Cairns investors will fight Council rates hike

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Property investors are vowing to fight a Cairns Regional Council move to increase rates on investment properties.

Council has written to owners saying rates will rise next year by 15 per cent or more for places deemed not to be a principal place of residence.

Property owners say it’s a poorly thought-out cash grab that will make the current Cairns rental crisis much worse.

They’ve started an online petition, they’re promising voter backlash at the next Council election, and there’s even talk of a class action.

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Cairns is one of Australia’s tightest rental markets, with a historic low vacancy rate of 0.1 per cent.

The owner of Professionals Edge Hill, Billy Gartner, said the rate increase will inevitably be passed on to tenants, and it will drive some investors out of the market.

“The rents are going up so fast, tenants aren’t going to be able to afford to pay the rent anymore,” Mr Gartner told Tropic.

“We all know that with this this new council tax, that's not going to stop with the investor having to pay it.

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“The owners are not property magnates, most are mum and dad investors, most of them have got mortgages.

“Those mortgage repayments have gone up seven times this year with the interest rate rises.

“A lot of investors aren't going to be able to afford to hold onto the properties unless they do pass on the increases to the tenants, and it's going to get to the stage where the tenants just can't pay the rent.”

Council says other local governments have introduced rate increases on investor properties, including the Sunshine Coast, Townsville, and Noosa.

It says the extra revenue would be used to pay for ongoing services to the community.

One councillor has said the increase would cost most investor ratepayers less than three dollars a week, but Mr Gartner says there’s a fairer way to do it.

“I believe it's something like a third of the properties in Cairns are rental properties.

“Instead of hitting the investor with three dollars a week extra, if they spread that over the entire population of Cairns, and every ratepayer paid an extra dollar a week, they’re in the same boat.

“If everyone paid that, the Council is getting the same amount.

“So why would you discriminate against the investors? It doesn't make any sense.”

Mr Gartner said the rate increase is based on a false assumption that all properties not listed as principal places of residence are being used as rentals or investment properties.

He said if Council needs to generate more revenue, it should create incentives to build new properties, rather than drive investors out of the market.

"Why would you target just the investors who are the ones who are actually supplying the rental stock?

“We should be looking at ways the Council could come up with some sort of incentives for people to build new accommodation for the rental market.

“If I can put up a duplex somewhere, that's going to add two more lots of council rates.

“But targeting the investors? There's less and less reason to own an investment property and they're not getting fantastic returns.

“We’re not going to have a property management business much longer because there aren't going to be any properties to manage.”