Landlords of investment properties in one of Queensland’s tightest rental markets have described a council rate hike as a “blatant cash grab” that will make its housing crisis even worse.

Cairns Regional Council has written to landlords across the city, advising of a potential rate hike of 15-40% for non-primary residences from the 2023-24 financial year.

The council said the move would bring it in line with other regional centres, such as Townsville, Noosa and the Sunshine Coast.

But investors questioned the timing of the rise, as the city grappled with one of the lowest rental vacancy rates in the country, below 0.6%, amid reports of rental bidding wars and families living in tents.

Tom Badstuebner, who owns four units on a single plot in Gordonvale in the south of the city, said the rate hikes could be the tipping point after a series of hikes in interest rates and the cost of Home Insurance.

Tom Badstuebner said he was selling due to rising interest rates and advice and rising insurance costs.(Provided: Realestate.com)

“The council isn’t offering any new services or infrastructure, or anything to compensate for it,” Badstuebner said.

“It’s just a blatant cash grab.

He described it as a “ridiculous decision, especially given the housing crisis”.

“It will only see landlords raise the rent, which will put more pressure on people who are already barely coping with the rising cost of living,” Mr Badstuebner said.

choose to sell

Mr. Badstuebner said his unit rates fell from $7,894 a year to $10,435 after the council changed the rating category for multi-unit units earlier this year.

He said they had decided to sell.

“We’re just small investors with a mortgage,” Badstuebner said.

“We had to raise the rent by $20, but that’s far from what it’s costing us.

“You’re going to see more and more people like us unable to afford to keep rentals. They’ll be clawed back by owner-occupiers and then you’ll have fewer rentals on the market.”

Hikes apply to base rate

Cairns Regional Council Deputy Mayor Terry James said the rate hike would be at the lower end of the scale and would only apply to the base rate, not the full rate.

A boardroom, with many people seated at their assigned desks.
The council has also started charging rates separately on homes that share a title deed.(ABC News: Curtis Rodda)

He said 75% of property owners in Cairns paid a base rate of $962 a year, meaning a 15% rate increase would equate to $2.70 a week.

“We see a lot of confusion so there is going to be another letter to clarify that,” Cr James said.

He said the money raised would not be earmarked for a specific purpose, but rather to continue providing municipal services to the community.

“The council has the same increase in electricity bills, the same increase in salary costs,” said Cr James.

“We promised never to exceed the consumer price index.”

Fears of rent increases

But Sally Watson, director of nonprofit Shelter Housing Action Cairns, said she was “disappointed and shocked” by the proposed rate hike.

“We are extremely concerned that the increase in rates on private rental accommodation will put further upward pressure on rents and also reduce supply,” she said.

“It doesn’t make sense in the current context of housing needs for vulnerable households or rising interest rates and other costs for private landlords.

“It is no secret that Cairns is facing the worst conditions we have seen in the private rental market for over 15 years.

Ms Watson said its supply of rental accommodation was ‘very low’ and ‘rental accommodation costs were rising beyond the means of many households’.

She said it had resulted in “sustained and unprecedented pressure on social services for housing support for over 12 months now”.