Queensland’s New Tenancy Laws: A Hidden Goldmine for Smart Investors - October 2024

By Rich Harvey, CEO & Founder, propertybuyer.com.au

For decades, the New South Wales Central Coast region was in a property market holding pattern. It was flying under the radar of homebuyers and investors alike. But COVID’s significant upheaval brought the region into the limelight. Now, a raft of drivers across the political and economic spectrum will deliver exciting times to the Central Coast – and those who own property will be among the biggest beneficiaries.
Anthony Knight, Principal buyers’ advocate for Propertybuyer on the Central Coast, has lived in the region for decades. We recently chatted about the region and why he’s excited about what’s to come.

LOVE Them! Shock as QLD Buyer’s Agent Makes Startling Claim About Queensland’s Recent Restrictive Tenancy Laws

In an unexpected twist, Glen Sainsbury, Principal Buyers Agent of Propertybuyer Queensland, claims that the state’s recent tenancy law changes—viewed as a hindrance—are actually a significant advantage for investors. These laws, which limit rent increases to every 12 months and ensure tenant protections, are creating opportunities for savvy buyers to secure properties at reduced prices.

Understanding Queensland’s Tenancy Laws

Queensland’s tenancy laws include protections that aim to balance the needs of both landlords and tenants. Among the most notable aspects is the regulation that rent can only be increased once every 12 months. Additionally, properties under tenancy cannot have their lease conditions altered mid-term. 

For savvy investors, Sainsbury says these restrictions paradoxically create a major advantage when buying.

The Investor Advantage: Case Studies

Let’s look at how these laws play out for investors in practical terms, starting with properties where six months remain on a 12-month lease.

1. The $700K Property

Imagine a $700,000 property with a tenant paying $100 below the market rate. The rent can't be increased for six months due to the lease and the tenancy legislation. Over that period, the total "lost" rental income would be $2,600. This situation might deter less informed investors and owner-occupiers, who either fear short-term income loss or cannot move into the property immediately.

However, for the informed investor, this lease creates an opportunity to negotiate the purchase at a price approximately $25,000 lower than what the property could achieve without this lease in place. While there is a six-month shortfall in rental income, the investor can capitalize on negative gearing benefits, reducing their effective loss. With fewer competitors in the buying pool, a significant capacity to negotiate arises - even in the strongest of markets.

2. The $1M Property

In another scenario, take a $1 million property that’s currently rented $150 below market. With six months left on the lease, the "loss" in rental income over that period totals $3,900. As a result of this lease, owner-occupiers are likely disinterested, and less savvy investors may hesitate, seeing the short-term numbers as unappealing.

This drop in competition presents an opportunity to purchase the property for around $60,000 less than what it might achieve if no lease was in place. Again, negative gearing eases the immediate rental income loss, and the investor secures a prime asset at a significantly reduced price.

3. The $2M Property

Finally, consider a $2 million property with tenants paying $200 less in weekly rent. Over six months, the "loss" in rent amounts to $5,200. Just as in the previous examples, the combination of tenancy laws and long-term leases discourages buyers wishing to move in immediately, as well as investors who 'cannot see the wood from the trees' and focus solely on the 'as is' numbers.

For a savvy investor, the property could be secured for approximately $120,000 less than it would otherwise achieve if there were no tenancy restrictions. With negative gearing again softening the financial impact, the investor walks away with a high-value asset at a reduced price.

The Winning Formula

Glen Sainsbury understands these laws better than most, and his team helped clients capitalize on them to make significant savings. "People often overlook the fact that tenancy laws are there to protect tenants, but they also create openings for investors," says Sainsbury. "Properties that might otherwise fetch much higher prices see reduced competition, and my clients have been able to buy at prices that reflect these short-term factors."

For his clients, the immediate rental "loss" is far outweighed by buying well, without penalty to the long-term value these properties hold. The lack of competing parties mean Propertybuyer’s clients are able to acquire properties at prices well below what they could achieve without these 'hampering' leases in place.

In short, while Queensland’s tenancy laws might appear limiting, they provide a distinct advantage for those willing to look beyond the surface, allowing investors to secure prime real estate at reduced prices and under more favourable conditions.

Engaging a local specialist buyers’ agent will enable you to find the hidden gems, obtain independent advice and gain access to off market opportunities. Reach out today for a free consultation.

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