Principal Buyers Agent of Propertybuyer Queensland, Glen Sainsbury, reveals a surprising insight into the state’s recent tenancy law changes.
While these laws are often perceived as restrictive, Sainsbury argues that they offer a unique advantage for informed investors. By limiting rent increases to every 12 months and strengthening tenant protections, these regulations are creating a buyer’s market, allowing investors to secure properties at more competitive prices.
“While there was initial backlash from landlords about more draconian legislation limiting the free operation of market forces in the rental market, this situation can actually assist property investors in negotiating a better purchase,” claims Rich Harvey, CEO of Propertybuyer.
Understanding Queensland’s tenancy legislation
Queensland’s updated tenancy laws are designed to balance the rights of tenants and landlords. Key among these regulations is the restriction that rent can only be increased once every 12 months, along with a provision that prevents altering lease conditions during an active tenancy. While these measures aim to stabilize the rental market, Sainsbury believes they provide unexpected advantages for strategic investors.
“Contrary to popular belief, these laws can be a hidden goldmine,” says Sainsbury. “The restrictions create opportunities to negotiate better deals, especially when properties are tied to leases below market rent.”
Investor advantage: Real-life examples
Sainsbury outlines several real-life scenarios that highlight how the laws can benefit investors:
- $700,000 property: A $700,000 property with a tenant paying $100 below market rent cannot have its rate adjusted for six months due to the lease. This situation, resulting in a $2,600 shortfall, can deter uninformed buyers. However, astute investors can use this to negotiate a purchase price up to $25,000 lower than market value, benefiting from reduced competition and negative gearing advantages.
- $1 Million property: A property worth $1 million, rented $150 below market, represents a $3,900 rental shortfall over six months. This can drive away owner-occupiers and less experienced investors. However, investors who recognize the opportunity can secure the property for around $60,000 less than its potential market value, reaping long-term rewards after the initial rental period.
- $2 million property: For a $2 million property with a $200 weekly rental discount, the six-month rent loss totals $5,200. This can make the property less attractive to typical buyers, but savvy investors can negotiate a purchase price approximately $120,000 below market rates, securing a premium asset at a discount.
Turning short-term challenges into long-term gains
“People often overlook that tenancy laws, while protective of tenants, can open doors for strategic investors,” Sainsbury explains. “Reduced competition means that our clients can acquire properties at significantly lower prices than they would otherwise.”
For Propertybuyer’s clients, the short-term rental income limitations are outweighed by the potential to secure premium properties at lower purchase prices. Sainsbury’s team has helped numerous investors leverage these conditions to acquire valuable assets while benefiting from long-term property appreciation.
