If you’re renting right now this question should interest you: “Should investors pay more to own a property than a resident owner?” Tenants are directly impacted by this issue because you’re the ones who wear the cost – or at the very least some of the costs, passed on to you in higher rents. So a recent court case regarding city council rates is an issue that affects many of us in Brisbane’s inner-city.
For those not yet up to speed here’s the summary: Brisbane City Council, as with many Queensland councils, charges more rates each year for a rental home than the identical property next door that’s lived in by its owners. Same footpath out the front, same local parks, same rubbish collection, same water and sewerage pipes running down the street. This extra charge has happened for so long we’ve all grown to accept it.
Until a small group of Mackay property owners decided to challenge the system, recently getting the Supreme Court to agree the extra charge was not legal. Talk of big refunds of investor rates bills caught our attention. And that of the State government, who’ve now legislated to validate this 2-tier rating system.
The argument? Investors can claim a tax deduction for the rates bill.
So I get a deduction for my car because I use it for work – but does that mean I should more for petrol or rego? If you need a uniform for your job that’s tax deductible too, but the dry-cleaning charge is no dearer. Is this a sound economic argument, or are non-resident property owners just an easy target politically? As media commentator Madonna King noted, “it raises the wider question of whether it is undemocratic for a council to make a decision like this about a group of people who own part of the community, but don’t have a right to vote in local elections.”
We’re not suggesting any changes to the right to vote, but it’s worth having a public discussion about government charges at all levels, and an open look at who is really paying what. This isn’t about wealthy landlords sitting on a pile of cash – if you tax a property owner then tenants will share that burden.
Please give us your comments!
You’re right, they should prevent the landlords from putting the cost on the tenants and make sure they pay the extra rates. That’s what your saying right? Some sort of Brisbane wide rent control to prevent renters from being ripped off. Sounds good to me.
I am the person that started the legal action with the support of 400 other rate payers. We won the case in the Supreme Court, but the State Government have passed a bill to amend the local government act, making it legal for the councils to charge the extra rates and have made it in retrospect to stop others from launching legal action. Our solicitor / barrister does not believe the State Governments action to be legal. They are exploring this argument. I would suggest that all landlords need to contact their Local State Member of Parliament and tell them what you think of their actions. Basically the government has been caught making illegal charges and have change the rules to suit themselves.
If anyone wants more information or would like to support the fight, please contact Ayril Paton on 0409593806 or mkyinvestorrates@hotmail.com
This is an absurd position of the council. Investors will have to pass the higher rates on to their tenants causing higher rents. Is this what the council wanted, a higher tax for tenants? How will tenants ever be able to save to buy their own property?
A similarly absurd situation exists in the high land taxes state governments impose on residential investment property.
Lloyd
Democratic or not, the sitting government can always change law to suit their purposes whenever they lost a case in court. In this instance it is local government grab a share of tax revenue from the Commonwealth government (higher tax deduction resulting less tax collected by ATO) in addition money from investors.
Bloody ridiculous! Tenants are tenants for a reason…they often can’t afford to buy so it’s unfair that they should have to have higher rents bcs their landlords have higher rates than owner occupiers.
It might be worth noting that inner-Sydney landlords are required to vote in Sydney local elections even if they live elsewhere. This is now law, punishable by fines.
The REIQ should petition all landlords and tenants to ensure a fair and equitable system based on council services. Tenants should equally voice their disapproval based on equity and fee for service.
There have been court cases in the past whereby councils were charging Licensed Food Premises fees for no particular regular service or extra service (for instance many food buisinesses had not been inspected by councils for a considerable period of time). Again REIQ on legal advice should develop a legal petition firstly to the Ombudsman I suggest. Just my thoughts.