We speak to the team behind the most intriguing recent property sale.
The property: A two-bedroom apartment at 14/51 Hampton Circuit Yarralumla, ACT. Sold by private treaty $320,000.
Who was the agent/agency? Moira Maloney, Maloney’s The Estate Agent Kingston.
How long was this on the market? [Moira] 3 weeks.
Why did this one sell? Because the investor wasn’t getting a return any more.
Was it overpriced? No.
What did you think it would go for? $320,000.
What was surprising about it?
It is the perfect rental property. It’s in a good position and affordable. This had been a rental property for 20 years with the same tenant. All the investors came and looked at it and didn’t buy. They walked away. It’s another example of what has been for a very long time an investment property in a great location that is now out of the rental pool.
The penny drops they all do their numbers. You’ve got to get a certain view of the return. Everyone was happy to fix it up, put in a new kitchen or bathroom or whatever, but the reality was, with the land tax and rates you have to pay on the property, the return wasn’t there. They couldn’t get 4 per cent. It was down to about a 3 per cent return.
They said “Sorry, Moira, we love the location, but the numbers just don’t add up to us. We’re happy to do the renovations, but with the outgoings here, we can’t get it to work”. It sold for $320,000 to an owner occupier.
In NSW you don’t pay land tax until it’s over a certain value, whereas in the ACT, on every property that is rented out you pay land tax. Even though it’s just this simple investor property worth $320,000, there will be land tax payable. They’ve had it in effect since the mid-90s, but in the last couple of years, they’ve increased their rates and the land tax has gone up.
Also, there’s an ACT proposal to extend the notice period given to tenants. It’s currently eight weeks’ notice of intention to sell. They want to make it 12 weeks.
The thing that’s forgotten here is that these people who own investment properties are just mums and dads and their circumstances change. Sometimes people need to sell a property and pushing it out an extra four weeks isn’t the answer to this problem here.
Do you reckon we’ll see another result like this: a) next week b) next year c) next cycle d) never?
a) It’ll be next week. It might even be later this afternoon! I’ve just signed one lady who owns two investment properties in Kingston. This lady’s concerned that it’s costing them money to have them as a direct result of increases in rates.