Queensland property market

By MARY HOLM

Q: I read your piece in the Herald a few weeks ago [March 30] and want to add the following observations.

I was on the Sunshine Coast in January and from what I saw and heard Queensland investment property schemes are little more than giant pyramid schemes. I wouldn't touch one with a barge pole.

The problem is that there is an ever-increasing supply of new apartments, as developers seem to be able to march further and further north or build higher and higher (apparently a 100-storey development has been approved on the Gold Coast).

Hence, supply is always ahead of demand and prices have little upside.

I attended a sales pitch for Queensland property which decried all other forms of investment and heavily promoted the tax benefits, which is fine, but you still have to find the other 61c or 67c in real cash.

Also, I do not recall anyone mentioning stamp duty (at 4 to 5 per cent) and the fact that as an investment property situated in Australia, Australian capital gains tax would apply to any gain.

(Technically there's almost certainly a requirement to file an Australian tax return in respect of any income or loss. The Australian-New Zealand double tax agreement gives the first right of taxation to the country in which land is situated.)

All in all, investing in Queensland is a mugs' game.

Surely the charlatans pushing these properties are subject to some form of regulation?

They are, as Mark Fryer outlined in a Weekend Money article on September 22.

Queensland laws that took effect last October include a five-day cooling-off period for all residential property sales except auctions, and fines of up to $A250,000 ($302,177) for people who use misleading information to make property sales.

Contracts must now come with a prominent warning notice including advice on how to get a property's sales history.

How well are the new laws working?

"Anecdotal evidence suggests that the marketeering has slowed down," says Australian lawyer Judy Teitzel, who has represented clients suing over Gold Coast property deals.

"The new laws require companies to set out all those parties who will receive a beneficial interest from the transaction. The idea is that companies portrayed as independent but which really aren't are shown up.

"The Queensland Office of Fair Trading has raided numerous solicitors, accountants, real estate agents and brokers with a view to prosecutions."

Sounds promising. But a comment from another lawyer, Tim O'Dwyer, shows things are still far from squeaky clean.

"Last week I helped rescue two Gold Coast holidaying Kiwis who were suckered only this month by a gang of Queensland real estate crooks," he says.

"At the same time, I got a pair of Victorians and a Sydney couple out of marketeering mischief."

Will it ever end?

I've read comments in other publications along the lines of: "Not all Queensland property investment is bad."

But I haven't heard of anybody who has been in that market for more than a few years - long enough to get past the initial "guarantees" and other hype - who has been happy with his or her investment.

You have got to ask yourself what ordinary New Zealanders are doing investing in real estate in one bit of one state in Australia? Why not Tasmania, or Timbuktu?

The sales people would say, "Because there are particularly good buys on the Gold Coast." But if that were true, why should they rush off to other countries to let foreigners share in the good fortune?

Could it be because we're the biggest suckers?

"Losses suffered by New Zealanders are generally significantly higher than others," says another Australian lawyer, Rob Lees.

All of this is, of course, not much help to those who have already invested in Queensland, and regret it.

If you feel you've been ripped off, you might want to contact Teitzel, O'Dwyer or Lees, all of whom work for New Zealand clients. Contact details are:

* Rob Lees, rlees@slatergordon.com.au

Slater & Gordon

phone 00 61 3 9602 6888.

* Tim O'Dwyer, watchdog@argonautlegal.com.au
phone 00 61 7 3208 1488.

* Judy Teitzel, jteitzel@cartercapner.com.au
Carter Capner Lawyers
phone 00 61 7 3210 3444.

Adds Teitzel: "Could you also stress that there are strict time limits to claim, as some people think about it for a while.

"The tribunal is as strict as one year from the time you find out about the loss or three years from the initial event, whichever is sooner. It's sudden death."

* Got a question about money?

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