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Why am I better off staying in my current rental?

Some renters may be tempted to search for new digs with many rental markets around Australia showing signs of growing vacancy rates. However, staying put has several benefits, particularly if your current rental arrangement works well for you.

One reason against shifting rental digs is to avoid the time-consuming and expensive moving process. Packing, organising, and transporting your belongings saps your time and money. Moreover, the need to update utilities, change address details, organise a new bond, and take time off from work can be side-stepped by simply renewing your current lease. According to hireamover.com.au, a typical four-bedroom house in Sydney takes between 7-10 hours with three movers and a truck and would cost between $1800 and $2,520 – and don’t forget the time it will take you to pack up the property and return it to the state it was in when you first signed your rental agreement.

There are even more reasons to stay if you enjoy a good relationship with your landlord and property manager. A responsive, fair landlord is worth their weight in gold. Accordingly, if your current situation is comfortable, it may be worth negotiating the terms of your lease rather than seeking a new property. You may also be able to negotiate a longer or shorter lease to suit your needs, and you can even request a rent review to ensure you’re getting a fair deal. Staying in your current rental also means avoiding the uncertainty of moving into a new property where you don’t know the landlord or property manager.

Having a property, you can truly call home shouldn’t be underestimated – and a long-term tenancy can be the next best thing to owning a property. As a long-term renter, you can enjoy stability. At the same time, this tenure allows you to build relationships within your local community, all without the pressures of homeownership, such as paying a mortgage.

Finding a new rental can also be stressful and competitive in suburbs and towns with low vacancy rates. Therefore, you can avoid the stress of house hunting in a tight market by staying in your current rental home.

Ultimately, if your current rental is meeting your needs staying put can be a wise decision as it can save you time, money, and unnecessary stress – and more importantly, a sense of security and familiarity.

Your local Raine & Horne Property Manager can provide further insights into why staying in your current rental might prove a sensible move.

Australian real estate surges on as early spring demand outpaces supply

Australia’s $10.9 trillion behemoth asset class—shares, which have a relatively modest market cap of $3.1 trillion—continued to power on in August with a 19th consecutive month of growth. Meanwhile, the latest data from Raine & Horne reveals that buyers are eagerly eyeing the powerhouse brick-and-mortar market and are eager to make their move.

According to CoreLogic, while the national median growth was a modest 0.5%, Perth (2%) and Adelaide (1.4%) led the way for the capital cities. Perth’s impressive real estate growth continued, with the WA capital reaching a median dwelling value of $785,250, surpassing Melbourne ($776,044) for the first time since February 2015. Adelaide, with a median dwelling value of $790,789, also finished ahead of the Victorian capital but still well behind Sydney, which clocked up a median value of $1,180,463.

Given the strength of Australian real estate and a record-high savings war chest of $1.5 trillion held in the bank by Australian households, according to the Australian Prudential Regulation Authority (APRA)[i], it’s little wonder that demand is higher now than at the start of spring in 2023 and 2022. The latest data from Raine & Horne shows that open home attendance is up by 21% compared to the beginning of spring last year and nearly 38% higher than early September 2022.

On the flip side, supply needs help keeping pace with demand. Raine & Horne report that appraisals are down nationally by -10.59 % compared to the start of September 2023 and listings by -10.88 %. Angus Raine, Executive Chairman of Raine & Horne, noted that while many markets experienced a very cold winter, which impacted sales activity, the arrival of spring will bring a surge in appraisals and listings as the weather heats up.

“Given the robust buyer demand, now is a fantastic time for vendors to consider selling a property, as competition from other listings is currently lower than later in spring. This is especially advantageous for those planning to move into a new home in time for the start of summer,” Angus said.

Reflecting on the strong buyer demand, Angus draws parallels to the COVID-19 years. “We witnessed the impact of overflowing household savings during COVID-19, with much of that money being funnelled into real estate. Due to recent concerns about interest rates, many buyers have delayed their real estate plans, but it now appears that pent-up demand is set to unleash a significant spring selling season rush, carrying momentum through to Christmas and even into the new year.”

The strong demand for quality real estate is especially evident in the rapidly emerging Adelaide market, which now boasts Australia’s second-highest median dwelling price. Open home attendances in Adelaide are currently 32.34% higher than at the start of spring 2023, underscoring the SA capital’s growing real estate appeal. Yet, appraisals and listings are significantly lower than last year.

James Trimble, General Manager, SA Raine & Horne, adds, “The key is to act quickly before more listings hit the market. Early September typically sees fewer properties on the market for sale and a disproportionate number of buyers to sellers. So right now, vendors considering a sale have more chance of achieving a stronger result.”

For an obligation-free appraisal of your home’s or investment property’s value for a spring sale, contact your local Raine & Horne office today.

[i] https://www.apra.gov.au/monthly-authorised-deposit-taking-institution-statistics

What steps should I take to sell a property that currently has a tenant?

Selling a rental property with a tenant in place can be a little more complex than selling a vacant property, but it is very achievable with the right approach.

One of the first steps is to inform your tenant well in advance. Providing ample notice helps maintain a good relationship and ensures the tenant has enough time to prepare for the sale process.

Check your state or territory’s regulations regarding the required notice period to ensure compliance. It is crucial to maintain open and respectful communication with the tenant throughout the sales process. Inform them of each step and any changes to the inspection schedule promptly. This will help reduce potential friction and make the process smoother for all parties involved.

A professional property manager, such as Raine & Horne, experienced in handling properties with tenants can make a significant difference. An experienced property manager can coordinate with the tenant, schedule inspections, and manage any issues that arise.

Since selling a property can be inconvenient for tenants, consider offering them incentives to ensure the property is kept clean and presentable. This could be reduced rent, professional cleaning services, or even gift cards. Making the tenant feel valued can lead to a smoother sales process.

That said, you cannot demand that the tenant always keep the property tidy. Instead, work with your agent to schedule inspections at convenient times for the tenant, such as coordinating around their work schedule or family routines, like a baby’s nap time.

If the tenant has pets, coordinate with them to ensure the pooches or moggies are managed during open for inspections. This might mean the tenant takes the pets out during open inspections. Clear communication and planning can prevent any potential issues.

If your tenant is on a long-term lease, the property is more likely to attract investors than owner-occupiers. Ensure that the lease details are clear and highlight the potential rental income to prospective buyers. Selling to an investor means the tenant can remain in place, which can be a selling point. Be aware that the lease transfers with the property, and the new owner must honour the existing lease agreement, regardless of the state or territory where the property is located. Ensure that this is communicated clearly to both the tenant and potential buyers.

While significant renovations might be challenging with a tenant in place, minor improvements can still make a big difference. Focus on the exterior by doing small-scale landscaping or gardening to enhance curb appeal. Inside, consider upgrading old appliances such as stoves and ovens, which can benefit both the tenant (especially if they are able to stay on after the property changes hands) and the sales process.

By following these guidelines, you can navigate the sale of an investment property with a tenant in place effectively, ensuring a positive outcome for you and your tenant.

Your local Raine & Horne Property Manager, in collaboration with a Sales Agent, can support you every step of the way through the sale of your investment property. Contact us today for a free property appraisal.

What should I consider before renting some digs with friends?

If you’re considering moving into a rental property with friends, there are tried and true rules of engagement to ensure you’re still best buddies at lease end.

Firstly, discuss and decide whose names will be on the lease. Will everyone be listed as a tenant, or will there be a head tenant? If your name is on the lease, you’re equally responsible for rent payments. If your roommates fail to pay, it affects your rental history too, even if you maintain your end of the bargain with rent payments every week. So, before signing up for a rental property, ensure your potential roommates are reliable and financially stable. Trusting that they can consistently pay their share of the rent is crucial.

It’s often best for all tenants to make individual rent payments to avoid confusion or disputes. However, ensure everyone understands that if one person fails to pay, it impacts all roommates. Also, as a collective, determine the right frequency for rental payments with the property manager. One housemate might receive a weekly wage, while another roomie gets his or her salary paid fortnightly or monthly.

Next, clarify that everyone has an obligation not just for the rent but also for utilities such as electricity, internet, and water. Decide how these costs will be divided and ensure everyone agrees. Discuss how rooms will be allocated. If someone gets a bigger room or an ensuite, should they pay more rent? It’s often fair to base rent divisions on room sizes or access to amenities. Likewise, if one of the tenants works from home regularly, factor this into how the utility bills are divvied up. Agree before signing a lease agreement on a fair way to split these household expenses.

Understand the bond arrangements. In some states and territories, the bond isn’t refunded until the end of the tenancy. For example, if a rental property is vacated early in New South Wales, the bond is only refunded at the end of the agreed tenancy period. This means you’ll need to sort out the bond repayment among yourselves if someone leaves early. If a new tenant moves in, they should pay their share of the bond to the departing tenant, assuming the outgoing roomie has left behind no outstanding damage. If no one moves in, the remaining tenants should consider reimbursing the departing tenant, as they will receive the bond at the end of the tenancy, provided there are no damages.

Consider the turnover of tenants. High turnover can be a hassle for landlords and property managers, so in some cases, having one or two head tenants might be preferable to manage the lease and relationships.

Nothing tears rental households apart faster than arguments about cleaning. Moreover, keeping a rental property clean is the responsibility of tenants and is stipulated in the tenancy agreement with the landlord. So, before you move in with buddies, be sure to agree to a schedule that ensures every flatmate does their share of the cleaning and tidying – and the cooking, for that matter. Rules about guests and partners staying over is another must, and at what point, the household extras must start to pay some rent. Also, if a partner of a roommate joins the household permanently, this tenancy change must be communicated to your property manager.

Having transparent and open discussions about these points before moving in together can help prevent misunderstandings and ensure smooth living arrangement.

Your local Raine & Horne Property Manager is always there to guide and support you. Don’t hesitate to contact them for tips on ensuring a shared rental property runs smoothly.

Property profits hit 14-year high

CoreLogic’s latest Pain & Gain report reveals just how much profit Australians have made on the sale of their properties. The results are astounding.

There can’t be too many markets where over 94% of participants make a capital gain on the sale of their asset.

But that’s exactly what happened in the property market in the first quarter of 2024.

CoreLogic’s latest Pain & Gain report analysed around 85,000 property resales in the first quarter of the year and found 94.3% of transactions recorded a nominal gain[1].

It’s the highest rate of profitability in 14 years, and Angus Raine, Executive Chairman of Raine & Horne says it’s a good reason for property owners to consider if now is the time to list their home for sale.

Median sale profits hit $265,000…

According to CoreLogic, the median gross profit on sale in the March quarter 2024 was $265,000.

Angus says, “That’s an exceptional result, especially when we look at it through the lens of an owner occupier, who can pay zero capital gains tax on the sale of a primary residence[2].

“Even for investors, a decent profit on sale can attract a 50% capital gains tax discount when a rental property is held for at least 12 months[3].”

…rising to $780,000 over 30 years

It is interesting to note that CoreLogic found the median gross profit on sale rose in line with holding periods.

As Chart 1 shows, sellers who had owned a property for, say, 8-10 years, made a median gross profit on sale of $275,000.

At the far end of the scale, those who held a property for three decades or more made a gross profit on sale of $780,000.

Is it time to consider selling?

Of course, not everyone wants to hang onto a property for over 30 years. And, according to REA Group’s PropTrack, home prices are still rising despite higher interest rates and an increase in listings for sale[4].

Nonetheless, PropTrack notes that property prices are “now at their peak in half the regions in our country”.

Indeed, PropTrack sets out a wide array of locations from Sydney to parts of regional Queensland and Perth, where property values are “at their peak”.

“This can flag opportunities for homeowners and investors to cash in on their gains, and use the profits to take the next step on the property ladder,” Angus says.

Now’s the time to invest in expert advice

With a question mark hanging over the direction of interest rates, and the supply of new homes remaining tight, it is important for buyers and sellers alike to access expert advice.

The fact is, no two property markets behave in identical ways.

What matters is that you speak to your Raine & Horne property expert to get a feel for how the market is performing in your patch.

Angus concludes, “It could be that now is the ideal time to sell, and cash in on significant gains. And with profits on sale shaping up in the hundreds of thousands of dollars, that’s one boat that nobody wants to miss.”

To find out more about the housing and apartment markets in your suburb, town or region, talk to your local Raine & Horne agent.

[1] https://www.corelogic.com.au/news-research/news/2024/profitability-reigns-as-property-gains-hit-14-year-high

[2] https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence---home/eligibility-for-main-residence-exemption
[3] https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt
[4] https://www.proptrack.com.au/insights-hub/home-prices-hit-new-peaks-across-half-of-the-country/

5 must-do steps if you're buying with friends

With property prices hitting record highs in several state capitals, demand remains strong. The latest research from Raine & Horne reveals a 16% year-on-year increase in the number of groups attending open inspections. Notably, an increasing number of these groups consist of friends and siblings teaming up to purchase a home. Co-buying can enhance your purchasing power, but planning ahead is essential.

Angus Raine, Executive Chairman of the leading Australasian real estate group Raine & Horne, noted that “property pals” are rapidly becoming a trend.

Industry research indicates that nearly one in two (47%) Australians are open to the idea of purchasing with someone other than a spouse or partner[i]. However, according to Raine & Horne's financial services arm, Our Broker, 5-10% of properties are being secured by property pals, depending on the location.

Co-buying can have a lot going for it. By pooling your financial resources it may be possible to get into the market sooner, or buy a better quality home in a more desirable location.

The flip side is that money and mates can be an oil and water mix. To enjoy a seamless property purchase – and rewarding home ownership experience, it is worth taking five steps:

Have an agreement in writing

Buying a property is exciting. But it's important to go into a co-buying arrangement with your eyes wide open.

Have frank conversations with your co-buyer about how costs (upfront and ongoing) will be divided – and iron out all the other nuts and bolts of property ownership.

Angus advises, “Put your agreement in writing. Better still, have a co-buying agreement drawn up by a legal professional. Yes, it's an additional expense, but it can save a lot of hassle (and possibly the friendship) further down the track.”

Decide your ownership structure

Property is typically owned through one of two different structures.

'Joint tenancy' is where the owners have an equal share of the property. It's a situation that works well for married couples or de facto partners because if one owner dies, the other inherits the entire property.

Co-buyers may want to consider a 'tenants in common' arrangement. This allows each person's interest in the property to reflect how much money they chipped in – it doesn't have to be 50:50 as with joint tenants. You can choose 60:40 or whatever proportions work for you.

Keep good records

It's worth keeping track of who pays for various property-related bills. This can prevent disagreements about who paid what, and if you decide to sell at some stage, it ensures each buyer gets a fair share of the profits on sale.

"Some co-buyers share a bank account that each owner contributes a set amount to each month to pay household costs,” says Angus. “There is also a wide variety of mobile apps available that make bill sharing very straightforward.”

Have a clear exit strategy

Plan ahead by deciding what will happen if one owner wants to sell the place, and the other doesn't. It can be a tricky situation but if you have discussed the issue at an early stage, each co-owner will at least have a starting point of agreement to work from.

Remember to address the exit strategy in your co-buying agreement!

Seek expert help with the home loan

Buying property with a friend is a serious financial commitment – and a very different ball game from shouting a buddy a few drinks at the pub, or even heading off with a mate on a round-the-world trip.

Craig Betalli, Senior Broker from Our Broker, explains that buying a property with a third party, such as a friend or cousin, effectively means entering a business partnership. “This brings joint liability into play," he says. “If you're entering a partnership debt to purchase a property, you're liable for 100% of the debt, even if another party is involved. In other words, if they don't pay their share of the mortgage, you'll have to.”

He adds, “That's why it's critical to speak to a home loan expert, such as Our Broker when it comes to funding your home.

“Generally, buyers have two main options: take out one home loan in joint names or opt for a product like the Commonwealth Bank's Property Share.”

Property Share allows each borrower to manage their loan repayments independently, meaning you have separate loans and cannot see each other's loan details, even though you're guaranteeing each other's security.

“Additionally, if the other party fails to make repayments, your credit file is not impacted. However, you will still need to resolve the payment issue, or the bank will sell the property to recover the debts,” Craig warns.

Having an experienced mortgage broker on board makes a difference, helping co-buyers navigate a crowded home loan market to find the loan that best suits their needs. According to Craig, “Our Broker's service offers tailored advice at no cost to borrowers And co-buyers can be confident they have access to the best value products and rates available.”

One final tip

The ING survey we mentioned earlier suggests the benefits of shared ownership can extend beyond buying a pad to live in.

One in three (32%) Aussies see co-buying as a smart way to kickstart a property portfolio, while a chillaxed 29% would do it for a holiday home.

If it's something you're considering, just be sure to think the arrangement through.

“Open communication, a well-thought-out plan and clear written agreement form the foundations of a successful partnership,” says Angus. “But above all, buy with someone you trust and who shares your goals around property ownership. If you're on the same page at the beginning, you could be well set up for a successful long-term ownership experience.”

To find out more about buying a property with a friend or family member other than a partner or spouse, talk to Our Broker today at 1800 913 677.

[i] https://helphub.ing.com.au/financial-health/how-buying-with-a-mate-could-open-the-door-to-home-ownership/

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