A real estate agency usually has two streams of income:

1. Sales; and
2. Property Management

Property Management is the management of properties on behalf of landlords who are leasing property to tenants.

Property Management does not exist without people who wish to invest in the property market. Without investors, we don’t have a professional Property Management industry. Many people within the industry criticise their landlords. Without them, however, there is no business. Maybe every agency should have a day to worship their investors.

Investors are also important for the housing shortages within the country. Without people investing in property and renting them out to tenants, those who can’t afford houses have nowhere to live. Property Management is therefore a fundamental part of the housing industry equation.

Government has not supported investors in the property market. It was two years ago that the government decided through the Australian Prudential regulator, to prohibit any more than 10% growth in the investment property market, in the banking industry. Banks then had to limit who they lent money to for investment in property. This has caused a credit squeeze for investors. Banks have become so tight that it is incredibly difficult to get an investment loan.

Even though, as far as being a marketplace which has grown off the back of property investors since its inception, various governments of Australia have forgotten this truth. In the last year, we have decided to ward off international investment as a means of thwarting the Chinese property invasion. Many might agree with this approach, however it is short sighted. For those who wish to invest in Australia, they need to pay $5000 for an investment review approval, higher stamp duty, higher land tax and have 10% taken out of the proceeds of any sale. Why would you want to invest in Australia when just across the ditch, New Zealand has no capital gains, no stamp duty, no land tax and no GST on property?

If investors are squeezed out of the marketplace, this will leave the reduction in the number of properties available for rent. Rent will increase, and the cost of living will spiral out of control. Lets hope the government wake up before it’s too late.

For those landlords who are already in the market, this may serve as a short term thought for your investments. In the long term, it will have an impact across the whole property market.

If you are a foreign investor, why would you keep your property? Why stay? It may be better to go invest your money in somewhere like America, Canada or New Zealand.

Investors are important to housing, they are the reason we have Property Management. God Save the Investor!

 

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538