Property is a long game, that’s why Longview is changing the way we think about Property Management and Real Estate, with better services for Landlords and Property Investors, like Guaranteed Rent and AirBnB management. It’s time for a fundamental mindshift in the industry, here’s what The Age has to say about LongView and why it matters to you and your property.
By Simon Johanson
From LookSmart to property management, entrepreneur and investor Evan Thornley is taking a long view on real estate.
In a recent case brought under the Equal Opportunities Act, the court held that the Owners Corporation (‘OC’) was a service provider. Consequently, the court determined that a disabled lot-owner was entitled to require reasonable works to be done by the OC to enable her to have sufficient access to the common property.
One important aspect on which the court did not rule, was whether the work requested was reasonable. It returned the matter to VCAT to decide on this question.
The consequences of the case could be far reaching for OCs. It is now the State of the Law in Victoria that an OC could be forced to do work which is required by a single lot owner or a tenant. If the cost of the works is substantial, such as would be the case with, say, the installation of a lift, this is a matter of concern for OC members.
Consequential questions for OC members
The questions which arise for owners include:
1) What if the work is impractical or impossible to complete in the block?
2) Who is liable to pay for the work?
What if the work is impractical or impossible?
Consider the circumstance of an apartment block built years before current legislative and other requirements came into force. In such a block it may be impractical, or impossible, to do works which would meet the needs of the party making the request for changes. In our view, the most likely outcome in these circumstances is that it would not be reasonable for the OC to have to make the changes requested and, consequently, it would not be forced to do so. However, until there is greater clarity on what is reasonable there is uncertainty in this area.
Who is liable to pay for the work?
The court did not deal with the allocation of the liability of owners to pay for the required works in the recent case. We expect that the fees levied to pay for works of this type would be treated by the OC as ‘special fees’ rather than ‘annual fees’. We also expect that these costs, rather than being allocated equally amongst lots, would be allocated using the ‘benefit principle’. The benefit principle simply means that those who benefit more, pay more. However, it is not straight forward to determine the share of benefit. For example, the party requiring the OC to carry out the works could argue that completion of the works will raise the value of the entire building and, consequently, suggest that all owners should pay a share.
What can your OC do to protect you and other members from the risk of being required to pay for a share of works carried out at the request of a single owner or tenant?
We recommend that OCs consider reviewing their rules with a view to making amendments, if necessary, which make clear that:
a) the liability for the cost of works carried out pursuant to the Equal Opportunities Act at the request of one (or more but not all) owners/tenants is to be treated as a special fee and
b) are to be allocated to the lot owner(s) requiring the works.
This course of action would provide owners with a line of protection against the potential risk.
Please contact Rama Murugesu from Interface Property Group (an Owners Corporation expert) by email at firstname.lastname@example.org or by phone on 0427 513 239 if you would like to consider such a course of action for your OC.
A recent article published by Jon Giann1, Director at Knowledge Source, shows that while all the headlines shout that the property market in Australia is in decline, this masks the fact that the majority of the market is still growing, with some parts even going ‘gang busters’.
Before getting into the detailed analysis there are two points to make according to Jon: “Firstly we have had seven property market declines in the past 30 years, so one every four years or so. The property market moves in cycles.” Secondly, this current decline is so far, one of the “tamest cyclical downturns in history”.
The property market is divided into the following segments: ‘Top End’ – the most expensive 25% of houses, the 50% in the ‘Middle Bracket’ of prices and the 25% which are ‘Cheaper’ properties.
The graph below shows that prices in the Top End are falling. This is what has captured all of the headlines. However, the Middle bracket is still experiencing price increase, albeit at a slower pace. At the same time prices in the Cheaper segment are going strongly.
So while prices are only easing in the Top End segment, they are falling far enough, fast enough that they are pulling down the aggregate numbers and are creating all the media headlines.
Why is this happening?
We think that the key driver of the price decline in the Top End is the tightening of bank lending criteria experienced recently.
We anticipate that with the coming wave of interest only loans switching to principal and interest, we will see the price trend begin to impact on other sectors of the market.
What should you do about it?
Times of higher price volatility present increased opportunities for risk and reward for investors. Make sure you are well informed before progressing with any property decisions – whether that be to buy, sell, hold or refinance.
When the market is in decline there are often good opportunities to buy an investment property or upgrade your home. The reduction in prices at the Top End particularly provides interesting opportunities for long term investment.
1. Jon Giann, Director at Knowledge Source, Ivanhoe, Victoria.
When the time comes to sell your investment property, no one knows whether your buyer will be an Owner Occupier or another Property Investor. But we do know this: the more interested parties you have, the better the chance of receiving a great offer. And the key to having more bidders is to get more investor buyers interested.
Every Real Estate Agent will promise: “We are the local market experts and we have a secret database of buyers in your area”. Let’s be honest, the ‘secret database of buyers’ is called realestate.com.au and domain.com.au! And if Owner Occupiers are looking for their new home in the neighbourhood of your investment property, then they will find it themselves.
Real Estate Agents can’t impact the number of Owner Occupier Buyers in the market at any given time – the number who are ready to buy and who are eager to make an offer, will be about the same for any competent agent.
However, in the age of the internet, the same is NOT TRUE for investor buyers.
Investors will look at many investment properties all over Australia, via realestate.com.au and domain.com.au and will receive daily alerts whenever a new property meets their specified criteria. In fact, Investor Buyers are spoiled for choice; and that’s the problem. Any serious investor has more possible properties to consider than they can ever fully assess, let alone visit, let alone do the legwork necessary before making a bid (pest and buildings, finance pre-approval and S32 review by lawyers).
So the extent to which we can help them to do their due diligence determines whether they will submit an offer or bid for your investment property. And the more investors submitting offers/bids, the more likely you are to get the highest price.
The number of Investor Buyers interested in your property is NOT a localised activity either. They could be a local, or come from somewhere else in Melbourne, or somewhere else in Australia, or somewhere else around the world.
So how do you get the largest number of Investor Buyers willing to make an offer or a bid, to your sale?
We have worked to create a specialised package for Investor Buyers that no other agency offers. And consequently, we believe no other agency is better equipped than us to bring you the maximum number of investor buyers, thereby increasing your chance of securing the highest price.
So what is our secret sauce? Three things…
1. A comprehensive Investor Information Pack from day one of the campaign: It’s great to mention the sunlit loungeroom and the Smeg appliances. For Owner Occupier Buyers these are important features.
But for investors, they also want to know: What’s the rental history or guide? What are the outgoings? What’s the land content? What‘s the history of capital growth on this property or similar properties in this neighbourhood? What’s the maintenance cost history?
Most selling agents can’t provide more than one or two of the answers. It’s frustrating. So, when Property Investors are left to collate and analyse this data themselves, it takes weeks of work for them to even decide if they are interested in progressing to the next stages of due diligence.
Every property we sell that is likely to attract investor buyers has an accompanying 6-page Investor Information Pack available from day one of the campaign. Pages full of numbers. So, any Investor can tell immediately whether it meets their financial criteria and move onto the next stage. This dramatically increases the number of Investors who may come to bid on the property. And that’s your best guarantee of the securing the highest price.
2. A Guaranteed Rent offer: What Investor doesn’t care about how much rent they will get and whether that rent will occur on time, every month, whether the property is let or not?
Selling your property with our Guaranteed Rent contract attached, removes all the guess work and risk for the Investor Buyer. You could be selling at the exact same time as a very similar property next door, but which buyer would choose your neighbour’s over yours when yours has a Guaranteed Rent contract available and theirs doesn’t?
We provide a Guaranteed Rent certificate on all eligible investment properties (confirming the guaranteed rental amount/month), which can be used as part of the Investor Information Pack and provided to interested Investors prior to the sale.
By understanding the needs of Landlords and Property Investors, we have created these unique sales products that will attract many more buyers. More buyers, means more bidders, means higher prices.
If you’d like to learn more about any of these products or to get an appraisal of the current market value of your investment property, call Grant Lynch, Director | Sales & Auctioneer on 0408 110 011.