14 Feb Finding investment grade property – Ben Kingsley
In October last year, the state government in Victoria set down a new Residential Tenancies Act that could have a fairly huge impact on a lot of investors, those investors who have purchased in Victoria. Ben Kingsley from the Property Investors Council of Australia, PICA explains why we should be concerned and about a petition you can access to help. We give you a link to find out more… http://bit.ly/2BMRZ8o
Kevin: In October last year, the state government in Victoria set down a new Residential Tenancies Act that could have a fairly huge impact on a lot of investors, those investors out of Victoria. Joining me to talk about this, Ben Kingsley who is from the Property Investors Council of Australia, PICA.
Are you the chair of that, Ben? I know you’re heading it up; you started it all off.
Ben: Yes, I am, Kevin. That’s right.
Kevin: So, you’re the man to talk to. What concerns you about what the stage government in Victoria have done, Ben?
Ben: Kevin, the backstory is that the Tenancies Act in Victoria hasn’t been reviewed for an extended period of time, and definitely, things change. And we want to try and get the balance right between obviously the rights of the tenant but also the rights of the landlord who owns the asset.
As part of that consultative process that took place, there have been some reviews, and now we’re seeing these recommendations. There are 14 of them that have gone through, and some of them are quite good. Some of them are needed, and certainly, some of them focus on protecting some of the more vulnerable people in our society – and we understand that.
Now, obviously, from our point of view, we represent landlords and those people. We’re a newly formed association, so we haven’t had a chance to engage with government yet in terms of these proposals. So, we’re concerned about a couple of them.
Kevin: Where do you think they went wrong?
Ben: I think certainly the one around the idea of allowing tenants to make non-structural modifications to rental properties. Personally, hanging up a hangar to put a picture up, that does no real material damage to the property; I can understand all that. But what that means is you could also potentially see a tenant basically put concrete out in the back yard. That’s non-structural.
Imagine if the whole backyard of your property was concreted and you had no rights to stop the tenant from doing so. That’s an extreme case, but this is the sort of information. The devil is always in the details. So, it’s ones like that.
Another is the removal of the landlord’s right to consent or refuse pets. Ultimately, we have different views on whether we allow pets in our properties or not. Imagine if you did have a large dog with really large claws and you have soft pine floors. That would tear those floorboards apart. Where are the recall rights of the landlords to get those floorboards replaced?
So, it is all coming down to we want to see more detail. It’s all well and good to say “Here are our 14 new reforms,” but tell us a little bit more about how they’re going to be policed and what’s the recourse for the landlord? Because there’s no doubt that all of these changes are in favor of the tenants and giving them more rights and opportunity.
There’s a blacklisting of potential bad landlords and potential bad property managers, and we think, “Okay, there’s a blacklist of bad tenants, we understand that. But how do you get removed from that, and what were the circumstances?” If one bad staff member inside a property management business gets that property management business blacklisted, if they’re a national network, that particular network of real estate agents is now blacklisted.
Again, the devil is in the details, so we want more consultation on this rather than them going to that, and that’s why we’ve joined the petition that’s been set up by the real estate industry to get these things further consulted on.
Kevin: We’ll come to that in just a moment. Are you concerned at all about the changes to notice periods, as well, around ending a lease?
Ben: Yes, we are. Ultimately, what we’re seeing here is changes to the notice period around ending a lease, removing the ability of the landlord to serve a 120-day notice period to vacate for no specified reason. “No specified reason.” What does that mean? If the landlord now changes their mind and they want to move a family member into that property, is that a specified reason, or no, that’s not strong enough; they need to be selling the property or doing structural changes to the property where the tenants need to be moved out?
I can understand tenants want more confidence around long-term tenancy inside a property, but there are unique circumstances where a landlord who owns the asset potentially needs some flexibility around that. So, to say “No specified reason,” or “Okay, that’s not a good enough reason. No, the tenant can’t be moved on.” To sit there and say “I’m going to sell the property” when they don’t intentionally want to sell the property to move the tenant on. It’s not black and white. There’s a lot of gray in this, and that’s why we want to understand it a little bit better.
Kevin: What amazes me is that governments – not just the Victorian government – all seem to do it. They come out with these sweeping changes without any consultation with people who are actually working in the field all the time and can help them frame this better.
Ben: Totally. Let’s look at the federal government; let’s not just look at the Labor state government in Victoria. Changes to depreciation, changes to travel cost. No consultation; it’s just basically blanket statements to balance the books.
We think that in terms of what’s happening here in Victoria, there’s a lot of competition in the politics for the Greens versus the Labor vote, and obviously, this is social politics here, so we’re also seeing potential here around “Is this a vote-winning exercise?”
We do agree that there needs to be a review, and that has been going from 2015. But there’s not been a lot of representation on behalf of the landlords, and that’s where PICA comes in, and that’s why we’ve set this association up. There are over 2 million of us around Australia, so we want to be able to build that association so that we can add our input into these consultation pieces.
Because when we see reforms like this that haven’t really been thought through in terms of we want a little bit more detail, that gives us an opportunity to be at the table for negotiation and discussion and to give our input.
Kevin: Okay, so anyone interested or who feels they may be impacted or want to have a say in this, how do they get onto this petition, Ben?
Ben: The petition is all around the focus of RentFair is Unfair, so that’s our petition. We’ll be able to give you the details, we can put them on your site, Kevin, and then they can click on that link and add their name to that petition as well.
Kevin: All right. By the time we get to air with this, I’ll make sure that it’s an included link inside the commentary, so just look for that link. Just scroll down and see. We do word-to-text on all of our interviews, and I’ll make sure that that link is inside there to take you straight to it.
Thanks for your time, Ben. I look forward to talking to you again more about what the Property Investors Council of Australia is up to, as well.
Ben: Thank you, Kevin. Thanks for your time.