Margaret Lomas heads fight against higher council charges for investors
Some Queensland councils are charging higher rates to property investors than owner occupiers, prompting a public backlash led by television host and Destiny Financial Solutions director Margaret Lomas.
Brisbane City Council has publically admitted to using a “differential rating system based on property land use to levy general rates” in an exchange on Facebook with investor Andrew Hancock. Upon realising that the council was charging lower rates to owner occupiers, he posted the following on the Brisbane City Council’s Facebook page:
“Can anyone there please give a plausible reason why rates are charged differently to a property for a non-owner occupier as opposed to an owner occupier? I fail to see how there is a difference in providing the exact same service to the exact same property, other than a way to profiteer off owners who aren't owner-occupiers at this time.”
Brisbane City Council’s reply:
“Hi Andrew, thanks for getting in touch. Council uses a differential rating system based on property land use to levy general rates. This is done to ensure that properties that are the principle place of residence of their owners do not pay as much as those which are income producing. Income producing properties also have the advantage of being able to offset such expenses against taxation. Council’s principal motivation is to ensure, through its differential rating system, that the owner-occupied, single unit dwelling sector of the community contribute to a level that is affordable and value for money. If you require any further information, please Private Message me your contact details and I will organise to have a Rates Officer contact you. Thanks, Tom.”
Hancock responded, calling the council’s logic "absurd".
“If you were to apply it to every purchase made in society, everyone would be paying different prices for the same goods and services on everything, as most things are deductible in some way to someone depending on their profession,” he wrote.
“Should I pay more for sunglasses than the consumer next to me because they're deductible in my profession? Should my brother pay more for hair cuts because they're deductible in his?”
Hancock’s issue caught the attention of Lomas, a Property Observer columnist and host of Sky News Business Channel’s Your Money, Your Call and Property Success with Margaret Lomas, who wrote the following on her Facebook page earlier today.
“I've known for some time now that in some QLD councils a higher charge is levied on council rates if you are an investor rather than an owner occupier. I admit I had not given much thought to this until I received an email from a ratepayer in Brisbane City Council.”
After copying in Brisbane City Council’s response to Andrew, she continued:
“The rate payer was appalled and frankly, so am I! There is simply no basis for this - the individual tax position of each property owner is of no concern to council, and I am sure the tax office would be interested to know that some councils are using our tax deductions as an excuse to profiteer! As this ratepayer pointed out, a person who can claim sunglasses as a deductible expense due to their job doesn't pay more for those sunglasses, and nor should we for our rates!
“We must start an awareness campaign, and band together to force these money- grubbing councils to stop targeting property investors. Our presence in their area enhances property values and provides housing for their constituents, and we should not be penalised for that!
“I don't know how you make a post go viral, but let's try to do that with this one and bring shame upon those councils involved in this inequitable and unfair practice!”
As of this afternoon, her post had attracted 53 ‘likes’ on Facebook.
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Speaking to Property Observer, Lomas agreed with Hancock that there was no logic to the council’s stance.
“It’s purely revenue raising,” she said. “There’s no other point to it. The very weak argument given on Facebook is that the rates make housing more affordable for home owners. But there’s absolutely no reason that investors should have to fund owner occupiers.”
According to Lomas, investors in a particular council help support housing in that area.
“My view is that investors actually provide affordable housing, and also add to demand for property, increasing values. And since rates are rated against property values, they are actually assisting councils.”
Earlier this month, Queensland’s Supreme Court set aside a decision by the Mackay City Council to charge property investors increased rates, following a class action suit from investors.
Mackay City Council is reportedly considering an appeal to the decision. Lomas believes that the Supreme Court’s judgement is likely to affect other councils who use a differential rating system based on land use. While she is only aware of the practice in Brisbane City and Logan City, she says she “does not doubt it happens in other councils”.
It seems that differential rates for investors does occur in other local Queensland councils, with Local Government Association of Queensland chief executive Greg Hallam telling The Morning Bulletin that "many councils presently use the differential rating power to categorise residential land based on whether it is used as a principal place of residence, or for investment purposes.”
As for the council’s argument that the differential rating system is equitable because investors receive tax deductions that home owners do not, Lomas disagrees.
“The fact is that all property investors get different rates of tax reduction. So if they want to make it fair, your rates would have to be linked to the size of the deduction you get. [The practice] is very inequitable, even among property investors.”
