Page 1991 - Week 06 - Tuesday, 5 June 2018
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When bundled with the economic mismanagement of the government through huge slugs to land tax and rates that have occurred over previous years, the economic argument for investing in Canberra is rapidly starting to look like a bad investment decision. The budget the Chief Minister and Treasurer will hand down today undoubtedly will call for more land sales, more unit block developments, most of which will be bought, hopefully, by investors who are now subject to a foreign investor tax if they are from overseas who will now carry further risk if they choose to rent that property out.
When I did a small stint working in real estate many years ago, the way it was explained to us about why it is a four-week bond and how the legislation is structured was very simple: the tenant is required to put forward a four-week bond of rent when entering a property. If there is a failure to pay, the standard terms of the tenancy agreement and the legislation mean there is a seven-day late period. The managing agent or the property owner is required to send a notice to remedy to the tenant and give them seven days to fix up that payment. If the tenant fails to do that, a two-week termination notice is able to be issued, which also allows for an application to ACAT to terminate the tenancy. In all, it is designed so that if a tenant fails to pay the rent the process to evict is four weeks. The landlord holds a four-week bond, therefore, everything is square on the ledger at the end of the day.
What has happened since is clearly illustrated in the ACAT annual report from last year, which highlights:
The average number of days elapsed between the opening of a residential tenancies file and the closing of that file is 56 days.
Currently, should a tenant fail to pay their rent, the landlord or the managing agent issues a notice to remedy and then seven days elapse. You issue a notice to terminate and another 14 days elapse. So three weeks have gone. Onto that you add the 56 days before ACAT can resolve the matter. Very few property investors in the ACT would not have a mortgage on their properties. So for the best part of three months the owner of a property is without an income to service the loan on their property.
Despite that, the government is seeking to pass changes that add a further layer into that eviction process which will require the landlord to apply to ACAT in the first instance to put in place a payment plan. If the tenant continues to breach the agreement the landlord will need to apply to ACAT yet again to have an eviction noticed served. So that 56 days is going to blow out and the process will take even longer.
As I said in my opening remarks, in the view of the opposition the pendulum has swung too far in favour of the rights of the tenant. If the government choose to apply these terms for some of the most vulnerable people in the community who are in social and public housing, go for it; it does not require this legislative change. It can be done by simply changing the standard terms of the rental agreement issued to public housing tenants. If they choose to that, there is compassion from those in the
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