Queensland investors with Tenants sub-letting all or part of a dwelling to Airbnb customers could be left exposed unless special wording is applied to Residential Tenancy Agreements.
The issue has become a hot topic in Victoria because the Supreme Court had overturned the tribunal decision.
In the Victoria case, the tenant sub-let the entire premises through an Airbnb rental website. Upon receiving this knowledge, the Landlord served a termination notice on the tenant.
The Tribunal ruled in favour of the tenant, but subsequently the Supreme Court ruled in favour of the Landlord based on the fact that the Airbnb agreement between the tenant and the Airbnb guests was for occupation of the whole of the premises.
The supplier of real estate agent agreements and contracts ADL Forms said; "This may indicate a tenant occupying premises under a residential tenancy agreement in Victoria may be able to license a portion of the premises under an Airbnb agreement without the Landlord's permission."
The Forms and Agent Advocacy service provider together their legal teams, have put their "Tenancy Agreements, Australia wide, under the microscope to ensure they keep landlords protected against a tenant sub-letting and/or licensing all or part of a rental premises without the Landlord's permission."
It's the opinion of ADL that the existingRTA Form 18a does not adequately cover the Airbnb situation. Special terms therefore have been added to better protect the Landlord against unauthorised sub-letting or licensing in respect of Airbnb or similar online service.
In accordance with the ADL special terms:
"The Tenant may not grant other person’s a licence to occupy or use the whole or part of the premises for the Tenant’s commercial gain, whether by written or verbal agreement with the other person/s, without the Lessor’s consent having been first obtained. The Lessor must act reasonably."
Landlords seeking to managed their own properties are warned of these risks. Especially if adequate general and special terms are not considered and executed in writing in accordance with relevant residential tenancy and/or rooming accommodation legislation.
Although some Landlords seek to minimise their costs to maximise profits, or don't have faith in professional managers, implementing a proper risk management system for your investment properties could save you more money then you could anticipate.
In some instances, damages or losses resulting from a tenancy not subject to proper risk mitigation principals by the Landlord could be jeopardising their insurance policies because of some of the fine print in the insurance policy.
The Reserve Bank of Australia announced today that the cash rate will be kept on hold at 1.50 per cent as many economists had predicted.
Real Estate expert and Rapid Realty Australia Principal, Aaron McLeod commented; "the RBAs decision is positive news for property investors and owner occupiers but regional markets were hoping for further stimulation with a rate cut".
Soft inflation data and a stubborn Australian dollar is the main reason the RBA chose to leave interest rates where they are as they wait and see what happens with the broader economy.
As the RBA likes to link its cash rate decisions to the quarterly Consumer Price Index (CPI) releases, the next rate decision is not expected until October. Even then many industry experts are predicting a steady as she goes approach or even a further drop in the cash rate before Christmas.
Corelogic Head of Research, Tim Lawless suggested that a November cut is likely particularly if inflation remains low. "If inflation was say 1.0 per cent year-on-year, that's a pretty good reason for another rate cut, he told The Adviser.
Although, the RBA had tried to engineer a further rate cut in the hope of reducing the Aussie dollar further to improve the country's balance of trading accounts.
The RBA seemingly are treading on egg shells trying to stimulate the economy yet be uneasy about firing up the housing market.
In the capital cities such as Melbourne and Sydney, lower rates could over cook these markets. While Brisbane, Perth, Darwin and regional areas like North Queensland, could benefit from a further cash rate cut.
OPINION: Townsville's future as a sports, entertainment and events centre for North Queensland has been secured with the announcement by all levels of government that the North Queensland Stadium will proceed to construction as early as May 2017 with expected completion before the 2020 NRL season.
The campaign by local leaders has been relentless over the past couple of decades. Without question, the will and energy of the City, depicted by local sporting and arts personalities such as Country Music Legend, Adam Brand and sporting legend, Johnathon Thurston is infectious as illustrated in the following promotion video.
The North Queensland Cowboys NRL Grand Final victory in 2015 certainly did the "yes" campaign no harm. North Queensland's victory became the catalyst for Prime Minister, Malcom Turnbull to announce a $100 million Federal Government contribution, after NQ Cowboys co-captain, Johnathon Thurston, effectively lobbied the government in his podium victory speech.
"Building a resourceful, resilient and technically superior enterprise culture in the City will ensure second and third tier employment and business growth for decades to come.",
Townsville Real Estate Blog.
Artist Impression: www.morethanastadium.com.au
The Prime Minister commented in the Sydney Morning Herald, that the Townsville stadium will do for Townsville what the Sydney Opera House has done for Sydney. This could bring a massive transformation by the way the rest of the world will view the City, one of the largest regional cities in Australia
Townsville Enterprise, North Queensland's commercial and marketing body, announced: "Expressions of Interest have opened today for principle consultants to put forward their design teams for the North Queensland Stadium."
The Townsville Enterprise press release identified the opportunity for local businesses to tender for the design and construction phase of the project with works estimated to cost $250 million, which will be administered by the office of the Minister for State Development, Dr Anthony Lynham.
Artist Impression: www.morethanastadium.com.au
The construction phase of this new signature North Queensland development is estimated to generate 750 jobs. Of course the local Mayor of Townsville, Jenny Hill is encouraging local businesses to 'strike while the iron is hot' to ensure the jobs and business revenues are returned to the Townsville economy. Yet the vision for global trading in the throngs of the current Information Age has been left out of the specific plans and objectives by the Mayor and State Minister. In fact, no international outputs have been considered despite the Prime Minister's reference to changing the way in which the international community views Townsville as a City.
Based on a revised Integrated Stadium and Entertainment Centre (ISEC) economic impact analysis compiled by Townsville Enterprise, the following estimates were identified:
$1.9B - ISEC will accelerate the development of the planned $1.9B waterfront redevelopment
1,650 jobs created in the construction phase
$130M in wages and salary in the construction phase
$675M in additional economic output in the construction phase
$5M annual gross value add once ISEC is complete
37,000 new visitors to the region each year
$2M annual visitor spend once ISEC is completed
The North Queensland Stadium has a scaled back scope, which will not include the Entertainment Centre, with less than half of the 1650 jobs being created as defined in the above estimates. This being said, an extra $1-2 million annual visitor spend once the project is complete is equivalent to the annual salary package of 50 full-time management employees.
We haven't seen the final designs but the location of the site is positioned on the waterfront of Ross Creek. The site is immediately adjacent to Reid Park, home of the annual V8 Super Cars Event. To the South is the southern access corridor (Saunders Street) into South Townsville and the City heart, and directly across Ross Creek from Honeycombs's Central and Holborn Apartment development on Blackwood Street, which includes a small cluster of existing food and entertainment shops. The head works footprint for the stadium is expected to connect these urban spaces to the stadium forecourts and promenades via a footbridge over Ross Creek.
The estimated 17-hectare parcel of land on the boundary of Saunders Street was owned by QR National, now purchased by the Townsville City Council, is the ideal site for a new international standard stadium. The 30,000 seat stadium would include 100 open-air corporate boxes and 25 enclosed corporate suites.
Of course, the big question for property investors is;
Will this national sporting and events stadium bring economic prosperity, and specifically, increased yields and capital growth to the local property market?
It will create jobs immediately which the City desperately needs. Townsville Chamber of Commerce, Stephen Motti said: "the stadium would boost businesses in and around the CBD" (Anthony Templeton, Townsville Bulletin). Townsville's unemployment reached 13.9 percent in April this year. Due to the number of skilled tradesmen and workers leaving the City for greener pastures, the population dropped in the tens of thousands in the last 12 months since Clive Palmer's Qld Nickel refinery declared bankruptcy. Unemployment dropped sharply this month to 9.7% due to people, skilled workers, abandoning the City. Also, the City has the highest bankruptcy rate in the country. A number of local developers are dusting off their plans for further residential development in and around the stadium site, including Honeycombs, Lancini Group, Parkside and others. For existing property owners of lower yielding apartments in the City precinct, the collateral developments are set to be rolled out by the local movers and shakers.
"This additional residential construction activity will stimulate short-term demand in the City from construction activity, but long term further increase in supply in the City market could keep vacancy rates above the 2-4% threshold. At this range or less, demand driven value increases, filter through the supply chain impacting more favourably on yields", stated Mr McLeod, Director of Rapid Realty Australia.
Mr McLeod also commented; "Unless sustained employment growth and business start-up investment occurs on the back of the stadium development, local business confidence improves and cutting edge innovation and technology developments are leveraged, the stadium development could be an impairment, further pushing steady and even bearish yields for investors."
The momentum risk for the Townsville political and enterprise leaders is that they may get caught up in the media attention and buzz of an unprecedented development for the City. "Group think" among the usual influences, planners and administrators are evident in the stated objectives of the project. Thinking it will be the 'silver bullet' that will solve all of the City's economic adversities is a massive mistake. It is not the be-all and end-all, but still a very positive development in the City which is screaming for real employment, entrepreneurship and economic growth.
Artist Impression: www.morethanastadium.com.au
Existing unit and house owners in the immediate City and fringe suburbs will see increases in rental inquiries, causing a reduction in time on market statistics. But a sustained increase is unlikely to occur with rental prices. Already, suburbs in the immediate area of the site such as Railway Estate, South Townsville and Townsville City have seen an increase in buying inquiries. Immature and even scrupulous investors thinking they will reap rapid capital gains from Townsville's property market are kidding themselves. But a prudent investor, disciplined for long-term returns, and knowledgeable with values and "street to street" targeting in Townsville at a median price of $336,000 compared to the national median of $800,000, is positioning themselves for favourable results in the long term. Townsville's median house price dropped 5.5% since June 2015.
Herron Todd White Townsville in Focus August 2016 Report
Herron Todd White, in their Townsville in Focus August 2016 Report commented that; "There is very little in the way of local stimulus or broader economic drivers that would indicate any short term change from this position". Broadly speaking the sentiment that had been building in the commercial and industrial markets has all but evaporated and these markets remain at the bottom of the market cycle."
The depth and breadth of the broader regional, national and international economic constraints, perpetuated by the conventional wisdom of politicians, economists and Townsville's mastermind groups that base policy on a scarcity of resources is a risk. Although counter-intuitive, this prevailing mindset is economic and political suicide in an Information Age. Leading international economist and author of multiple books including the "The Next Millionaire", Paul Pilzer, says the scarcity model is incongruent with the modern Alchemist Economic approach of accurate forecasting.
This conventional wisdom, in contrast to the Alchemical Economic models, is the belief that the region's resources are limited based the City's industrial niche of education, administration and management, real estate and manufacturing and of course mine processing. These sectors are the top sectors contributing to Townsville's Gross Domestic Product (GDP).
Artist Impression: www.morethanastadium.com.au
Change and innovation in technologies cause the expansion to economic capacity and capability, including infrastructure investment. Instead, state and local planners and policy leaders are seemingly fixated on government investment in "real estate" infrastructure as the treatment for sustained jobs creation. This is a short-term purpose, however, again programmed around a scarcity conscience, political agenda and time frame. This is evident in the constant appeal for government funding by local institutions like Townsville Enterprise, council, politicians and business influencers. Just this week as a case in point, The Honorable Coralee O'Rourke, Minister assisting the Premier, The Honorable Annastacia Palaszczuk said; "In the future, footy fans will come to a North Queensland Cowboys game and stay for a holiday and the North will be able to attract a variety of events that will attract new visitors and investment to the region." Since 1995, Townsville has had an NRL events calendar attracting footy fans to the City. Many visitors stay with family overnight and then return to their home. By definition, this is not a holiday stay.
For property buyers, long-term investment in Townsville is prudent with the City likely to attract further lifestyle capital from the legacy of the principal stadium development, at least in the immediate City fringe precinct. Flow on investments, which will include boutique retail, residential and commercial developments in the City, and could extend South to the Dean Street precinct, including the old industrial railway yards. It too has been earmarked for an Integrated Entertainment Centre, indoor events and transport blueprint because the existing entertainment centre is aged and not certifiable.
Mr Turnbull's vision of a Sydney Opera House concerning the stadium is duplicitous. This vision statement is the type of statesmanship expected of a Prime Minister, but it could be seen as appeasing the Canberra elite. The City's civil leaders working locally but thinking globally is not enough. We need now, more than ever, to have an international thinking and working mindset. This Turnbull vision would be better served in infrastructure that could add profound value to the global and domestic trading capacity of the City. Instead, the Sydney waterfront vision would be better directed to the waterfront at the entrance to the Townsville City port and Strand precinct.
This waterfront vision presents a great opportunity to demolish the "swamp", which is the name given to the ageing entertainment centre and home of the now defunct Townsville Crocodiles Basketball Team and develop an architecturally appealing Commemorative War, Marine Nature and Indigenous Arts Theatre on this Opera House style site. The development would create a monumental signature image, unique in architecture, character and function on an international scale and appealing to our largest trading partners and markets in China, United States of America, Japan and Europe. It would also add attraction demand inflows for the tourism, arts, education and innovation sectors, instead of the narrow events and domestic tourism focus outlined for the stadium.
Sydney Opera House, Australia
The strengths of Townsville's location to the Great Barrier Reef, indigenous arts and heritage, and the strategic importance and operational role Townsville played during World War 2; battles of the Coral Sea, Kokoda and the broader Pacific campaigns is epic in a historical context. Yet this unique North Queensland story is not showcased anywhere in the nation expect the National War Memorial in Canberra, some 4000 kilometres away.
This harbour-side location, which includes the existing "The Ville" Casino, offers a unique and unprecedented opportunity to attract tens of thousands of tourists to Townsville from all over the world, and capitalise on a massive $9 trillion and growing travel industry.
The North Queensland Stadium in good time will be famous for its beloved NRL stars. But more potent would be the stadium's catalyst impact creating an additional lifestyle and functional economic developments with a far-reaching international appeal. A gauge of the appeal of Townsville's military history will be tested on 15th of October 2016 with the Defence Air Show. Below is the objectives on the Queensland State Development website http://www.statedevelopment.qld.gov.au/major-projects/north-queensland-stadium.htmlfor the stadium project.
Queensland State Development Stadium Objectives
Attracting more people to the City to be amused, entertained and educated is fine economic commentary. Building a resourceful, resilient and technically superior enterprise culture in the City will ensure second and third tier employment and business growth for decades to come. Unfortunately, the Queensland State Development Objectives fall short of this bold vision.
Visionary leaders could emerge and flourish in this environment of adversity and infinite opportunity. Following are some of the favourable conditions for Townsville's competitive advantage, including;
Northern Australia development zone investment maturing
Free trade arrangements with China and the United States not long dry completed
Federal Government seeking private capital sponsorship for better terms of trade infrastructure
Scaling back of the Aquis Resort and Casino Development in Cairns due to casino licensing restrictions.
Property investors are encouraged to maintain a diligent lookout for either civil, political or business leaders that have the courage, purpose, plan and associations to leverage the political, trade climate and economics necessary for contemporary infrastructure investment, both digital and "real".
With seemingly impaired vision at all levels of leadership, the Townsville property market is not expected to flourish off the back of a national sports stadium development. By and large, the existing 1300 SMILES Stadium, which hosted concerts and sporting events at Willows, is being replaced. The North Queensland Stadium is far from being a "greenfield" development. Significant value-added trading infrastructure, resources and technologies, combined with innovative digital information and entrepreneurial industries, must be leveraged within the next 5-10 years. Bringing back the 20,000 people that have left the City in the past 12 months, reducing unemployment and cultivating a digital and industrial driven economy is critical. A positive sign for property investors is not government funding program announcements, but the cultivating of more digital business Joint Ventures with international, national players and local business and institutions. This must be acted upon in order for Townsville investors to decide the feasibility of a short to medium term trigger. Otherwise, the Townsville property market long-term investment and holding strategies will continue into the foreseeable future.
References:
Queensland Government Statisticians Office - www.qgso.qld.gov.au
