statistics for Australia – April 2010

ABS Building Approvals – April 2010 Key Points

TOTAL DWELLING UNITS

  • The trend estimate for total dwellings approved was flat in April 2010 following rises in the previous 14 months.
  • The seasonally adjusted estimate for total dwellings approved fell 14.8% following a rise last month.

PRIVATE SECTOR HOUSES

  • The trend estimate for private sector houses approved fell 2.0% in April and is now showing falls for four months.
  • The seasonally adjusted estimate for private sector houses approved fell 13.5% following a rise last month.

PRIVATE SECTOR OTHER DWELLING UNITS

  • The trend estimate for private sector other dwellings approved rose 5.0% in April and has risen for ten months.
  • The seasonally adjusted estimate for private sector other dwellings approved fell 5.4% following a rise last month.

VALUE OF BUILDING APPROVED

  • The trend estimate for the value of total building approved fell 1.0% in April and is now showing falls for three months. The trend estimates for the value of building approved should be interpreted with caution.
  • The seasonally adjusted estimate for the value of total building approved fell 13.3% in April. The seasonally adjusted estimate for the value of new residential building fell 4.6% while the value of residential alterations and additions fell 8.4%. The seasonally adjusted estimate for the value of non-residential building fell 28.5%.
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Paying Interest in Advance on Investment Property

Now is the time of the year some people consider paying 12 months of interest upfront to claim the tax deduction in this financial year. If you have sold a property and have a capital gain liability, or have come into some money via a bonus or something, paying the interest upfront and claiming the deduction this year can be a good way to reduce the tax bill for the year.

Many lenders will offer a discount on the interest rate for paying in advance, for example Commonwealth Bank have an interest rate of 6.54% for paying 1 year upfront if you are on their professional package. This is less than the discounted variable rate, of course you are taking a risk as to what interest rates will do over the next 12 months.