Should strata place a ban on smoking? Chris Gray's Your Property Empire

Joining Chris on the latest episode of your Property Empire is Andrew Rechtman from Realestate.com.au and Charles Tarbey, Chairman and owner of Century 21, Australasia.

During the week we had an email in from Frank Raiti in Sydney and he asked:

I've just received a letter from my Strata managers as one of the other owners in my block has requested a Special By-law be introduced to prohibit smoking on the whole property.

I don’t live there and so it doesn't directly affect me but how do you think it will affect my ability to rent or sell the property in the future? Is it a positive or a negative?

Charles: I’m not a smoker so I guess it would be a good thing if you’re not a smoker, because those people who don’t smoke can really smell it.

Chris: More and more these days because no one’s smoking

Charles: If one of my team goes out in the back lane for a coffee you can tell well before they get anywhere near you they’ve been smoking. I think it would impact very much on their ability to rent. I think also, in fact, on the sale price.

Chris: Do you think that’s a positive or a negative?

Charles: I think it’s a negative thing because people like to have a smoke and you can’t take that away. If a guy has nowhere else to go what are you going to do? walk out to the street in your own home now, in your own property and have a smoke? It could be quite a problem for values and for renters. Absolutely. 

Chris: Well the other thing is do you have the other tick box on REA, smoke free zone? 

Andrew: For a smoke free zone yes, but there certainly are things like pet friendly versus not pet friendly. There are issues around making noise. There are buildings where you’re not allowed to have excessive noise and parties. Even parking on some property. My personal favourite is… we have seen buildings with excessive smoke from BBQs… so you’ve got to keep the BBQ under control. It’s very hard to know and you’d have to talk, you know, for your reader, you’d have to ask what is the domain in that particular building? Talk to the tenants, do the tenants mind? I tend to agree with Charles. 

Charles: How do you police it though, really?

Andrew: There’s got to be better ways of them putting, you know, by-law in the building to stop smoking and it does feel like it’s stepped over that personal…

Chris: You see with corporate buildings these days that ban the smokers from being out the front because it’s a bad image for the company as well isn’t it. 

Charles: I think it’s a very bad image for any business when you’ve got people out the front having a smoke. I know some companies where people stand out the front and have a drink. You know, they’ve got a can of VB in the hand and it never looks good. So the back lane is always the best place. But still, you’re going to end up removing a whole series of situations. Pet friendly’s great because a lot of people have a small pet and I don’t see that as an issue as long as it doesn’t make so much noise, but boy oh boy you’re getting really into it if you’re going to start smoking.

Chris: The pet friendly thing is, if you didn’t like pets and you’ve found they’re noisy, would that reduce buyers in the building?

Charles: Well, anything that reduces the opportunity to expose your property to more sellers than normal is always going to have an impact on your price. Limitations like a first home buyer’s property is going to have a million buyers looking at it. A super residence in the eastern suburbs or top area in any area of Sydney is going to have 10 buyers looking at it. 

Andrew: It depends on community standards as well. So at some point it’s going to flip the other way which is I won’t buy from a building that allows smoking. We’re seeing that change in community standards over time. I remember going on airlines where you could smoke not that long ago and you could smoke in bars and pubs and restaurants.

Chris: But having the pet friendly, for instance then, there’s a lot of people who won’t rent. So my philosophy on rentvesting is all good financially but if you’ve got a pet or you’ve got a dog then suddenly you can’t do the rentvesting thing. So that’s where someone may get a premium to get into pet friendly. 

Charles: They may, but I think people just don’t tell you they have a pet. I mean my experience in real estate is you don’t get the full picture on what’s really going on when somebody’s renting. I’m sure that’s your experience too. You rent a property out to one person and in some parts of medium density, you find 10 people living in the property.

Chris: So, would you go with the by-law or go against it do you think? And obviously we’re not giving financial advice here.

Andrew: I’d encourage you to talk to the tenants and see what they think. If there’s a general mood that they shouldn’t be smoking then I’d probably be in support of it. But I think in the long term it probably devalues your property.

Charles: I would be against it and I’m a non-smoker.

For more information other things to consider when buying a property contact Chris at chris@yourempire.com.au.

To watch Your Property Empire on Sky News Business with Chris Gray, click here.