Apartment owners and tenants brace for new costs
City Council rates for medium density housing are set to leap from January 1st when a rather odd new rating system kicks in. Last week’s BCC budget outlined a new loading on units, townhouses and apartments, with the Lord Mayor arguing these properties aren’t yet paying their fair share. According to the Unit Owner’s Association the annual bill for one inner-city apartment will jump from $1300 to $2400, and there’s no doubt these costs will be passed on to tenants in higher rents. It’s hard to imagine the government adding an extra excise to petrol prices right now – imagine the outrage that’d cause. Yet this rates slug seems like the housing equivalent in a market already struggling to cope with falling affordability, under supply and interest rate rises.
Council has to consider “capacity to contribute” when charging rates, and it’s true apartments have generally paid less than houses. But we’d argue there’s plenty of benefits to the community in encouraging apartment dwellers, including more efficient use of amenities like roads and parks. Isn’t it a little ironic the same budget that goes a long way to easing Brisbane’s traffic congestion with record infrastructure spending also penalizes those who live closer to the city and make less use of it!?
The new calculations are complex and if your apartment sits on a block of land worth over $1m you’ll cop a “luxury apartment” loading. Across the inner city that’s pretty much your typical 6-pack and over, (plenty of them aren’t too luxurious!) and the dearer the block the higher your loading. Remember these are values set by the state government and often regarded as irregular and unreliable. But the real sting is how the value of your block of land is split amongst each owner. The state’s body corp legislation says the shares (interest entitlements) must be equal unless there’s a good reason otherwise. So while the Lord Mayor targets “capacity to contribute” the very laws he’s using to calculate the rates split say this notion’s not relevant. In recent years penthouse owners have sued their own body corps to reduce their “unfair” entitlements and developers have been scared into keeping them fairly equal when setting up new buildings. So 1 bed apartments and 3 bed penthouses often pay similar rates bills.
The net result? Smaller apartments across the inner city are about to cop more than their fair share of yet another increased cost. And these are the homes most likely to be rented.