Podcast: Zooming in on connections lost in France

There’s a different sound to the Flat Chat Wrap this week,

Firstly it was recorded over Zoom, then Jimmy seems to have acquired hay fever in  the south of France, the lavender-growing capital of the world.

And then it’s been hastily edited on his laptop in between hikes, hotel moves and failing internet.

But the show must go and and this week Jimmy and Sue talk about what difference (if any) last week’s budget meant to the housing crisis,.
There’s the Sydney council that wants to tax owners who leave their properties empty while it also wants to ban no-fault evictions and allow tenants to sign leases for several years at a time.
And finally, the strata scheme that’s in dispute with Sydney city over a tree that could be a killer.

That’s all in this week’s French- flavoured Flat Chat Wrap.

Transcript in full

Jimmy  00:00

Hello Sue.

Sue Williams  00:01

Hi Jimmy! Well the hell are you?

Jimmy  00:05

I’m in a place called Venes, which is in the south of France,  near Avenos. Do you remember all those years ago, we went to the Cannes Film Festival and we took a day off and went up into the mountains?

Sue Williams  00:19

Gosh, that was beautiful; I remember that very well.

Jimmy  00:21

Well, that’s kind of where I am now.

Sue Williams  00:24

Oh no! And you’re not with me?

Jimmy  00:27

Obviously, no. You’re back in Sydney! I’m doing a travel piece about hiking in this area; that’s my excuse.

Sue Williams  00:37

And you’re with your friend Kieran?

Jimmy  00:39

Yes. And we’ve just realised how mountainous the area is. I’m having enough trouble, climbing the six flights of stairs to get to our rooms.

Sue Williams  00:52

Oh my god! That is probably good training, because I don’t think you did enough training when you were still here, did you?

Jimmy  00:58

Well, we’ll find out tomorrow, when we do our first hike.

Sue Williams  01:04

And how long is the hike?

Jimmy  01:06

Five days. It’s an average of about 12-15 k’s a day, but it’s a lot of hills. We can see the Mont Ventoux, which is the big giant hill that turns up in the Tour de France every year and terrifies the riders. It’s terrifying us, I can tell you!

Sue Williams  01:33

Wow!

Jimmy  01:36

We’re just looking at it. So what’s been happening in housing, and what are we going to talk about?

Sue Williams  01:41

Well, first of all, we’re going to have a quick look at the Federal Budget and decide what’s in the Federal Budget for housing; did it go far enough in helping people; helping with the housing shortage. And we’re also looking at a council in Sydney, which is talking about taxing homes that are left vacant. That’s already happened in Victoria, but they’re still talking about that here. And there’s been an interesting story about a seven-year battle between a strata building in Sydney and a council, to remove a dangerous tree.

Jimmy  02:16

Okay, sounds good. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue Williams  02:22

And I’m Sue Williams and I write about property for Domain.

Jimmy  02:25

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Okay, I’ve kind of lost touch a little bit, with what’s been going on in Australia, because I’ve just spent the past four days in Paris. So, what’s happening?

Sue Williams  02:51

Poor you!

Jimmy  02:53

What’s happened in the budget, that’s changed the landscape for housing?

Sue Williams  02:58

Well, I guess everybody was looking to this budget to be a real cost-of-living budget, and to really help with the housing shortage, because I think the housing crisis is uppermost in many people’s minds, really. And the budget did a few things; I mean, it had a huge increase in welfare ($9.5 billion increase in welfare), and a lot of that was rental assistance and it was also increases to the dole and single-parent payments, and some energy-bill discounts. So that’s going to help the hardest-off in Australia, which is fantastic, I think. Those people who are renting are having a really tough time, and those people who are renting and don’t have a decent income; oh my god, how do they make ends meet? But even though there is an increase in rent assistance, it means that they will only receive a 15% increase in a fortnightly payment, which adds up to a maximum rise of $31 a fortnight, which doesn’t sound very much, when you’re looking at rents going up. You know, we’re hearing about rents going up by $100 a week; $300 a week… Incredible rises. The government said they’re going to try and help, but is it enough, really? Rents; 14.6% they’ve gone up in Perth, over the last year and 11% in Melbourne and 10% in Sydney… It’s pretty hard.

Jimmy  04:18

So what’s happened with this $10-billion housing input thing, where they were going to build all these houses, over the next five years?

Sue Williams  04:27

Well, nothing much has been said about that. I guess the showpiece of the budget was a boost to the build-to-rent sector. That includes tax-breaks for foreign investors, to encourage them to inject more money into the housing sector, because they’re the ones who are building most of the build-to-rent (not all of it, because Australian developers like Mirvac are really getting into that). It’s interesting, because it’s still only a tiny section of homes, the build-to-rent, but it is a $17-billion industry and developers now say because of these tax breaks, they’ll build an additional 150,000 units, which is fantastic. They’re mostly going to be in Sydney, Melbourne and Brisbane; all the big capital cities. For renters, it is a bit of a game-changer, because you have longer-term security of tenure, which is something that a lot of tenants really, really want. And they have much more freedom to make rented properties their homes and often, with better amenities. I mean, we went to see one and it had a fantastic pool and a gym, a playroom for kids and a working- from-home-space. It was pretty amazing. But the downside is, that they’re often more expensive than those on the private market and they don’t do anything to help increase the stock of affordable housing for people like nurses and teachers and firefighters and police officers… The people who are really vital to the wellbeing of the rest of us. Of course, it will take a while for that supply to come through. I mean, it will probably take at least two-years (probably three-years), for those build-to-rent units to come through, but it is a good thing.

Jimmy  05:25

We had on the website the other day, a piece by Julie McLean from SCA Victoria, asking who’s going to manage all these disparate demographics, when they’re all put together in a strata scheme? When you have owner-occupiers, you have investors, you have tenants, you have affordable tenants, and you have social tenants… All these different groups are going to be thrown together and the only people who are left to manage them, are strata committees. I mean, it does seem like it hasn’t really been thought through; do you think that’s true?

Sue Williams  06:46

I’m not so sure I agree, because with the build-to-rent sector, you actually get professional managers for every building. They’re the people who look after everything; who organise any kind of repairs that need to be done, who organise community events… Who try and create a sense of wellbeing and a sense of human community in these buildings. So there’s actually a lot more being done for these, than in the private rental sector. I think it’s a really promising way for the future.

Jimmy  07:16

Right. But it’s going to be two or three years down the track, isn’t it?

Sue Williams  07:21

Absolutely. We’re going to have to wait. And there wasn’t much in the budget to increase the supply in the meantime. The good thing with the budget, I suppose, is that there was a budget surplus, and that was the first time in 15 years. The good thing about that is, that it creates a bit more confidence in the economy and hopefully, we won’t see many more interest-rate rises.

Jimmy  07:51

That would be good; that would be excellent. We’ve got limited time, because I am halfway up a mountain in the south of France. Do you want to talk about the council that wants to put a tax on empty houses?

[MUSIC]

Jimmy

Which is the Sydney council, Sue, that say they want to put a tax on empty houses?

Sue Williams  08:22

This is the Inner West Council. They’ve discovered that they’ve got about 10% of their housing stock, vacant. So they’re suggesting that there be an additional land tax on these vacant homes. And they’ll also want to do things like ban no-fault evictions (which I think would be a fabulous idea), and lengthen tenancy periods to up to 10-years and charge higher rates to retail landlords, who keep shopfronts empty. We all know how miserable it is, walking along the high-street, and there’s just rows and rows of empty shops. We’ve seen that a lot after COVID. The main thing is the vacant home tax. I think this is an excellent idea. Victoria introduced that in 2018, to help address the lack of housing supply. I think this is a fantastic lead from the Inner West Council. I mean it’s a shame that it’s not a statewide initiative; that it’s not a national initiative. This year, it’s going to be really hard, because there are so many more migrants coming into Australia, because we really need skilled migrants. They reckon there’s going to be 1.5 million extra people arriving to 2027, which is a lot of people. That’s really going to exacerbate the housing shortage, because where are all these people going to live?  I think initiatives like this are really promising for the future, especially looking at the people coming in.

Jimmy  09:54

But let’s face it, this is a council in Western Sydney… They don’t have the power to put that tax on, do they? And they certainly don’t have the power to change the terms of rental agreements, or am I missing something?

Sue Williams  10:08

No, I think the council can really push for the power to be able to do this. They’re asking for the state to allow them to do this. It’s interesting, because it is a push that other people are joining, as well. There’s another Sydney Council, Lane Cove Council, which has been calling for reforms to permit higher council rates, or land tax on empty homes as well. So if this increases, it will be great to see that pressure make the government do something.

Jimmy  10:37

The government has shown no signs of wanting to do it and it is a state government decision; it’s not a local council decision.

Sue Williams  10:44

That’s right. And the government is still baulking at doing anything like this. But it’s interesting, because other people are  joining the push. I mean, we’ve got the University of New South Wales; the Housing Research and Policy Professor, Hal  Pawson (who’s an incredibly-respected commentator on housing), and he’s offered support for a vacancy tax. It’s all putting a bit more pressure on the government. Hopefully, they will start considering it, as well. The Tenants Union of New South Wales support it; obviously, the Real Estate Institute of New South Wales doesn’t support it, but then, they wouldn’t, would they?

Jimmy  11:19

No, they wouldn’t.

Sue Williams  11:21

But I think a louder chorus of voices are asking for these kind of things and maybe, they’ll push the government over the edge, and they’ll start thinking “we can’t continue like this.” 10% of homes being vacant in one council area; that’s incredible!

Jimmy  11:39

Am I right in thinking that people who are invested in the property; they can’t be bothered with the hassle of renting them out to people, so they’re just happy to sit and benefit from the capital growth; the value of the property?

Sue Williams  11:55

Yes, that’s right. It’s speculative investment, really. They’re just doing that because they want to keep them for the long-term, but they’re not too bothered about earning extra money from them. They might have another house somewhere, or they might have a few other houses somewhere else. This might be their bolt -hole from their main home in the Southern Highlands, or down the coast, but it’s only used on occasional weekends, so it’s vacant nearly all the time. The rest of us can’t really afford that, I don’t think. We need these homes.

Jimmy  12:27

It’s also leaving the area; it’s denuding them of the people who could be living there and contributing to the local economy.

Sue Williams  12:36

Sure, absolutely. What must it be like, to be living next door to empty homes? It would be really dispiriting, I think. You don’t have any neighbours… It’s interesting; now you’re gone Jimmy… You do all our cooking, as you know… The fantastic next-door neighbour in our apartment building gave me some food yesterday. She made a big quiche and gave me half of the quiche and it was delicious. So it can be great, having wonderful neighbours. If you don’t have any neighbours at all, it can be really miserable.

Jimmy  13:07

I can tell you, sitting here, halfway up a mountain in the south of France in a nice little village, there’s not an awful lot of people around who aren’t visitors, staying in hotels. There’s lots of little houses and little apartments; not a lot of activity, because people buy these properties (holiday homes, second-homes), and they go away. You know, it’s Sunday night and everybody’s left.

Sue Williams  13:35

I mean, people could probably make quite a good living on people like you staying there, if they rent them out on Airbnb and those similar kind of short-stay platforms. It  just means there’s just not many locals left.

Jimmy  13:53

I would just like to point out that I am not in an Airbnb; I am staying in a hotel… A very charming hotel.

Sue Williams  14:03

But there will be many other homes there, which are just let out, wouldn’t there?

Jimmy  14:07

You can see the shutters over the windows and everything, and you think “these places, will be empty until the Airbnb guests or the owners, come back.” It’s kind of sad, but it’s very beautiful. I don’t know what it would take; one council saying that this needs to be done… It does seem to me that the Labor government we’ve got in New South Wales; we had a lot of high-hopes for them, to get to grips with this stuff… They don’t seem to be doing anything.

Sue Williams  14:39

They seem to be incredibly cautious.

Jimmy  14:41

Timid, is the word I would use.

Sue Williams  14:44

That is a good word. Well, let’s hope that they’re forced into a corner and they end up having to do something.

Jimmy  14:51

I think they need to ‘grow a pair.’ I think that’s the phrase.

Sue Williams  14:55

Or put their ‘big boy pants on,’ as David Chandler would say.

Jimmy  15:02

Exactly. Slightly sexist, but it’s harmless, I think. Is there anywhere in the world where they have put a tax on empty houses, that has made a difference?

Sue Williams  15:15

Yes. Hal Pawson talks about it; it’s in Vancouver in Canada. There was a 5% tax on empty homes, and that had raked in millions of dollars and returned more than 4,000 homes to the market. So that is a really good precedent, isn’t it? That’s a very good example to outline.

Jimmy  15:33

That’s a win-win.

Sue Williams  15:34

It really is.

Jimmy  15:37

And on that note, we’ll take a quick break and when we come back, we’ll talk about the council that’s in dispute with a strata scheme, over a tree.

[MUSIC]

Jimmy

Okay Sue, where is the council that is locked in a death-struggle with a strata scheme, over a killer tree?

Sue Williams  16:00

I think that’s overstating it just a little, Jimmy! It’s in Darlinghust; so it’s the City of Sydney. It’s a strata building and it’s a big blue gum tree. It’s in a flowerbed, which is on the strata scheme’s property, but it has always been maintained by the council, so they feel that the council has responsibility for it. And this tree has been dropping a lot of branches on neighbours. It’s been damaging (sorry, not on the actual neighbours, but on neighbour’s properties)… It’s been damaging the footpath and creating cracks in the floor and on the wall of the garage next door and the courtyard next door, for the last seven years and the roots have blocked the drain.

Jimmy  16:50

It’s a big old tree and it’s one of these trees they called ‘the widowmaker,’ because it will just suddenly drop a big heavy branch and if somebody happens to be underneath it, that’s their tough-luck.

Sue Williams  17:03

That’s absolutely right. I think most people around this tree would like to see it gone, because it is so dangerous. The strata building says the council has always trimmed the tree and always looked after it and always claimed responsibility, so they should be the ones who pay for its removal. The council is saying ‘no, it’s on strata property, so therefore, they should pay for the removal.’ It becomes really difficult, because the council still has to give  permission for removal and it puts quite onerous conditions on that removal, as well.

Jimmy  17:38

Right. It’s basically a bunch of bureaucrats in the council, who can’t really see that people in strata, are actually people. I’m sure they’re sitting there going “oh, this is an owners corporation, therefore, it’s a company. Therefore, we’re dealing with faceless people, just like ourselves.”

Sue Williams  17:59

And it’s really hard, because the apartment building has spent about $8,000 to rectify the damage. It’s spent a lot of money on getting reports done. And they still can’t convince the council to actually do anything really. They just want to convince the council the tree is dangerous and causing all this damage.  Neighbours of their building are really outraged at what’s happening, but they just can’t convince the council to do anything.

Jimmy  18:26

I mean, that’s a really tough one, because the council doesn’t want to pay for it. Okay, that’s just a financial/legal thing. But they also are making it difficult for the tree to be removed in the first place. Somebody needs to just sit them down and say “do you realise, sooner or later, somebody’s going to get killed or badly-injured by this tree and it’s costing this strata scheme a lot of money? Why don’t you just do the sensible thing and cut the bloody thing down?”

Sue Williams  18:58

Absolutely. I mean, the lawyers say “they can all go to the Land and Environment Court.” You know, they have a division dedicated to tree disputes (which I’d never realised before). That becomes very expensive and it takes a long, long time, as well. I mean, surely common sense would say “let’s get rid of this tree. Let’s find another kind of tree to put in there, instead. Let’s just work it out now and get something done this week.”

Jimmy  19:25

But you see, we know of these stories about rich people poisoning the trees in front of their big, fabulous houses, so that they can get improved views… Maybe they could ask the rich people to get their tree poisoners to come in, in the dead of night?

Sue Williams  19:46

The tree would fall down then, wouldn’t it? It would kind of die and wither and then it would fall down.

Jimmy  19:51

But at some point the council would say “this is dangerous tree; this poison tree, this widow-maker tree… We’re going to get the chainsaw out.”

Sue Williams  20:02

You’d hope so, wouldn’t you? You know, you do sympathise with people in this situation. It just seems a ridiculous, bureaucratic bungle, that nobody’s doing anything whatsoever. Why doesn’t the council just say to the strata building “okay, let’s go halves on getting rid of the tree. We’ll pay for half the cost; you pay for half the cost. Or, we’ll provide the labour and you buy a new tree to put in its place; something much safer.”

Jimmy  20:27

But then they’d have to get permission to remove the tree in the first place. Sounds like another bunch of bureaucrats that need a pair of ‘big boy pants.’

Sue Williams  20:39

Absolutely.

Jimmy  20:41

Well, on that note, it’s nearly midnight here, in the south of France. The next time we speak, I will be in Avignon.

Sue Williams  20:50

You’ll have done your walk by then, won’t you? You’ll have either survived, or not.

Jimmy  20:55

If I have survived, that is where I’ll be.

Sue Williams  20:59

So if it’s me alone doing the podcast next week, we know the worst has happened.

Jimmy  21:04

Yes. People will be writing in, saying “oh, please let that happen! Get Jimmy to sit under the widow-maker tree for a bit!”

Sue Williams  21:16

Oh, no! Have a great time, Jimmy. It’s great that you’re keeping tabs on strata, even while you’re in such a beautiful, distant place.

Jimmy  21:29

You know me; it’s an obsession. Thanks for being there, at the other end of this call, Sue.

Sue Williams  21:38

Thanks everyone, for listening.

Jimmy  21:39

Thank you. Bye.

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free, on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.