The Western Australian property market continues to prove its resilience in the face of rising interest rates, with new investment loans continuing to climb.
The latest Australian Bureau of Statistics lending indicators data shows that the total lending for investment loans in the state reached $668 million in April – a consistent increase from $647 million in March, $623 million in February and $602 million in January.
Limnios Property Group Licensee and Managing Director James Limnios said the chronic lack of rental properties and increasing rents had reignited interest in WA’s buy-to-rent sector. “This is particularly the case in the city fringe area, where Limnios Property Group has recorded a huge demand from buyers seeking rental properties in the inner city because of competitive property prices and surging rents,” he said.
“The latest data SQM Research shows that rents in the Perth CBD area alone have surged by more than 20 per cent during the past year.
“Our company is finding property investors are now achieving rental returns in excess of six per cent per annum in the city fringe area and this rising demand for rental properties is putting an upward pressure on property prices in the area.”
Mr Limnios expects a fresh wave of property investors to enter the Perth market in the new financial year, typically becoming active after consulting their tax agents.
However, he warned first-time investors against self-managing their property because they often encountered difficulties with tenants who failed to pay rent or caused property damage, or underestimated the correct market rent.
“In many instances, we have found the weekly rents are totally underpriced – sometimes by more than $100 per week,” Mr Limnios said. He advised investors weighing up managing their own properties to consider the following:
1. Do you fully understand the Residential Tenancies Act 1987 and the proposed changes to maintain a fair and professional relationship with your tenant? The tenant may sue you if you conduct yourself outside the act.
2. Are you aware that private landlords cannot access tenancy default databases?
3. Have you lodged your tenant’s bond money in accordance with the Residential Tenancies Act 1987 requirements and within the required timeframe? If not, you may be liable for a heavy penalty.
4. Do you have time to conduct detailed property inspection reports regularly to ensure the property is well maintained?
5. Do you know the correct procedure for dealing with rental payment arrears?
6. Are you conversant with the Residential Tenancies Act 1987 in case a property-related matter ends up in the magistrate’s court? If you are ill prepared with non-compliant documentation, invalid notice periods or lack of evidence, justice may not fall on your side.
7. Can you terminate the tenancy and recover possession of your property without court intervention? Do you know the correct procedure, the right notices to issue and the correct timeframes? Is your negotiation skill and knowledge of the act sufficient to mediate a successful resolution and outcome?
8. Can you complete a valid property condition report with enough detail to hold up in court if necessary?
9. Are you familiar with the correct procedure when a tenant has absconded and abandoned goods remain at the property?
10. Have you considered that the services of a professional property management company are tax deductible?
Article in the West Australian published on 17 June 2023
