2011 Winter

nicolez

The Property Review

Winter 2011

Tower & London

1


Tower & London

THE PROPERTY REVIEW

A quarterly magazine published by

Tower & London

Enquiries regarding this magazine should be made to:

Tower & London

38 Alfred Street,

Milsons Point NSW 2061

Phone: (61) 2 9956 6500 Fax (61) 2 9956 6522

Email: reception@towerlondon.com

Disclaimer:

The information contained in this publication is for general information purposes only. Readers are advised that

while an earnest effort has been taken to ensure the information in this document was obtained from reliable

sources, Tower & London gives no guarantees or warranties, written or implied, over the accuracy of the information

provided. Tower & London Pty Limited disclaims all responsibility for any loss or damage suffered as a result

of the use of the contents of this publication. The views expressed in this publication are those of the writers

and do not necessarily reflect the views of the publisher.

2

2


Table of Contents

Winter 2011

20/7 Northcliff Street,

Milsons Point

Front cover

Message from John Tower

Why and who should invest in residential

property? 4-5

Lower North Shore Sales Data 6-7

Land Tax 2011 8

Capital Gains Tax and Foreign Residents 9

Stamp Duties on purchase in NSW 10

Current Sales 11-22

Tower & London offices 23

Useful Resources

Back Cover

3

3


John Tower

M.D. Tower & London

Licens ed Real Estate Agent

Registered Property Valuer

Why and who should invest in residential

property?

Not everyone likes to invest in the stock market, a

small percentage of people w ill invest in commercial

and retail property, yet people are draw n to

residential property. Many investors w ill use their

homes as collateral to buy an investment property

and enter into a mire of problems.

What’s wrong w ith residential property? Well, just

about everything, such as: tenancy laws, fluctuating

interest rates, unreliable property managers,

low returns, very little average annual capital

gains, high strata levies, poorly managed buildings,

tamp duty on purchase and Capital Gains

Tax.

So w hat's good about residential property investment?

The short answ er is: not much. The reader

might ask: w hy is this Real Estate Agents so

much against residential property investment?

The answ er is not residential property, it is the

investors themselves and the system they have to

abide by.

Residential property investors in Sydney are

mostly mums -and-dads, some professional individuals

w ith high incomes, young couples or singles

that cannot afford to live in the property they

ow n, and very a few syndicates.

Most of the mums and dads should not ow n an

investment property. Here are a few reasons why:

1. Most have used their home as equity to be able

to borrow the funds or have borrowed too much.

Most have problems w ith paying for repairs and

become desperate w hen the property is vacant

4

for a couple of weeks.

2. The w ives like to decorate or renovate the investment

property; usually w ith minimum expenditure

and maximum unsuitability. The result

is a poorly renovated property that adds to the

stress of owning a residential property. The husbands

are often useless.

3. Some insist on getting many quotes for small

repairs, or have their good friend, w ho w ill fix it

for much less, do the work. Often the result is

poor quality and more needs to be spent to correct

what should have been a simple repair undertaken

by a professional.

With respect to young couples and singles; these

are mostly generation “y”: they are educated, articulate,

and can give a very strong argument

backed information they have gathered from their

constant Google searches. Most of these buyers

would have benefited from one or more government

subsidies for their first property. Here are

some reasons why this group should not invest in

residential property: they should save to ultimately

buy their home.

1. They cannot afford it; the only reason many are

able to borrow the funds is because they buy

the property on the pretence that they w ill live in

it, to get the Government grants; then move

back to live w ith their parents or share with others.

2. They often conduct market analysis, and instruct

their property manager w hat the rent should be;

the property stays vacant much longer than it

should; and in the end, the real market rent is

achieved; resulting in many w eeks of w asted

vacancy would never be recovered.

Professional individuals are perhaps the most

suitable segment for this type of investment. These

are men or w omen aged over 35 w ith high incomes

and are solid middle to high level managers

or w ith their ow n established business or medical

practice. There are many reasons why this

segment should be more representative of this

style of investment:

1. They benefit greatly from negative gearing and


Depreciation Allow ances, as they pay a considerable

amount of tax.

2. They make decisions based on sound economic

sense, some might like to buy investment property

because they like it, or they might leave it to their

children, but most w ill listen to good advice and

make a considered judgement.

3. They don’t have time to w ant to know about small

repairs or worry about not enough rent, because

they have not borrowed to the kilt, and therefore

they can easily maintain their investment, relying

on professional advice.

4. Because they are practical business minded individuals,

they understand the limitation of the law s

governing tenancies and can logically and fruitfully

negotiate good outcomes.

5. Because they are mostly in business or managing

a business or a practice; they tend to lean tow ards

quality property managers and property professionals,

their aim is not get the low est rates but to

get the best service at competitive rates.

Finally: Property Syndicates, this is rare group of

people that put their resources together, purchasing

and managing good residential property. They

often include a Real Estate Agent, a law yer and

an accountant. These structures are less common

these days as do-it-yourself super schemes, have

largely taken over.

The residential market is very poorly served by the

various levels of Government and their inadequate

policies; here are some reasons w hy these bodies

are the cause of the falling standards of this sector:

Government policies and practices:

1. Registration of Property Managers are not recognised,

the Registration Certificate states the

person, regardless of gender, is a “Real Estate

Sales man”. A young w oman can w ithin w eeks

be registered as a Real Estate Salesman, be

working in a Real Estate office making important

decision and advising clients on various

aspects of their investment. There are of

course various coursed and Professional

5

Development Points they need to earn in order

to renew their registration, but these courses

are offered by many institutions and can be

anything from learning how list a property to

how to sell one. Nothing to do w ith Property

Management. The Real Estate Institute of

NSW is a w onderful institution: it offers relevant

courses to property managers on regular

bases given by true professionals and passionate

people w orking in the industry.

2. Tenancy Law s: This is the largest problem area

to property investors in NSW, recently

these tenancy laws w ere updated and

drastically altered the balance of fairness to

the tenant’s favour. Backed up by a Tribunal

system that resembles a Kangaroo Court,

where the law of evidence comes w ell behind

tenants’ 'hard-luck stories. The Tribunal members

sometimes make ridiculous decisions

based in intuition and emotion.

3. Tax Policies: There are good reasons for high

income individuals to invest in residential property;

these tax incentives include: negative

gearing and depreciation allow ances; however,

Capital Gains Tax, although halved in recent

years, it remains an obstacle w hen a decision

is made to sell the property. This tax should be

completely abolished in order to attract good

long-term residential property investors.

Other radical area of change is needed of the State

Taxes is Stamp Duty on purchase. Instead of discounting

or eliminating stamp duty on purchase for

first home buyers, the Sate Government should

consider reducing Stamp Duty to residential property

investors, this will surely attract real investors,

not those that fooling the Government, pretending

they w ill live in the property. In the end it w ill be

good for tenants, most of all, as w hen better informed

and financed professional investors are in

the market place buying residential property, the

supply naturally increases, placing less stress on

tenants and reducing the pressure on rent increases,

especially to young tenants saving to buy their

first home.


Lower North Shore Sales Data

2,500

House Sale Prices

2,000

1,500

$1,000

1,000

500

-

Mar-08 Jun-08 S ep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11

North Sydney 1,089 1,093 936 1,030 1,045 990 1,135 1,130 1,300 1,258 1,201 1,186 1,150

Mosman 1,813 2,150 1,785 1,835 1,780 1,950 2,050 2,000 2,150 1,988 2,110 2,285 2,238

Willoughby 1,038 1,053 1,175 1,000 1,035 1,150 1,164 1,250 1,312 1,345 1,285 1,250 1,310

350

House Sales Volume

300

250

200

150

100

50

-

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11

North Sydney 124 151 99 85 74 157 164 215 168 146 126 142 117

Mosman 81 92 65 60 61 111 116 107 132 101 84 98 75

Willoughby 218 200 138 159 146 6 244 271 314 240 184 161 191 164

6


Lower North Shore Sales Data

750

Apartment Sale Prices

700

650

$1,000

600

550

500

450

400

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11

North Sydney 551 570 543 510 517 519 550 610 635 645 616 630 615

Mosman 460 535 550 520 536 529 527 620 695 603 643 645 635

Willoughby 500 503 480 488 489 499 520 563 570 600 581 582 595

700

Apartment Sales Volume

600

500

400

300

200

100

0

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11

North Sydney 391 395 317 308 350 516 651 545 450 533 539 546 469

Mosman 116 116 97 82 105 173 173 149 112 136 129 152 131

Willoughby 220 195 181 174 211 267 347 268 215 194 193 173 175

7

7


Land Tax 2011

Who needs to pay?

Land tax in NSW

If you own any property tha t is not your principal place of residence (your home) as at midnight on 31 December, including a holiday

house or unit, you may be liable to pay land tax. This includes property that does not earn any income.

The amount of land tax payable depends on the combined value of any taxable land you own or have an interest in, excluding exempt

land that is above the threshold. The value of taxable land does not include a ny structures or improvements on the land such

as a house. Any land you own outside of NSW is not subject to land tax in NSW.

What land is exempt?

Principal place of residence

Your principal place of residence is genera lly exempt from land tax. You can usually only claim an exempon for a principal place of

residence on one property.

If you use your land as your principal place of residence and for non-residenal purposes, for example, if you run a business on your

land, you may be eligible for a reducon in land tax for the proporon used as your residence.

If a company is an owner or part owner, generally it is not entled to an exempon for a principal place of residence.

Concession for land intended as your principal place of residence

You generally do not pay land tax on land intended as your principal place of residence, provided you do not own another property

which would have qualified for a n exempon as your principa l place of residence at the ta xing date. You may be elig ible for this concession

if you:

a) have purchased unoccupied land where you intend to build your principal place of residence (your home), or

b) are renovang an exisng home that you intend to occupy as your principal place of residence.

This concession a pplies for the four tax years immediately following the year in which you acquire the property, or, where you are

rebuilding or renovang, for the four tax years starng from the me the building or renovaons physically commence. There is no

discreon to extend the concession. Prior to the 2011 tax year, the concession applied for two tax years and could be extended under

certain circumstances.

How is the value of your land determined?

The Valuer General values a ll land in NSW annually and provides these values to OSR for land tax purposes. Values are determined as

at 1 July, preceding each land tax year.

Strata unit valuaons

For stra ta units, the land value for each individual strata lot is calculated on a proporonal basis using the unit entlement for each

lot and the aggregate for the strata scheme. Landowners can find out more, or request a land valuaon brochure and a general valuaon

sales report by calling the Land and Property Management Authority toll free on 1800 110 038.Read more about land valua-

ons at www.lpma.nsw.gov.au/valuaon

Average values

Since 2007, the value used to determine your land tax liability will generally be the average of the land value for the current tax year

and the land values for the previous two years. Where a parcel of land was only recently created (eg by subdivision or amalgamaon)

the average value will be based only on the land values for those taxing dates when the newly created land item did exist.

How is land tax calculated?

Land tax is calculated on the combined value of all the taxable land you own.

The land tax threshold for 2011 is $387 000. This means your land tax assessment is calculated on the combined value of all the taxable

land you own above this threshold. The amount of tax is $100 plus 1.6 per cent of the land value between the threshold a nd the

premium rate threshold ($2 366 000) and 2 per cent thereaer.

This informaon 8 is an extract from the NSW Office of S tate Revenue website.

8


Capital Gains Tax

Capital Gains Tax and Foreign Residents

The way that capital gains tax applies to foreign residents has changed. If you are a foreign resident

and you made a capital gain before 12 December 2006 on disposal of an asset that had the necessary

connection with Australia, the gain would generally be taxed. On or after 12 December 2006, a

foreign resident makes capital gains only on the disposal of taxable Australian property. Capital

gains tax (CGT) generally does not apply to pre-CGT assets - that is, assets acquired before 20

September 1985.

Unless otherwise specified, 'Australian resident' means a resident of Australia for tax purposes.

Assets which have a necessary connection with Australia include:

land or a building in Australia (or an interest in land or a building)

a CGT asset you have used in carrying on a business through a permanent establishment in

Australia

a share in a private company that is an Australian resident company for the income year in

which the CGT event happens

a share, or an interest in a share, in a public company that is an Australian resident company

and in which you and your associates have owned at least 10% of the value of the shares at

any time during the five years before the CGT event happens

a unit in a unit trust that is a resident trust and in which you and your associates have owned

at least 10% of the issued units at any time during the five years before the CGT event happens

an interest (other than a unit) in a trust that is a resident trust for CGT purposes for the income

year in which the CGT event happens, and

an option or right to acquire any of the preceding CGT assets.

If your assets do not fit within one of the above categories - for example, land or a building overseas

or shares in a foreign company - they do not have the necessary connection with Australia.

Assets that are taxable Australian property include:

a direct interest in real property situated in Australia (for example a house or farm located in

Australia) or a mining, prospecting or quarrying right to minerals, petroleum or quarry materials

in Australia;

a CGT asset that you used at any time in carrying on a business through a permanent establishment

in Australia, and

an indirect Australian real property interest - which is an interest in an entity, including a foreign

entity, where you and your associates hold 10% or more of the entity and the value of

your interest is principally attributable to Australian real property.

9

9

This is an extract from the ATO website.


Stamp Duty on Purchase in NSW

Dutiable value of the dutiable property subject

to the dutiable transaction

Rate of duty

$1.25 for every $100 or part of the dutiable

$0 - $14,000

value

$14,001 - $30,000

$175 plus $1.50 for every $100 or part , by

which the dutiable value exceeds $14,000

$30,001 - $80,000

$415 plus $1.75 for every $100 or part, by

which the dutiable value exceeds $30,000

$1,290 plus $3.50 for every $100 or part,

$80,001 - $300,000

by which the dutiable value exceeds

$80,000

$8,990 plus $4.50 for every $100 or part,

$300,001 - $1m

by which the dutiable value exceeds

$300,000

$40,490 plus $5.50 for every $100 or part,

over $1m

by which the dutiable value exceeds

$1,000,000

· A sale or transfer of land (including improvements) or a business in NSW is liable to duty. It is immaterial whether

or not the transaction is effected by a written instrument or by other means, including electronic means.

· A liability for duty arises when the sale or transfer occurs. However, if the sale or transfer is effected by a written

instrument, liability for duty arises when the instrument is first executed.

· Duty is payable within 3 months of the date liability arises. The purchaser or transferee is liable to pay the duty.

· Purchasers of Newly-constructed dwellings worth up to $600,000 will receive 50% discount on stamp duty if they

purchase before 30 June 2010.

(source: NSW office State Revenue website)

10

10


Current Sales

28/110 Alfred Street, Milsons Point

For Sale $1,600,000

An Ordinary apartment; spectacularly transformed.

Stanic Harding Architects brought this apartment back to its shell allowing for a new design, to fill it

with light & harbour views, while separating public from private spaces. A remarkable timber cabinet

decorates the living room concealing entertainment equipment is an example of the extensive joinery

applied. The kitchen wrapped by a cornerless pod on one side and a gorgeous dining table on the

other equipped with Gaggenau. Generous Master bedroom contain a dressing room forming part of a

luxurious ensuite. Large second bedroom, fully fitted; bathroom separating a third bedroom/ study.

Semi circled balcony cradles the entire harbour side of the apartment. pleasant harbour views compete

with stunning interior design. Double secure parking & storage. Near Milsons Point trains and

ferries.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

11

11


Current Sales

20/7 Northcliff Street, Milsons Point

For Sale $1,700,000

Harbour View Delight

A very large two bedroom apartment in a perfect position, close to the harbour’s edge

and enjoying spectacular harbour bridge and city views.

This property is has a wide balcony that extends the width of the apartment, two large

bedroom, the main has wonderful water views, superb bathrooms and kitchen, timber

floors and first class fixtures and fittings. Situated between the ferry wharf and the railway

station; secure parking space is on title.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

12

12


Current Sales

4/139 Middle Head Rd, Mosman

For Sale around $1,250,000

Mosman Mews In the Heart of The Village

Modern and tightly held block of 24 secure apartments on the edge of Mosman village

shops. This exceptional apartment is on the street level yet set back from the noise

and bustle to the rear of the block. Comprising three bedrooms all with built-ins and

opening onto balconies; the main is substantial. The living room is just the right distance

from every other room, opening onto a private balcony. The kitchen is delightful,

and both bathrooms and laundry are well appointed. Ample storage is provided within

the apartment and a separate external store room; additionally, large storage units are

erected inside the double lockup garage included on title.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

13

www.towerlondon.com

13


Current Sales

1101/93 Pacific Hwy, North Sydney

For Sale $550,000

SOLD

Harbour Bridge Views

Nearly the size of a two bedroom unit, this is a rare offering in a modern quality block and

perched on the 11th floor attracting spectacular harbour and city views from the living

room and bedroom. Separate study the size of a 2nd bedroom can be completely closed

and used as a quest bedroom. Eat-in kitchen and dining area with polished timber floors.

Lounge area opening to full view from floor to ceiling glass windows. North Sydney station

is a stone’s through away.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

14

14


Current Sales

1602/55 Lavender Street, Milsons Point

For Sale $3,800,000

3 Bedrooms, 2 Bathrooms, 2 Parking spaces and

one spectacular view

The last building to the North of Milsons Point and to the east of Clark Park ,“Latitude”,

Winner of the 2008 UDIA National Awards for Excellence, Mirvac’s finest building in Milsons

Point features this superb apartment perfectly perched on the 16th floor and capturing

the ultimate harbour view. All rooms wrapped in glass, opening onto balconies with

shutters, enjoy harbour views spanning across to the Blue Mountains.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

15

15


Current Sales

2102/ 2 Dind Street, Milsons Point

For Sale $2,180,000

Breathtaking views from wide open spaces

The Pinnacle is the finest apartment building in Milsons Point; this could possibly

be the best value apartment offered. Spectacular harbour views from every room

of this rambling property, perched on the 21st floor watching the sun set with a

magical array of colours. The main bedroom and the second bedroom are almost

identical in size with a smaller 3rd bedroom. Massive living room featuring a separate

dining nook. Modern kitchen, two bathrooms and a powder room are lined

with marble tiles. Double lock-up garage, 24 hour concierge, three fast lifts, swimming

pool, a gym and a beautiful lobby.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

16

16


Current Sales

33a/8 Hardie Street, Neutral Bay

For Sale $490,000

Totally refurbished, One Bedroom + Study and parking

This one bedroom apartment is like no other; it has been completely remodelled to an

outstanding level of efficiency and fitted with the best quality fixtures and appliances.

French stone tiles cover the living areas. Custom made kitchen with dextrorotary features

matched by the custom made dining table and chairs, separate study area, stone

bathroom akin to those found in Istanbul and incorporating a built-in in laundry. Bright

bedroom with wardrobes, spacious north facing balcony; open parking space. All within

a few minutes’ walk to Neutral Bay shops and bus terminal. Offered fully furnished.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

17

17


Current Sales

33/8 Hardie Street, Neutral Bay

For Sale $525,000

SOLD

Modern apartment refurbished with impeccable style

This one bedroom apartment is like no other; it has been completely remodelled to an

outstanding level of efficiency and fitted with the best quality fixtures and appliances.

French stone tiles cover the living areas. Custom made kitchen with dextrorotary features

matched by the custom made dining table and chairs, built-in study nook, stone

bathroom akin to those found in Istanbul and incorporating a built-in in laundry. Bright

bedroom with wardrobes and views over North Sydney lights and beautiful parks, spacious

north facing balcony; and security parking. All within a few minutes’ walk to Neutral

Bay shops and bus terminal. Offered fully furnished.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

18

www.towerlondon.com

18


Current Sales

3/23 Tunks Street, Waverton

For Auction 26 March 2011

SOLD

SOLD at Auction

$840,000

Bridge to Bridge Views

Newly renovated top floor apartment in a small federation building of only three; featuring

a large square deck and enjoying spectacular city & harbour views; spanning from the

harbour bridge, across the city and taking in the Anzac Bridge. Comprising two bedrooms,

the master is very large with two built-in wardrobes; brand new kitchen and bathroom;

massive living room with large floor-to-ceiling windows capturing great views. Direct

access to Waverton Station, and on title is a generous lock–up garage.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

19

19


Current Sales

503/28 West Street, North Sydney

For Sale $695,000

SOLD

Large Deck Overlooking Tree Tops

This fabulous apartment of generous proportions enjoys an open and expansive view of

the beautiful surrounding tree-lined district; comprising: two bedrooms and two bathrooms

on a separate wing from the rambling living room, and opening to a large covered

deck. All rooms open onto balconies, a modern kitchen and a good internal laundry. This

apartment is meticulously kept by the occupant and comes with secure parking; yet only

few minutes’ walk to North Sydney CBD, parks and excellent schools.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

20

20


Current Sales

1205/12 Glen Street, North Sydney

For Sale $720,000

SOLD

Oversized Apartment

Nearly the size of a two bedroom unit, this is a rare offering in a modern quality block

and perched on the 11th floor attracting spectacular harbour and city views from the living

room and bedroom. Separate study the size of a 2nd bedroom can be completely

closed and used as a quest bedroom. Eat-in kitchen and dining area with polished timber

floors. Lounge area opening to full view from floor to ceiling glass windows. North Sydney

station is a stone’s through away.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

21

21


Current Sales

908/8 Glen Street, Milsons Point

For Sale $550,000

SOLD

Modern Building with a High Ceiling

This near new one bedroom apartment is in a fine building close to the station

and positioned on the edge of Lavender Bay. Irregularly shaped apartment distinctly

separating the lounge and dining areas, the lounge room with a high

ceiling of 3.2 meters and almost entirely opens to a large balcony with views

over sections of the Harbour Bridge; modern bathroom and a fully equipped

kitchen.

Details and Viewing: Phone: 9956 6500

Email: reception@towerlondon.com

www.towerlondon.com

22

22


Sydney

38 Alfred Street, Milsons Point, NSW 2061

Phone: (612) 9956 6500 Fax: (612) 9956 6522

Hong Kong

6/F Luk Kwok Centre, 72 Gloucester Rd, Wan Chai

Phone: (852) 2918 8788 Fax: (852) 2918 9808

23

23


Useful Resources

Tower & London

http://www.towerlondon.com

Department of Fair Trading

http://www.fairtrading.nsw.gov.au/

P: 9895 0111 F: 9895 0222

Consumer, Trader & Tenancy Tribunal

http://www.fairtrading.nsw.gov.au/cttt.html

P: 1300 135 399 F: 1300 135 247

Real Estate Institute of NSW

http://www.reinsw.com.au/

P: 9264 2343 F: 9267 9190

NSW Department of Lands

http://www.lands.nsw.gov.au/

P: 9228 6666

Office of State Revenue

http://www.osr.nsw.gov.au/

P: 1300 139 816 F: 1300 363 806

Reserve Bank of Australia

http://www.rba.gov.au

Real Estate.com.au

http://www.realestate.com.au/

Domain.com.au

http://www.domain.com.au/

24

More magazines by this user
Similar magazines