NSW rents predicted to rise as land valuations rise! The NSW Valuer-General has issued new land valuations that will form the basis of tax assessments sent out by the Office of State Revenue next month.
The Sydney Morning Herald’s Property Editor Jonathon Chancellor reported on 11 Jan 2010:
”Rents will face upward pressure this year as the latest land valuations push up land taxes. Land values in the inner west surged last year. Leichhardt municipality led the way, with a 14.4 per cent rise.
”Many Leichhardt tenants could expect their rents to be increased by their landlords, by perhaps $20 a week or so,” the president of the Real Estate Institute of NSW, Wayne Stewart, said.
Leichhardt has 9200 tenants. The typical rent for a three-bedroom property is $630 a week. Leichhardt’s $484,000 median land value is well above the $376,000 land tax threshold set by the NSW Valuer-General for the purpose of taxing land other than the principal place of residence or farming land. Investment property with a $470,000 land valuation incurs a tax of $1604.
Warringah, which has 12,400 rental dwellings, recorded a 12 per cent rise in values to a median of $577,000. Pittwater land values were up 8.1 per cent to $638,000. Its 3800 tenants typically pay $600 a week.
The State Government collects about $2 billion in land tax a year. Non-residential properties account for about 60 per cent of land tax revenue.
Though NSW treasurers have insisted market forces determine rent levels, not landlords’ costs, the rise in valuations coincides with forecasts of strong rental growth resuming this year after a relatively flat 2009.
”Vacancy rates are still at very low levels, population growth is still very strong, and there simply aren’t enough new properties being built to satisfy demand,” said Matthew Bell, an economist from Australian Property Monitors. ”The reasons holding the growth back in 2009 have largely disappeared as job security and incomes have already started to improve, meaning renters will be more able to agree to increases in weekly rents.”
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