Will Changes to Queensland's Minimum Housing Standards Impact Investment Market?

From 1 September 2023, Queensland's minimum housing standards for investment buyers are changing. Whilst the changes are not unreasonable, they may have an unexpected impact on the property market.

Scheduled to cover the safety and security of a property as well as ensuring it is reasonably functional, investment properties by law will be required to be:

• structurally sound and equipped with fixtures and fittings, including electrical appliances, that are in good repair,
• safe and secure offering fully functioning locks on doors and windows,
• private and fitted with window coverings in all areas where a tenant would expect privacy, and
• fitted with adequate plumbing and drainage, and connected to a drinking water supply.

An extended list of the minimum housing standards changes can be viewed at REIQ.

How will the minimum standards impact landlords?

The changes are set to have an impact on landlords. However, it will depend on the quality of the property to start with. Whilst the standards are designed to ensure safe and standardised living conditions for tenants, there are several factors to consider:

• Compliance: Existing investment property owners must ensure rental properties meet minimum standards. Everything from safety to amenities and even functionality needs to be looked at. Upgrades and improvements may need to be made to bring the property up to compliance. Failure to comply may result in penalties.
• Increasing costs: Upgrading may bring significant expenses and if not budgeted for, could lead to the decision to pass these on to tenants. Adjusting rental prices could then impact affordability and ongoing tenant retention.

Note, existing tenancies have until 1 September 2024 to comply. This gives landlords just that little extra time to get their affairs in order.

What should you consider when purchasing investment properties to rent?

If you are currently in the market for a new investment property, the incoming changes may alter your take on an intended purchase. Many properties for sale are older and not equipped with modern facilities; this is then reflected in the rental charge asked of tenants. However, with the introduction of new minimum housing standards, investors should look carefully at the quality of the property before purchase. After all, the aim is to attract and retain great tenants. Landlords need to familiarise themselves with the specific changes to Queensland's minimum housing standards and stay updated.

Engaging with local processionals, whether it be a real estate agent or a buyer's agent, will give necessary guidance and assistance in ensuring your intended property fits the bill; and if not, only you will know whether your budget extends enough to make the necessary changes. One way to ensure independence is to hire the services of a property inspection company to conduct a pre-purchase building inspection. Learn more here.

Don't get caught out by the changes to Queensland's minimum housing standards scheduled to come into law in September 2023.