Investing in real estate — is it still worth it? Rapidly changing rental laws, newly developed requirements for new buildings and tax changes are a lot for any property owner to take in, let alone understand the long-term implications.
At Penrose Real Estate, we understand that change can make property owners nervous about their investments. So, we've created this guide to help you understand the latest housing legislation changes in Queensland and how they might impact you.
Changes to Rental Laws and Tenant Rights
Rental law reforms came into effect on 6 June 2024, while amendments to minimum housing standards began last year. The sector has also seen several rental reforms in previous years, including stronger protections for tenants suffering family violence, a new framework for renting with pets, changes to orders for repairs and amendments to reasons to end a tenancy.
The frequency of rent increases for a property is now limited to once every 12 months and minimum housing standards aim to ensure the safety and security of rental properties. Rent bidding has now been banned, and changes to the bond process, caps on reletting costs, and a code of conduct for property managers are in progress.
New Building and Construction Regulations
New accessibility standards under the National Construction Code (2022) are designed to meet the needs of our aging population with measures such as step-free entry and wider internal doors. While they will add to the cost of a new home or unit, they are designed to take the pressure off care homes and create a more inclusive community.
Another change to building regulations that will cost homeowners more initially but is designed to save them money in the long term is updated energy efficiency measures. All new homes and units are now required to meet a 7-star energy efficiency rating for the building shell, while a Whole of Home rating promotes energy-saving appliances and renewable energy sources.
Changes to Property Taxes and Stamp Duty
The Queensland Government announced a range of changes to property taxes as a part of the financial year 2025 budget relating to stamp duty for first-time home buyers, increases to duty for foreign buyers and the foreign owner land tax surcharge.
Where stamp duty was previously waived for homes up to $500,000, that threshold has now increased to $700,000. First-home buyers will see reduced stamp duty for properties up to $800,000, while the vacant land threshold has changed from $250,000 to $350,000.
To counter further inflating house prices, an increase in stamp duty and land tax for foreign investors is also in effect. The Additional Foreign Acquirer Duty rate increased by a percentage point, meaning foreign investors now pay an extra 8% stamp duty on liable transactions. The Foreign Land Tax Surcharge has also increased from 2% to 3%.
Moves for First-Time Homeowners
A one-off payment to help first-time buyers enter the property market has doubled. The First Home Owner Grant now gives first-time homeowners $15,000 or $30,000 towards building or buying a new home in Queensland until June 30, 2025. This tax-free payment is only for eligible owner-occupiers.
What's Changed for Investors & Landlords?
Now you understand what is changing in the real estate landscape in Queensland, let's look at how these rental and building reforms and tax adjustments may impact property investors and landlords by answering the questions we hear most at Penrose Real Estate.
How does compliance with new laws impact rental property owners?
Rental sector changes aim to balance the rights of landlords while creating a safer and fairer system for renters. However, some aspects of the reforms could be difficult for landlords to meet, and their long-term implications are unknown. For example, changes to repairs and bond processes could be impacted by a landlord's inability to find tradespeople, despite their best efforts. A landlord's inability to adjust rents in response to economic factors such as changing interest rates may well end up harming renters.
Therefore, the best thing investors and landlords can do to ensure they are following the correct processes and complying with new laws is to align themselves with a real estate agent who is well-versed in these changes. At Penrose Real Estate, our understanding of changing regulations and intimate suburb knowledge can help alleviate pressure on investors and landlords as the industry navigates these changes.
What impact will new building rules have on property investors?
Building reforms, along with other pressures on the construction industry, mean the cost of building a new home will continue to increase in the short term. It also means that in the future, more Queenslanders will be able to stay in their homes for longer, which can potentially impact housing supply, particularly for first-time buyers. It may also force greater competition for established dwellings between those looking for an investment property and owner-occupiers.
New energy efficiency measures will impact the price of a brand-new home, which could have a flow-on effect on the property market, including for renters. However, a landlord currently has no obligations to help reduce a tenant's energy bills, something which the Australian Council of Social Service argues must change. It notes that the average energy performance of the country's 8 million properties is 1.7 stars, compared with the 7 out of 10 now required for new dwellings.
Because the transition to these changes to the Modern Homes standard is being made slowly, assessing the impact on investors is challenging. However, accessibility and eco-friendly changes will help to increase a home's value and appeal to renters in the long term. Therefore, any modifications landlords make to existing rental properties also represent a good investment.
How will first-time home buyer incentives impact the residential market?
Grants for first-time homeowners were introduced to offset the effect of the GST a quarter of a century ago. However, they are now used as an economic stimulus tool that is supposed to reflect housing affordability and channel demand into new rather than established housing supply.
Along with changes to property tax and stamp duty aimed at encouraging first-time home buyers to enter the market, some argue that stimulating this demand could simply inflate housing prices up to the limit of the grant and add to future affordability pressures.
Real estate data provider CoreLogic argues that these types of incentives are likely to cause market volatility and make housing affordability worse. It says the 'supply-side' policy and removing red tape would have more of an impact on housing affordability.
Penrose is Here to Help You Navigate Real Estate Changes
Whether you're looking for a property manager for your rental property or want to buy an investment home in Brisbane, Penrose Real Estate has the knowledge and experience to help you achieve your property goals.
Brisbane real estate power couple Grant and Christina Penrose have almost 60 years of combined experience buying and selling homes across Brisbane and surrounding suburbs, so they are well-equipped to help homeowners navigate the ever-evolving property market.
Call our reliable and trustworthy team today or visit our website to see what our clients have to say about working with Brisbane's best real estate agency.