A Developer's Collapse, the Rate Flip and Four Different Brisbanes

Opening

Cold open and this week's stories

Kasey McDonald (00:05) Well, welcome to Before the Weekend episode 16, Friday, the 28th of August. Can we believe it? We are three quarters of the way through 2026. but today, big headlines. Sydney developer collapses. they owe forty-five million dollars of that to buyer deposits. We've got a Perth agent disqualified from his own industry award. So, some interesting stuff for us to dive into there. Three banks are changing their mind on where interest rates will land. WA is starting to talk about those rent caps and an agency doubling its rent roll, deciding property management is now not the second cousin to sales. Welcome to Friday, the twenty-eighth of August, and I'm here today with my co-host, Pete Schravemade. We've had a big week this week, Pete.

A numbers week

Peter Schravemade (00:51) G'day, Kasey. Yes, we certainly have. We've been out and about on the road. It appears to be a numbers week though, and the most of the theme is is about the numbers industry. sales data, award ladders, rental forecast, developer balancing sheets, balance sheets, sorry, vacancy rates. and then there's there's five separate sets that broke at once, including, and I'll be careful how I say this, the Prime Minister's plenty to get through before the weekend. B at the start though, you and I were at a conference at the beginning of the week, which was the Laing+Simmons conference. And I think it's safe to say we both enjoyed ourselves, but not it's not so much about enjoyment. I I thought, and I've been to quite a few of these Laing+Simmons conferences in the past, I felt that this was one of the most refreshing real estate conferences I've ever been to. Not just in terms of content, but the way that they approached the particular market conditions. What what were your thoughts?

Laing+Simmons conference debrief

Kasey McDonald (1:51) I agree with that. I think their well the headline was make the market right, you know, and it it wasn't about we've got to we're gonna meet the market. We need to make the market our our own. And I really loved that that came out across, you know, all of the sessions. you know, whether they were panels, whether it was talking, you know, tech and AI, it was Yeah, I and I felt as though like they always do, they really put their people first in terms of, you know, their leaders and those within those businesses and really trying to, I guess, dive deep into how they can be helping them. and so I I love that about what Leanne and the team do at Laing+Simmons.

Peter Schravemade (2:31) Yeah, yep. And without banging on about it for a long time, I've been to a few conferences since the market has turned in the last month and a half where things are all doom and gloom. And I didn't get that. I actually felt as though here are here is our opportunity to be better at what we do. And they spoke there were quite some themes that came through. So touch points, Caloshi, Michael Caloshi raised touch points and the fact that personalisation was something that they did did, and that he he was very much viewing this particular market as being an opportunity for his agents to really drill down into that and prove as to why they're better professionals. But we we saw that the whole way along. Like a lot of the people were

Kasey McDonald (3:11) We did.

Peter Schravemade (3:12) Were saying personalisation. I know Glenn Cortinho was saying at the end, Will Torres to an extent was talking about it. and then they had some great inspirational speakers. I really enjoyed this guy called Luke Richmond. I'd never heard him speak before. and for those of you don't know, look him up. He's an adventurer. He lives down in Tassie. But he's conquered some crazy stuff. He's a b he's a unit. He's a unit, isn't he, Kasey? He's like

Kasey McDonald (3:39) Well, we did speak about like how how does he even have the mental capacity to think what's kind of next, what's the next adventure, right? We were sort of going, Wow, we're so glad that he is doing that, because it's not not something that I've got to do in myself. I mean, I've got a fear of heights, so I wouldn't even be able to do half of what he did. Yeah. Yeah. Exactly.

Peter Schravemade (3:56) Nah, we were watching some of those BASE jumps going, Well, it's a perfectly good cliff. It doesn't seem like a good idea to be jumping off that. And and then when he showed the one where he got it wrong and he he went into the cliff for a a second or so, I was like, nah, nah. I'm out. I'm out of that. That's that's over to you, buddy. But he he he totally engaged. Very rarely do I see guest speakers who turn up. They do that piece and they leave. But not Luke. He was into it. He really wanted to get to know everyone there. Very, very authentic dude. If you're Looking for a guest speaker at a conference, I can highly recommend that guy. amazing experience. And I I even enjoyed sitting next to him when some of the other guest speakers were on. Like he was riding them like a horse down the straight. He was like he was hanging off every word. Yeah, brother, yeah. And he was getting stuck into it. So I yeah, highly enjoyed. Luke Richmond's got a book out if you're i you're interested, get into it. But big thank you to Laing+Simmons, Jacqui Barnes, Jackie Jones, what a job.

Peter Schravemade (4:54) Putting that together. Michael and Ange had to leave early and where our thoughts and prayers are going out to those guys. tough week for for those two, but we hope that they're they're on the on the turn there. And the whole team, like Chelsea and the the group there, I'm sure I've missed about four of them and they will remind me of that. But what a great conference that was at Laing+Simmons. Well done. should we move on? Let's get in. Yeah.

Universal Property Group collapses

Kasey McDonald (5:11) Mm-hmm. Absolutely fantastic event. Yeah. Yeah. Well done. Yeah. First story. Yeah. the the Bathla, right? The 3.2 billion and the the kind of developer space. But I think the key headline here is around those buyer deposits, right? you know, I the administrators, Teneo, I think that's how you say it, were appointed on Tuesday of this week to Universal Property Group. so it's you know, hundreds of numbered subsidiaries running as high as UPG four sixty, which to me, that's just kind of all these acronyms. You might need to dive into that, Pete. But I think the liabilities were around 3.2 ish billion. and of that 2.85 was of borrowing. So I think though our the the key part of this though is that, you know, we've got those buyer deposits. Some were protected by trusts, some were in solicitors' trusts. So yeah, just be I you know, what's kind of happening in this space, I guess, you know, from the developer's point of view, we've been talking about it, right? Around this now being that kind of piece of the market, the same as the broker's space, right?

Peter Schravemade (6:25) Yeah, yeah. And so like I I think that there's a couple of things. Like it's not looking good for the for for this scenario. The

Kasey McDonald (6:30) No I no it's not. Yeah.

Peter Schravemade (6:32) Administrators want twenty million to keep them running for five weeks. So you know, like the what they're gonna do now is they're gonna go out to all the key stakeholders. This is what administrators do, and they're gonna say, anyone wanna put in money to a company that's already announced that it's gone bankrupt or is in administration about to go bankrupt. Anyone want to put in twenty million and I don't think the appetite will be there to keep that going for five weeks. So their best course is that another developer comes in and says I'll take over. But I think they have to announce it's done before that happens. I think that's the way it works. But I think I I I think the unprotected deposits is the problem. Twenty seven million dollars of buyer money sits outside protected accounts. So If if you have purchased and you, you know, and I suppose there's a lot of people who have purchased that would have been scrambling this week to find out whether their their deposits are protected or or otherwise.

Peter Schravemade (7:25) And and don't forget there are other plays here too. So real estate agents or investment property buyers agents might might have claim to those deposits. So it may not be something that they're getting back because these are these are sales that have effectively gone gone ahead. and these are conditions that sit outside the real estate. So like but the commission, just like the deposit, is actually unsecured. So if they're getting paid on settlement rather than exchange. And and typically I've been in this space. Typically if you're an investment property salesperson or if you're a buyer's agent and you're getting you will typically get fifty percent of it up front on exchange on when the contract goes unconditional and you'll get fifty percent of it at the end. That That is that was industry stakes. I don't know if that's the still still the case now. because I've been out of that space for a while. But yeah, I I suspect there's a lot of commission that's also unsecured in there.

Peter Schravemade (8:21) And so there'll be a lot of agents hurting at a time that they probably didn't need to. But hey, forget the agents for a second. Mums and dads out there have lost you know, huge amounts of money at the moment and they're they're it's uncertain times actually, knowing what's going ahead.

Kasey McDonald (8:35) Yeah, and I think as also as a part of this, the builder is also gone. so you know, I guess as a part of those warranties under defects for new builds, you know, that's kind of I guess a piece that's also now been removed as a part of this. But in in also, I saw in the headlines that I guess as a part of, you know, where why this has landed where it is as well, is it was over 200 million of completed stock there. that was all unsold. So yeah, we're coming back to this piece of, you know, the the buyers are are being patient, they're waiting. but, you know, I guess that stock just was not attractive, whether that's price point, location, but, you know, the buyers are just not buying.

Peter Schravemade (9:24) Well, remember I called it last week. We I said, as part of the buyer's agent story, I said, I'm aware of a development where there were twenty three lots and eighteen of them had not unconditional contracts. They had contracts placed on them. Come the federal budget, come all of the noise about tax reform. Eighteen of those went away. They took their deposit back and they said we're not proceeding anymore. And that developer has yet to locate a buyer for one of them one and a half months later. So Can you imagine the same thing happening for these guys? Like there there there is a good chance, and I don't know the story here. There'd be a great chance that they they would have had conditional contracts in place and people would have just gone, my god, the government's just lied to me about these things. Now the purpose for which I'm buying them they're not going to settle until end, so that let's take them all back. And that would have created a nightmare for Bathla and the the groups that are involved there, the the construction and the the development.

Peter Schravemade (10:22) Groups. But yeah, it's look sadly, I think we're gonna see more of this. I think I think this is the first. Like we're one and a half months into this or nearly two. We're nearly two months down the track from the federal bud budget and tax reform. And it it it you know, for it's here to stay at least until the next election. I think we're gonna see more of these in the next twelve months.

Kasey McDonald (10:42) Yeah, really unfortunate. You know, we're meant to be having, you know, a a higher come to the market. You know, we want builders to be building because we need homes. we need apartments, you know, we need housing. And we're just yes. Yeah.

Peter Schravemade (10:52) Well well the the irony, the irony of us in a supply and demand market and these guys can't sell now. It's like unbeliev I can't I could not have written this script f you know, eight weeks ago. I would not have believed we're in this scenario. It's just incredulous.

Kasey McDonald (11:10) Yeah, but we are and I think there's there's more to come, right? As you indicated. So yeah.

Peter Schravemade (11:17) Yeah, I t I don't know whether I should be laughing or crying about this 'cause like we've we were banging on about the supply and demand issue and here we are going, here's an agent with two hundred and nine million dollars worth of supply who can't sell it. Maybe it'll get fire sold, maybe that'll do something to the market, you know, maybe there'll be some stress tests there. But the the the real lack of hope that I'm seeing at the moment is no one's predicting that, and we've got stories coming up later today about rents, and that doesn't look good either. Let's Ditch this one and move on to the next one because it's it's kind of it's it's an alleged scenario, right? So we should say at the moment that all of this is alleged. I read

REIWA disqualifies an agent from its own awards

Kasey McDonald (11:52) Mm-hmm. Yep. Alleged, yes.

Peter Schravemade (11:55) I read this one, you picked it up from one story. you picked it up from the the fact that REIWA has actually banned one one of its members from entering their their awards this year. And and they've done that, it seems to me fairly fairly reasonable the fact that they've banned this person. they have said they have found that the numbers submitted by this person, and I've always wondered whether whether if this should come up, what the outcome would be. But this person, and I I really don't want to name him. It's not about naming shaming agents, but this person over in West Australia has submitted agents has submitted an awards entrance and it's been found that the numbers that are submitted don't stack up. There are inconsistencies in them.

Peter Schravemade (12:42) And the agent is fairly saying it was a mistake. REIWA, for what you know, I I don't think they've made a decision as to whether they think the agent has deliberately done this or whatever. I haven't seen that. But they're saying, look, it's it's outside of our terms and conditions, therefore you can't you can't be in this. But this very same agent is also in the very next story. If I just get to it, so there's he Basically the the allegation is he has purchased or used a company to purchase the house of the the seller who he represented. So I don't know if I've said that correctly. He had a fiduciary obligation to a vendor, I'm assuming, and a company that he has beneficial interest in has acquired the house of that of that vendor. Now that the seller is saying the vendor, the seller is saying that we w it wasn't disclosed the the agent full disclosure, he's saying the allegation is false. He disclosed it up front. So it's a watch this space, but it's it's he's yeah, I it sounds like he's in in all sorts of pain over there at the moment.

Kasey McDonald (13:56) Absolutely. I think it's been put down to administrative errors. and I guess you know, good on REIWA. I mastered that's the more award bit, right? Yeah, absolutely.

Peter Schravemade (14:04) Well that's the award that's the that's the awards, right? Yeah, that's the award part, yeah.

Kasey McDonald (14:08) Yeah. So as I started to kind of I think look through the particulars within the awards and the results that they started to uncover, you know, that there was, I guess, errors as a part of that and and the numbers weren't stacking up, as you said. But, you know. I think I'd like to highlight here that, you know, the integrity of awards I think are really important. And Suzanne Brown, who's a REIWA president, follows that sentiment, right? She's saying, you know, we don't want to just hand out awards and we actually dive in you know, what the information is that people supply as a part of their submission is really important that we, you know, justify, clarify, and confirm that that information is actually accurate, right? Because we really want the consumer to rely on the fact that that Sales agent, property manager business should be in fact rewarded and that the information they're providing is accurate. So good on REIWA for actually, and I'm I and I'm I'm confident that all of our industry awards actually do do that. but you know, it's really great that they've actually come out and showcased that, especially in times where we've spent a lot of Fridays talking here on Before the Weekend about misconduct and trust.

Kasey McDonald (15:23) Of the consumer or the lack of trust the consumer has in us as real estate agents. So it's just really refreshing for that to come out to say, you know, we actually do do the right thing behind the scenes as well. And we are, I guess, reprimanding those that shouldn't be awarded.

Peter Schravemade (15:39) Mm, yeah. Well and and I a hundred percent agree with that. I as you may know, I judge a fair few of these awards for various states and and and the national ones. And not only do I take my job seriously, but I I know a lot of the people who make their submissions in there, they take them seriously, like they have accountant's letters signing signing off. So well done to REIWA for taking his stand on that. I d I just don't think I think your whole awards falls into a heap if you don't if you don't have integrity in it. But On this secondary issue, I I I think this is not looking good. and again, it's an allegation. I'm I'm I'm not putting out any any guilt on any side, but the way this worked is the per the seller, the seller involved in this transaction bought his first home WA in twenty twenty, six years after arriving from overseas. On in in twenty twenty four, he signs an exclusive agency agreement with the agency involved.

The same agent and his vendor's home

Peter Schravemade (16:36) A Self-described multi-award-winning boutique agency. Well, I'm not gonna be winning an award this year. Six days later, an agent emailed the seller saying there are three offers. The highest is from this particular company, let's say ABC Proprietary Limited. Then there's a text in the afternoon saying don't hold the buyers out too long. So they're putting pressure on him to sell it. The seller signs after countering for an extra 20K, then the selling agent messages saying that the purchasers had accepted his counter. the then then the seller has a requested ASIC give him the records of the company that purchased. And then he finds out the owners of that company are the agents involved in selling his property. and the registered address is at the real estate office's own address. This is on the same day that the offer was made. So once they were confronted, they paid another 10k and then they waived the ten thousand dollar fee. But almost six weeks after the contract was signed, the agent sent a form disclosing the beneficial interest. So this is down the track. The agent sent a form.

Peter Schravemade (17:59) To the seller disclosing the bench or the the beneficial interest six six weeks after the contract signed. So in WA, just like every other state, it's against the law for an agent to be a party to a transaction for a property which they've been hired to sell without prior written consent. So there there's more in there. There's a ghost open home that was part of it. that yeah I

Kasey McDonald (18:20) Yeah, I did read that. Yeah. Yeah.

Peter Schravemade (18:23) Look this this to me sounds the if If all of this is true and you know how much we can believe the media these days, Kasey. So I don't know that it is, but it doesn't look good from here. And then there's there's respe retrospective valuations involved. So, you know, now there are valuers saying that look, there's a there's a discrepancy in what the property should have sold for. And I mean, we all know what valuers do. So I it just sounds like a dogfight now. I d I I don't know I don't know that it's going to be a wonderful outcome. for for anyone in there I think I think we've already lost

Kasey McDonald (19:01) Everyone's lost, I think, in that regard, unfortunately. and again, we've we've got another story in the media around misconduct and what we're not doing right as real estate agents. So again, we're just going to continue to diminish our trust factor. and we've got to just honestly look at the way in which we're operating. but I think, you know. Other agents need to now. I think now's the time where we're going and and we've been saying this as well every week. It's about making sure that you're operating in the right way and you're doing the right things and respectfully. That it's what we just need to do in this industry, right? we've got we've got to step up and now's the time to do it. I wanna start to see more positive news in the stories of these great things that real estate agents are doing. I don't wanna see these types of stories in the news, right?

Peter Schravemade (19:58) One one thing is if if it's proven to be correct, like if if this is taken to a court of law and and or if the the relevant Office of Fair Trading or Consumer Affairs investigate this and find that the agent's guilty, I'll be really disappointed if it's a slap on the wrist, you know. I that that is what is that is what also what is you know, making people so emboldened to perpetrate this kind of things. And again, it's only alleged, I'm not saying the guy did it. But if if the if if it is opening and shut, then you know, while if I I'll be very disappointed if there's not some kind of outcome that stops agents further down the track, actually considering that this might be an option in a in a in a tough market. let's move on. Let's move on. We've had everything's flip flopping around. the the the Prime Minister and the treasurer have changed their position multiple times and Now we have seen major banks change their position.

Three of the big four flip to a hike

Peter Schravemade (20:57) Only in twenty four hours. I was watching the news last night, the night before, and the banks were all predicting that they expected a cut to interest rates in twenty twenty seven. Now all all three, three of the big four are saying that there's gonna be a hike. Westpac is the outlier, still saying there's no change. Now, this is what they're saying, and I don't know if we should care. The amount of times that economists are right and wrong and you know, it's a bit like the weather. I sorry to the weatherman out there, but it's a bit like you get a weather report saying it's going to be a fine day and it's it's it's belting down rain in your area. They don't always get it correct correct and it there's always different. But it's the headline inflation that's three point five percent down from three point eight. but it's kind of held at three point six. That's forced the change, is what they're saying. and I mean I don't it's it's b it's probably bad news. I don't I don't want any interest rate, Kasey. I don't know about you. I don't want to rise.

Kasey McDonald (21:59) Yeah, no, actually. No, I don't want one either. But so it'd be the fourth, I think, for 2026, right? If if we get that. But yeah, it is because they were anticipating that inflation would go down again after that 3.8 drop to 3.5. So they were expecting that it would slightly fall again. But we saw throughout July additional spend. And I think I saw and it might have been in a different article by by an economist actually kind of working through these numbers, but it was on gambling. So where the right rate rise has come throughout July has been gambling. People going to the cinema. The cinema? Yeah. it's all your fault. Yeah.

Peter Schravemade (22:43) Really? What? I did I did go to the cinema. It's all my fault. Wow. I went to the first I went I went to the cinema for the first time in years. It's my fault.

Kasey McDonald (22:54) Yeah. it's your fault. So the cinema is obviously becoming an attraction spend

Peter Schravemade (23:00) What?

Kasey McDonald (23:00) Again. But yeah, gambling was the highest. so throughout July,

Peter Schravemade (23:04) Well, I haven't g I haven't gambled.

Kasey McDonald (23:06) There's w what obviously all the aspects of gambling and everything that you can gamble on. you know, obviously people are trying their luck. Hey, we've got our last hundred dollars. Let's see what we can make out of that hundred dollars. Maybe that's what people are thinking. I don't know, but They they actually worked through those numbers and said that's where the spike was in July, which has caused that to slightly increase. but yeah, I mean

Peter Schravemade (23:29) Well, it it is a well known fact that when times are tough, people turn to pubs and gambling, but the cinema just has me mystified. Like I'm I was sitting in the cinema

Kasey McDonald (23:35) Mm-hmm. I d I like the cinema. I don't know what that means, but it was there.

Peter Schravemade (23:40) Going, What did I just spend my money on? Because I've got a better I've got a better screen, I've got an equivalent sound system. Why am I here? Like I'm looking at the amount of money I paid for a Coke and I'm going, Wha th unless there's some kind of white powder in this, I don't know why it's so expensive.

Kasey McDonald (23:58) But hey, like they say the cinema, it's about the experience. So I don't know if that's what you got. I don't know, right? I'm sure that well I certainly know that to me, reclining my chair at home is the same as me getting a recliner chair at the cinema. So I'm not too sure what the different experience is, but kind of funny just that I saw that in a different story. but

Peter Schravemade (24:19) I know what it would've been. It would have been the Greek one that's out with Matt Damon, the one that I went and watched.

Kasey McDonald (24:26) Right, or Spider Man or whatever it is, Superman one of those ones, isn't

Peter Schravemade (24:28) No, no, it's

Kasey McDonald (24:29) One of those out?

Peter Schravemade (24:30) Yeah, but the thing about the the one that what's it called? The one with is it Odysseus or something? Odysseus, I I went to see it, Odyssey, I think it's Odyssey. I went to see it because the hype on it is you need to see it in an IMAX cinema. it's been really well marketed and I don't know if that's true, but it's a it you know, these IMAX cameras they're like half a million to a million dollars each and they're supposed to shoot differently. That's what that's what the spike would have been. Is people like me buying into all of the newspaper articles telling us that we need whoops, sorry, interest rates.

Kasey McDonald (25:01) It is. Yes. Yeah. And the third was construction. The third was construction. So it went gambling cinema construction. and so well, housing, but I guess construction costs is where the highest killer is in terms of the inflation being elevated. and and we can see that, right? We've got builders departing, we've got d developers leaving, going into administration. So yeah, interesting that that's kind of where we've seen that slight inflation. And and but yeah, you know, it's three of the majors are now saying, but they're all saying it at different times as well. we've got them one in September and we've got two in November and Westpac are holding firms. So I guess it's just let's see what happens as we always do with the RBA, right?

Peter Schravemade (25:53) Yeah, I I I mean I gotta say I feel so judged. Ha how how the hell do rising interest rates happen because I went and watched Odyssey in a cima cinema. Like this is ridiculous. I mean, I know I know it's the rest of it as well as the gambling and the construction, but far out. I love the way I love the way economists do this, as though

Kasey McDonald (26:06) Yeah. The gambling was the highest. Yeah.

Peter Schravemade (26:11) That's normal in a society. Like we gotta put the rates up so everyone that owns a mortgage suffers. What the heck? What whatever. Let's Yeah. That's yeah. Now now

Kasey McDonald (26:16) Yep. So you all just stay home and watch your movies on Netflix. Yep.

Peter Schravemade (26:22) Can you imagine the damage that that will do to the cinemas? Like people that don't go to the cinemas, the interest rates are rise. Like what a what a croc. Anyway.

Kasey McDonald (26:26) Yeah, but did you see that article as well? Just kind of to add on to that, around that there was just kind of a piece of a lady talking around the cost of living and how it's obviously rising. And that the the c you know, kind of looking at Her house is only five years old or under five years, and how in which it was built. And it's meant to have all of these kind of features in it that support energy efficiency, and therefore then it should bring costs down, right, of bills. And she's done an analysis as around her electricity and solar bills, and it's actually higher than it's ever, ever been before. when she's got all of these things inside of the home. And but yet now we're saying don't go to the cinema. But stay at home and watch movies because we don't want you to spend. However, we're already spending inside of our four walls, right? Like with everything that's actually costing us to keep our home operating. And so what

Peter Schravemade (27:23) Hm. It's

Kasey McDonald (27:24) Do we do? Do we just become these, you know, this habitat community inside

Peter Schravemade (27:26) Yeah, I and to

Kasey McDonald (27:28) Of our four walls and never go outside?

Peter Schravemade (27:30) The the the banker that called me up the other day, I like I'd gone called me up. I'd gone for a credit card loan and they couldn't see they couldn't see anything about my employment history or my financials. And no joke, he goes, sorry, sorry, sir, we've declined you for this. I I totally get it, because I'm I'm an independent contractor. He needed 10 years of financials, he didn't have that. I wasn't gonna send them through, couldn't be bothered. It was one of those things, would you like this credit card? I clicked, yes. He goes, Maybe you should consider having one less cup of coffee a day. You condescending I

Kasey McDonald (28:00) There you go. Hey.

Peter Schravemade (28:03) Won't say what I said, but what the Anyway. We gotta I'm gonna if I if I say

Kasey McDonald (28:09) But yeah, there we go.

Peter Schravemade (28:11) What I thought about that guy, we're gonna get a we're gonna get a ratings licence issue on this. So we need we need to move on. Let's move on. Yeah.

Kasey McDonald (28:16) Well, don't hold your tongue. Yeah, absolutely. So our great friend Arvi Khan was in the news again. but in a great way, right, talking about this two year lease you know, mandate that they're trying to bring in. So Pete, talk us through yeah.

The ACTU's two-year lease mandate

Peter Schravemade (28:33) Yeah, well we spoke about we spoke about it last week, right? We had the ACTU the idiots are suggesting that we we we put two year leases on everything. And you know, we were talking about this going I it last week where we where we got to is we feel that that totally should be owner discretion as to whether we put a two week

Kasey McDonald (28:52) Hundred percent.

Peter Schravemade (28:52) Sorry, a two week, a two year but like I can just see this being an issue and I think Arvi has agreed to that. Like what What most of the the the pro the landlords will do is if you if you say, right, you're gonna put a two year cap, remembering that we can only raise it once a year anyway, so we can't raise rents as landlords can't raise rents within twelve months in most jurisdictions in Australia. And then on top of that, we would have a two year lease. So it's kind of contradictory to the first one, where, you know, maybe you'll be able to raise it midway through the lease. You could build that into the lease, but where where I think it will matter is I think anyone will go, okay, I want to soak up what could possibly be the worst case scenario for interest rate rises, which is the story that we talk about about just before this. So how many could we expect? Well, we might expect six. Let's put our rents at this and I'll think you'll see more than that for tenants, the thing that they're hating at the moment is these large incremental jumps that are forcing them to move.

Peter Schravemade (29:57) Tenants are being more displaced now than ever before. And it's a result of that 12 month change. Like if if you're incrementally going up five dollars per week, you can actually find it. But when you've got you've got to make a call now and you won't be able to make a call for the next 12 months, a lot of the landlords are overestimating and go, Well, it's another eighty dollars to to to do this. And people are just going, I can't afford that. So we've already got one set of of barriers in place that I th I don't think is working out for for tenants. to put two years in is just crazy. I I mean, I know they say that there's an option for renters to opt for a shorter period. Renters and I don't mean to be rude about this, they're not understanding. that we've seen, do you remember that song that we had on a a few weeks ago that the ABC posted about your

Kasey McDonald (30:47) Yes. Yeah, we see right. Yeah.

Peter Schravemade (30:48) Bun bunch of tenants taking aim at landlords for you know, that's if that is the way that the average tenant tenant thinks about their landlord or the actual housing market, they're not going to be opting for shorter periods. So I c I can't see that being being the issue. And then yeah, then we've we've still got the supply and demand issue.

Kasey McDonald (31:08) Yeah. Well, I think it's absolutely needs to be everyone's choice, you know, the renter's choice as well as the, you know, property owner's choice in this regard, because there's certain sit circumstances as to why you might need to move to a location and only rent. And I think we did speak about that as well. But, you know, as a part of this, it's still not actually fixing and solving the issue that we've got. And and it's absolutely a supply issue. It's not about just saying, let's just keep those tenants in and lock them in for two years. That's actually not really helping anyone because it's going to increase those rents dramatically, as we've said. It's then going to, I guess, hold people into positions that maybe they can't be held into. But more importantly, there's all of the break lease laws under each state's legislation. So a tenant, regardless of whether or not they've signed that year for two lease, can exercise their rights under that piece of legislation and buy, move out, relocate, whatever they need to do. So they're then's just gonna leave a home vacant, which costs the property owner far more money.

Peter Schravemade (32:13) But they're not they're not they're not getting it. They're not getting it. They're just not understanding what the problem is. They, you know, the legislation has come in to say that we can only raise the rents once every 12 months. This is landlords. Landlords are exercising their right to do that. And now, because they're given 12-month breaks, a lot of them are overestimating. So, you know, what could have been a $30 increase over a period of of 12 months locked in? fifteen dollars at at six months and and another fifteen dollars at the at at the twelve month mark. you know, maybe tenants could swallow that. But what a lot of landlords are doing now is they're going, Well, we've got another twelve months and I don't want to be out of pocket for that. So I'm gonna raise it ninety dollars, which is a you know, a or or whatever that number is. I don't actually have the numbers, but the it's because we are not allowed to raise the rents when when we were previously, and now that is causing tenants to be displaced.

Peter Schravemade (33:09) And that that is their issue. We want to lock tenants in for two years. The law that was bought in previously has caused this. Let's not make another one to r to wind back the one that we've done. Just take away the first one and you'll find that I think it'll become a lot lot easier for the majority of tenants. But This is when you start getting these policy on the run. You get people who like, what does the ACTU have to do with the housing market and how are they to tell us what we should be doing over in this area? It's just crazy. It seems like everyone has an opinion now. So I like I don't I don't know where we're going with this, but Arvi raised some, you know, pretty pretty points, pretty good points about that. it's it's just a suggestion. It's not it's not even close to law. It's been pushed by an ACTU president who is no longer there, resigned. Called it's not government policy.

Peter Schravemade (34:09) I think the strongest point was vacancy is the most expensive event in property management and landlords already have a powerful financial incentive to retain good tenants, put a number on it. What does a two week vacancy plus re-letting fees actually cost an owner? And that's and that's become the biggest issue is that, you know Th there is an incentive for landlords to not get rid of and and I actually spoke about this last week. I've given longer term letting to the tenants that I have because I don't want them to leave. I think, you know, there's a there's a three to four week gap in there, or maybe at best it's two, but that's two weeks that you you don't have rent that you could. So I I don't you know, and then then Arvi Khan says nobody's asked the property manager who has to administer it whether whether it's a great idea. Like there's there's so many issues with this type of thing that's there. Should we should we move on or no? Into the next one, yeah.

Rents and the affordability ceiling

Kasey McDonald (35:00) Yeah. I think it's a nice segue though. Yeah. It's a nice segue, I think, just into the next one, right? Where where obviously, you know, Chalmers came out and said it's going to be $2 a week increase, you know, kind of over the, you know, term of your of your lease. But what we're already seeing is rents are already rising, right? Like exactly. Yeah. So we've got more than 50%. We did. We we're just like rents are just gonna go like this. Yep.

Peter Schravemade (35:19) Exactly what we said would happen. We we said it we said it in the first week. We you and I said it in the first week. We said rents will go up. And at that stage they were saying only eight percent. That was what they were saying. They're saying maybe eight. Now it's thirty. Thirty percent. my gosh.

Kasey McDonald (35:33) Yeah, now it's 30. Yeah. And then yeah. Yeah. So on average, the so on average, and I I I last looked, you know, probably a few weeks ago, but thanks to Cotality, I think houses are now up to national average of about seven thirty a week. and you've got apartments at about 620 odd. So on average. That is about 56% from an apartments perspective. 56% of someone's take-home income is going to rent already. And so we've already seen just since the budget release is that those rents have already gone up. They were at only like 700 as averages. We're now going to 730. So we've already seen those increases go. so in Sydney, it's about 69% of their weekly pay and goes to to Paying rent. So we're looking at where that's gone already. and then obviously as things now continue to increase as to what that's going to look like. So Tim spoke in episode two or three about tenants already being at their affordability ceiling. And that was back in May.

Kasey McDonald (36:47) That was before, that was just after the budget conversations occurred. And now we're already seeing those weekly rents increase far more than $2 a week. We're talking that they're going up 20, 30, if 40 in many locations, and they're going to continue to rise even more.

Peter Schravemade (37:07) Yep. And the the real the real outcome of this is we'll see more homelessness. Like that already I can't believe what I'm seeing around Queensland and I know it's the same in in the other states. There's just a ridiculous rate of homelessness which is terrible, is really terrible. It should Moving in, yep. Yep.

Kasey McDonald (37:21) Absolutely. And families move more families moving in together, right? Like we do already see that. And I I don't know if you, you know, what we're going to find then, unfortunately, is situations that have occurred across many years is that they, you know, many families, you're going to have two or three families with children, all living in a four bedroom home. There's not enough bedrooms, there's not enough bathrooms. And so then they start to live in garages which are not compliant. or classified as bedrooms,

Peter Schravemade (37:49) Poland and it makes

Kasey McDonald (37:51) There's no smoke alarms, you know, so then we're just going to end up in a battle of other components of rental legislations not being met by renters. Owners can't keep up with it because now they're going to have to make their homes compliant and import different standards to accommodate the fact that instead of having people not residing with a roof over their head, is that we're going to have more and more families having the need to live together because they just won't be able to afford the rent.

Peter Schravemade (38:19) Yeah, and I mean we had Josh Deckart on from Zapiio last week. He was talking about the fact that one of the biggest plays at the moment is to put a granny flat on a house. And and like while I I'm fully in support of of that kind of move, especially from an investment perspective where it brings in in more money. What what that's actually doing is making a mockery of of the town plan. So the these town plans have included a specific this is the amount of people we see dwelling on this, because that has ramifications for the plumbing. the the electricity supply, the water, the roads that are leading in and out of the place. And that's why we're seeing peak hour traffic now here in the in South East Queensland that starts at four a.m in the morning and goes through to eleven, if we're lucky, and then kicks back in at one PM in the afternoon and goes through to seven. It's because we've got, you know, sa in some cases, double the amount of people living on a lot that was only designed for three and a half. three and a half people. That and sorry.

Peter Schravemade (39:15) I know we can't cut people in half, but this is the way they work in council. They say this lot is approved for a 3.5 or 4.7, and it's not like we're going to get a 4.7 in there. The way they divide it is this one has five and this one has four and it works out in the wash. But you know, we're seeing that kind of stretch everywhere. we're seeing Victorians, you know, abandon their state in huge numbers and come up to to Queensland just like I've I've never seen before. And that shelter issue is becoming even bigger on the back of that. you know, everything seems to be breaking. And I I don't know, the more that we talk about this, the more we sit here and go, Why don't we just build more houses? It seems like it seems like that would be y it yeah, that's that's right. Like we've got

Kasey McDonald (39:54) Yeah. And then we try and the developer goes into administration.

Peter Schravemade (39:58) This whole vicious circle happening today. And now we've got guys like the ACTU who know nothing about rentals going, it's the problem is the greedy landlord, we're gonna put another two years on that, which will exacerbate the housing market. What we're talking about at the moment with moving is a result of policy on the run only twelve months ago. Now we're trying to do some more. It just seems, it seems crazy. And there are some areas that are really impacted by this. Like the Gold Coast is just nuts at the moment. If you're earning $130,000 a year, you can't afford to rent on the Gold Coast. Regional Australia is no longer a rental refuge in many areas. Rents are now pricier there than capital cities. This is all coming out of that article. So The NAB's modelling is that rents in Sydney and Melbourne are rising twenty five to thirty percent over two years. Just nuts. Just nuts. Just crazy. and I don't have

Kasey McDonald (40:53) Absolutely crazy.

Peter Schravemade (40:54) I don't have much more to say say about that other than, you know, it's a pretty disgusting scenario for everyone to be in.

Four vacancy rates, four different answers

Kasey McDonald (41:00) Mm-hmm. Hundred percent agree. next story, I guess we're kind of staying on the, you know, property management train here is around vacancy rates. you actually uncovered this one, Pete. So I might get you to take the lead on it and talk us through what it is that you uncovered. You did uncover this, yeah.

Peter Schravemade (41:13) Uncovered. Yeah, well well, we look at we look at all of the news articles for Before the Weekend that go out and we kind of weigh them up as to whether they're newsworthy, whether we need to bring them to obviously this is a podcast for property professionals, whether sales or rentals. And this week there's some interesting stats. I was reading them, not really sure as to whether I was getting it right or not. But the the bigger there seems to be a fairly big outlier. But the the the issue is that the numbers don't add up. So we've seen two articles and those articles we'll put in the beforetheweekend.com episode. It'll be on the page so you can go and have a look at it. where the two two of our big our big firms in Australia, REA or PropTrack in this instance, and Domain are both put out figures and they're conflicting and I don't I don't know which one is correct, but I'm going to have to side with actually if we go with Cotality because they kind of sit between the two of them. Yeah,

Kasey McDonald (42:16) Mm-hmm. In the middle? Yeah.

Peter Schravemade (42:18) But l like if we just look at the figure, say Domain have released a vacancy rate for Sydney saying one point one percent, SQM say one point seven, PropTrack say one point seven, Cotality say one point nine. who's right there? Well, the outlier appears to be Domain, and and for Melbourne, Domain is saying 1.2%, SQM 1.7, PropTrack 1.8, Cotality hasn't released for that. And we've got similarly different figures for for vacancy rates in Brisbane. with with Domain saying 0.6, close to half a percent, SQM are saying 0.9, closer to one, PropTrack are saying one, Cotality are saying 1.2. So Brisbane, no one seems to know where the hell the vacancy rate is. There is a massive difference between two percent and half a percent. And that's what we're seeing there, and so on and so forth. It there's but there's a huge discrepancy across the board. And I'm not really sure, you know, it it may not be Domain that is the outline here. They they might be right on the money. I don't know. I'm not the numbers guy. Might be worth getting Tim Lawless back in to go, mate. Can you can you guys have a chat amongst yourselves and sort this out, please?

Kasey McDonald (43:27) Yeah. Yeah. So

Peter Schravemade (43:29) I'll have to

Kasey McDonald (43:30) There there's something I've s sort of just seen i within this or within the article, and maybe it's around how and which people or sorry, each of the companies are counting the days. I mean, vacancy should be not just when a property goes up on the portal, because at that particular time it might not be, in fact, vacant, right? It's at what point in time does the tenant actually Exit the premises and and what's the period of time that the that property owner is not making any income, right? That's that's the true vacancy period. So I'm wondering as a part of this, is it that each of them are actually looking at counting those days all different as to

Peter Schravemade (44:11) Different time frames.

Kasey McDonald (44:12) Why they're not their numbers are so different? Like, I don't know, maybe.

Peter Schravemade (44:16) Yeah, I don't know. Well, I mean, they they are even disagreeing about which city is in trouble. So Domain are saying point six for Brisbane Cotality one point nine, a three point two percent gap, same city, same quarter. Darwin Domain point one percent, PropTrack point nine, a percent, a ninefold gap. That's a massive difference in in I know it sounds like small numbers, but this these are not small. Cotality named Sydney and Brisbane as the loosest capitals. Don Domain and SQM both have Brisbane among the tightest. And but one thing that they're all saying is that all four are loosening. so I mean, at least we have a trend we can follow. But but

Kasey McDonald (44:57) Yeah. There's one.

Peter Schravemade (45:00) It it it's it's it's interesting times. I don't I don't think I've ever seen those figures not line up in that way.

Kasey McDonald (45:07) No, I I'd I've never seen them be so disjointed to be fair and that there's just such a gap or a or a disparity around what those numbers actually look like. It it's normally fairly consistent, right? I guess across all three. So that's why I kind of raised the thought, I wonder if it's how and which each provider is looking at their kind of methodology behind it and how in which they're calculating it. What does a vacancy rate actually mean? are they taking it from bonds data? Are they looking at at what point in time does the tenant actually vacate? Where are they then getting that data and statistics from? So yeah, kind of interesting to see where this is going to play out.

Peter Schravemade (45:48) Yeah, yeah. And if you're a property manager in any of those areas that we've mentioned today, send us an email. Hello Before the Weekend. Tell us exactly what you think is going on and which one of those you agree with. if if you care. Maybe they're numbers that you don't care about. Let's let's let's move on. so I

Rob Mandanici answers the rent cap case

Kasey McDonald (46:04) Let's move on. What have we got next to chat?

Peter Schravemade (46:09) Yeah, well, I I saw a Facebook post from good mate of mine called Rob Mandanici. He's an auctioneer. And he also the director of Paddington R Realty, but also the REIWA deputy president. So carries a bit of weight as to what goes over in the West. And we've had already one Perth article today, but Rob has come out swinging I mean, I think he's been quite professional. That's probably what I mean is like he hasn't come out smashing them, but he has absolutely stated that there's an article in the in the West, I think they call it the West of the which is the their

Kasey McDonald (46:45) The like news p newspaper. Mm-hmm.

Peter Schravemade (46:45) The central newspaper over there. Yeah, it's a it's an opinion piece saying that we should have a two year rental cap. The same thing that the ACTU are saying over here. And Rob is Rob has come out saying l almost everything that we say. he's I mean the lady in the article was talking about San Francisco rent and r r Rob was saying R you know, that's correct. The rent it cut rental supply by fifteen percent, but it was selectively quoted. the The numbers are right, but her framing was misleading. the IMF told Ireland to remove rent controls in May twenty twenty six, right? But understated. New York's still constrained after like she's basically gone ahead in this article and compared us our us with compared Western Australia with San Francisco, Stockholm, Ireland, New York, very similar economies. It's like no, they're they're not similar at all. But I I I think

Kasey McDonald (47:41) Not sure.

Peter Schravemade (47:44) I think I think it's an another one of those things that when we get into a scenario with rental distress, people with great ideas sometimes put them forward without actually understanding the market. but yeah, the the the whole premise of doing that looking at those other nations is very, very very interesting. You'd have to be across them. That have to be similar in what they are. And the New York rental market is nothing like it is in Perth. So I I don't even know whether it's it's it's worth listening to what that or g going and looking at what that article says.

Kasey McDonald (48:22) Yeah, that's definitely kind of a weird comparison in my view. of course, having been to Perth and San Francisco and or New York, it's yeah, definitely not the same at all. I mean, if you're maybe going Sydney, you know, like I think everyone's always kind of gone like Sydney, Auckland, you kind of, you know, compare looking across the ditch there to our Kiwi friends. you know, Sydney, you might go, you know, a a smaller scale. you know, kind of San Fran like kind of aspect, downtown LA, so to speak. But I just, you know, there's just I just don't think that it can compare at all. I I don't know that we should be comparing to America, to be fair.

Highland Property doubles its rent roll

Peter Schravemade (49:03) Yeah, I I I agree with that. I think it's I think it's a difficult comparison. should we go on? Should we move on? yeah, so this this story's one that you picked up.

Kasey McDonald (49:13) Mm-hmm. Yeah, I I saw a pop in to my inbox and it's in regards to property management, you know, not being classified as the second cousin. the story is from the CEO of Highland Property. and you know, he's showcasing in that article, it's on Elite Agent if ever anyone would like to take a read of the article, but it's about how they doubled their management portfolio. To around 5,000 properties by simply running property management as a standalone business unit, as opposed to thinking that it's just a tack-on to sales, in how he kind of talks about it. So he really dives into what the operating model is, and it's and it's not about the growth. So he doesn't actually talk about, you know, we've organically grown this and this is what we do from a, I guess, a BDM or go-to-market strategy. This is simply about it.

Kasey McDonald (50:08) Owning its own P&L, cost centre, the technology. So everything comes under one. the cost to run that property management department, the revenue it's generating, and everything is within that. And then that has allowed them to look at the revenue it's generating, what tech they actually need, and has indirectly allowed them to actually double. Management's under portfolio instead of just putting everything under sales and just thinking property management's, you know, its own little kind of beast in the corner. So yeah, I just felt felt it was just really interesting with you know what's obviously happening within our real estate landscape right now and in in every marketplace I'm going to on the ground. I'm certainly hearing the buyers are becoming patient. The listings are harder. Well, you know, sellers are going, what should we do? Buyers are holding back. So now is the time to actually, I think. look, take a kind of, you know, look under the lid here and ha and assess, you know, what tech stack have we got? How are we operating our businesses? And are we generating the best, you know, I guess profits and revenues for ourselves as business owners. Yeah.

Peter Schravemade (51:17) Yeah, I've I've I I I don't know what I think about this article. I I obviously this is one CEO and one agency and I I do agree that there are a lot of real estate agencies now treating that, you know, the the cash flow. Typically when the market goes flat, the cash flow from property management rent roll will will run the business. So that that side of the article I don't I don't disagree with a lot, but I've I've actually seen quite a lot of sales and I don't know whether the sales are linked to formerly sales agents or real estate. There's a lot of real estate agencies not around today that were around two months ago. And and and I have seen a lot of sales of rent rolls go go through. Now I don't know whether that's because of of changes in the market, compliance that's coming in. We've had all of the AML compliance. We've also had, you know, I come we're in a completely different market because of the tax changes and the butt budget that was released.

Peter Schravemade (52:14) So I don't I don't know whether people are selling their rent roll because of that, but there are a lot of there are a lot of people out there at the moment actually buying rent rolls going to that. And and and it's it's very, very interesting. You know, I I saw one of the guest speakers at Laing+Simmons disclosed the other day that they had just bought a a large rent roll for about 11 million dollars and and he was lamenting the fact that interest rates were on the rise. Because, you know, that's obviously a loan that they have to pay back against the balance sheet. So seems to be that there's there's a bit happening at the moment. There's a lot of a lot of rent rolls changing hands, but definitely in the agencies that are solid and going to ride this wave out, they definitely seem to be coming to the fore as a very, very useful tool within that agency to drive cash flow and keep the business afloat.

Kasey McDonald (53:03) Yeah, absolutely. But I think also just to kind of add to that, for those that maybe haven't got this type of a structure, I think it's then one to also look at doing and considering, because then then it might be that you're able to look at where you can be saving some monies and obviously have some better figures showing on your balance sheets. But more importantly, you're then leveraging off your existing portfolio to look at what are our growth options here, right? So that when we are getting through these. kind of, I guess, market lows, it's it it is our rent roll cash, right? That is obviously keeping the business afloat. So if if it's, you know, we're kind of stagnant because we've got no new investors buying in market or they're not certainly increasing their portfolios, you know, it's about let's get under the hood, let's look at how we're operating. I just, you know, I felt that this was also just a good way for business owners to be considering, considering how could they do it slightly different to help support the growth?

Kasey McDonald (54:00) And that could be As you said, it could be buying that other rent roll. You know, adding two or three hundred, five hundred onto your existing portfolio can absolutely be a nice cash injection and increase that revenue considerably. More importantly, absolutely build your asset wealth, right?

Deposit flicking, week three

Peter Schravemade (54:18) Yeah, definitely. Yeah, and I I I agree with all of that. I think I I think there are a lot of real estate agents looking at that very seriously at the moment, doing it. let's let's go into the next story. And I'm not gonna dwell on this one because we've we've hit it for two weeks now. So the the this the story is it's basically more noise around the Jared Zak and Dott & Crossitt conveyancers and solicitors with the with the Australian Institute of Conveyancers. We we aired something two two weeks ago or two episodes ago about deposit flicking, and we aired more on the response to that. There'd been an injunction that was removed. there's no real changes to that at the moment. aside to say that there's been a couple of I think there's been a couple of heavy hitters that have come out since then. So the New South Wales Off Office of Fair Trading, Tim McKibbin, has has openly said they have asked the Office of Fair Trading in New South Wales to to rule on Is this a, you know, is this a problem?

Peter Schravemade (55:19) And the peak body, he's basically saying the peak body don't have an answer for that. So it's an it's an interesting one. But they're they're pointing to the statutory fund. So if you haven't followed along, deposit flicking, I'll I'll explain it in in 30 seconds. Instead of putting it into a trust account as you would normally do when you're going to buy a house, there there has been a company that has been holding it in their own account in order to accrue the interest. That sits in there. Now that the interest normally goes to rectifying issues with with deposit trust accounts in the first place. So when you hear in the news that this trust account has been misappropriated, it is that fund that steps in to to do that. So Tim McKibbin has been asked for comment as to, and he's like, Well, we aren't the regulator in this instance, it's not us to turn around and say, whether it's right or wrong. And we've asked the regulator and they're saying they don't know.

Peter Schravemade (56:17) And so now it's over to the statutory fund. And the question is to ask them is is a deposit in a third party account is that is that legal and and in this instance I believe both parties have agreed to it, both the buyer and seller. So I I'm not sure I don't think the story is anything to talk about. I don't think we're any closer to the answer on that. It's more of watch and see. We've got our eye on that one and we'll see what happens as as things get further. I've picked I've picked up this next one though from across the ditch. this is a New Zealand one and we we we are primarily aimed at Australian real estate agents, but I thought this one was interesting because of what was going on over there. There's a report. So this is taken from One News R and RN said Sammy Carter has done

New Zealand names and shames

Kasey McDonald (57:02) RNZ, yep.

Peter Schravemade (57:03) Yeah, has done a worst property managers named and shamed in a new report. So They're saying that there's been 3,000 tenants surveyed and about 500 have named their property manager. More than 40% of renters told their homes, of renters told their homes met healthy home standard, still had mould, dampness, or draft. So let me say that again. 40% of those tenants had said that their health, that their homes had met the standard for being what is called a healthy home in New Zealand. But they still had mould, dampness, or drafts. So indicating to me that their tenants are probably saying they don't meet ho healthy home standards, but on paper they have. More than half of the homes, and they've they've named companies. I don't wish to name companies. I don't I don't think that's fair. Those companies can look at that in their own time and decide whether they've got a problem with the stock that they bring on board. 25% reported.

Peter Schravemade (58:02) Discrimination from a landlord or or a property manager often focused on family status or beneficiaries, which is not cool. But hey, let's let's let's discuss. And the recommendations are a rental warrant of fitness. warrant of fitness, isn't that something they put on a car? I think that's the that's the Kiwi version of of Roadworthy, isn't it? Have you got a warrant of fitness? Like yeah, like I

Kasey McDonald (58:20) Yes. Yeah. Anyway, yeah. Yeah, it is a fitness correct. Yeah. Yeah.

Peter Schravemade (58:27) I mean New Zealand's just slap you they just slap this word warrant of fitness round in anything. Like right now I wouldn't get one on my body. There wouldn't be a warranty of fitness right here. So the Kiwis love it. Like, let's what does that even mean? We're gonna we're gonna slap a a warranty of fitness on my house.

Kasey McDonald (58:37) No, there wouldn't be. But yeah. I I think the key thing if I can fitness if I can just add here though, there's a slight difference for those that don't know and who's listening today between Australia and New Zealand in terms of investor property management space. In Australia, we have let's say it's an 80-20, and that means 80% of those properties. Are professionally managed. And it's the other way in New Zealand. So it's a smaller marketplace in terms of those that are professionally managed. And over there, the private landlord market, which I think this is probably, you know, while the renters have been surveyed and it's kind of about them under businesses or property managers that they've named and shamed. it'd be interesting to see what the flip side of the results were if they actually went and did it from a private landlord rental perspective, because it's actually probably a 70-30 split in New Zealand. So 70% of the rental properties in New Zealand are privately managed.

Peter Schravemade (59:50) Yeah, right. Yeah. Well, I'm it it did say that it said something about that in the in the in the title. So it said more than forty percent. no, how many did it say had named that property manager? About five hundred of the three three thousand. So you know, there's two and a half thousand people who haven't named that pro property manager and probably couldn't, is what I'm guessing. I see that mates from another real estate agency over there, I won't name them property management are actually saying that they walked away. From nearly 170 managements because they did not meet the healthy home standards. So again, I mean, I I think we see this over here in Australia. If if you've got a property that that is it sits beneath minimum standards, that's what we're calling them here, mi minimum rental standards, or doesn't have a warranty of fitness on it, as the Kiwis like to call it, then perhaps you should consider sacking that because of the ramifications and what that does. Like you've got tenant health in there, you've got the amount that you're going to be called for maintenance on those properties.

Peter Schravemade (1:00:50) And then it probably means that you've got a tenant who sorry, a landlord who's not servicing the property in the way that they probably should, recognising that it needs the maintenance and the so, you know, I I I think this this probably the survey is just highlighting something that we are already aware of across here in Australia. should we move on?

Kasey McDonald (1:01:07) Mm-hmm. Yeah, absolutely. What I don't like about it though, just to close out, is of course, you know, that discrimination piece. And I do, I do hope that, you know, I do hope that, you know, when we are assessing any renter, regardless of where we're located in the world, that, you know, we're looking at the true facts of that application and we're presenting that through. But of course, again, if we have got rental providers within our marketplaces that are saying, No, I am not going to rent to them because of X and Y and that is forming discrimination. You do need to think about whether or not that's the type of owner and/or property you want to have on your portfolio.

Peter Schravemade (1:01:49) Yeah, agreed. Agreed. let's move on. So the next story is about two is it's consolidation. So two acquisitions. You we've got Herron Todd White, the valuer, and they've acquired Mitchell Brandtman. So for those of you who don't know, Mitchell Brandtman is a quantity surveying and construction cost consultancy. So they are linked. Like it it pretty much puts Herron Todd White earlier in the development and construction area than they previously have been. Herron Todd White would normally come in later than that. But I it's for me, it's it seems like a pretty good merger if if you like. It seems like it's it's intentional. And then the second one that we've got is Ingenia, Ingenia Communities. So those of you who don't know, Ingenia is largely I won't say they're la well they are. They're really in the seniors, the seniors housing kind of estate, but they've also got campsites and and other things that they're well known for and and they have Proposed it's only proposed at this stage and nine hundred and ninety two and a half million dollar acquisition of Peet.

Consolidation: Herron Todd White and Ingenia

Peter Schravemade (1:02:52) Peet, as in P-E-E-T, not me. I would love to be valued at nearly a billion dollars, but that's not the case. it Peet is a Australian real estate. Well it ha yeah, maybe. Well well, for for that

Kasey McDonald (1:02:55) Mm-hmm. It just goes back to your fitness, your warrant your certificate of warranty of fitness. If you did that a little, if you kind of worked on that, you actually might be worth that. Let's, you know.

Peter Schravemade (1:03:09) You want f give me an amount of money and like that and I'll work on that. Peet's an Australian real estate property development company that and they they are very much in the same industry, slightly different in that they create l master planned communities, but it it it tends to it tends to be again another both of these aqua acquisitions or the mergers if you want to call them, seem to be in the same field and make a lot of sense at at this particular point. I mean I'd question the market conditions, but there's if they've got the money it seems to work.

Kasey McDonald (1:03:44) Yeah, I think the underlying here for us within our sector is to look at, and I think we have also, you know, mentioned this throughout the podcast is that it seems to be, you know, the bigger businesses are getting bigger. and the smaller businesses are those, you know, either deciding to merge with those bigger businesses or they're deciding to close doors, right? throughout this. So and I think, you know, from we're seeing that, I think, in the real estate landscape. And it's, you know. the same that's happening across w a complementary industry as well.

Peter Schravemade (1:04:17) Yep. Yep. And and the final article that we had before we go to what we're calling quick hits at the moment, which is just the stories that we don't get a chance to cover in depth, is is the story you actually raised it earlier. it's somebody has a rental built in twenty twenty two described as a six-star energy efficient home with the split system. which is still costing around $140 to $200 a month in winter electricity while reportedly dropping to thirteen to fourteen degrees overnight. It's really a this study is is almost a energy or ESG study into houses. and it might be interesting to get our mate Cecile Weldon on. I'm sure she'd be happy to to talk about this. but the research is a study of a hundred Australian homes found Eighty one percent of them were below eighteen degrees on average across winter. and where the eighteen degrees come f comes from, that's the World Health Organization's guidelines put eighteen degrees is the minimum safe indoor air temperature, which is that's that's why that number is featured. I think your line was al along the line of maybe housing affordability shouldn't be measured in what it costs to get the keys. And I know Cecile is very much on this one, hey.

Six stars and eighteen degrees

Kasey McDonald (1:05:36) Mm-hmm. Yeah, definitely. I actually saw some pieces and resources that Cecile's kind of distributed. So I actually think it would be really great if we did get her on to talk about, you know, what we are looking to do within the within the sector around the energy efficiency or what she's certainly recommending that we do across both sales and property management to to really bring to the forefront to both renters and buyers and and of course, you know, those investors and sellers within the market. Around what this actually does mean. it's not just about putting a split system in and, you know, she does kind of dive into that. And it's not about this just give it a, you know, six star or a five-star rating, but it's about, I guess, the scoring, you know, and each particular feature kind of has that score rating to then kind of bring it up to that, to that number and what it is that's going to be expected. you know, a house potentially is going to now sell for more if it's meets particular ratings. And so she's done some a amazing research on this. So yeah, it'd be great to get her on and talk through this.

Peter Schravemade (1:06:38) Yeah, I well I I'm I'm just even marvelling. I we moved into a new house about a year and a half ago and the difference between this house and the the forty or fifty year old house that I previously I think it might even be sixty is just insane. We don't we don't feel the outside weather in this house like we do. It's just insane how much construction has has moved in that period. And I I know I shouldn't be surprised by that, but yeah, d it does make a massive difference when a house is built to to spec, like we're using things like heaters and air conditioners less. and and I can see how that might mount up if you're in, especially some of the older ones, the old Queenslanders, which, you know, we were designed for cool breeze, which you're not getting anymore or or something like that. So yeah. shall we go into our quick hits?

Quick hits: PEXA scam detection collapses

Kasey McDonald (1:07:25) Yeah, let's hit it. So quick hits number one. I

Peter Schravemade (1:07:27) Yeah. Pad the pan.

Kasey McDonald (1:07:30) Like it, yeah. Fart on the fun. so only forty-one percent of Australians think they can spot a property scam. That's down from 51. Okay. So PEXA, Settlement Scams Index brought to the forefront that forty two percent failed to spot any warning sign. 99% could not identify a fraudulent email address even after being told it was fake. and on I guess the eighth, I think it was the eighth of August, Westpac banker intercepted a phishing email that would have cost a young mother one point two million dollars. So yeah, kind of an interesting fact there that we still today aren't quite aware of, you know, spamming phishing emails, you know, and are kind of identifying those fakes, right?

Peter Schravemade (1:08:13) Yeah, I think I think they're quite difficult. Actually, I think in that Westpac bank ad, the Yeah.

Kasey McDonald (1:08:16) Yeah. They're getting the spammers are getting better at it, I think. Yeah.

Peter Schravemade (1:08:20) In in that Westpac bank ad, I'm I not advert the the article about the Westpac bank is is I I know that the Westpac banker didn't spot it at first either. They'd made a a call first and that call triggered them to look at it the second way. So yeah, they they are very difficult to spot. I've seen a few of them in my time and yeah, I've been called into an agency to actually investigate one of those exact phishing scams and It it was almost undetectable. And yeah, it's just to be vigilant because the next the very next article is there is an agency in New Zealand, and they are investigating a CRM breach. So a hacker known as twenty nineteen. love the fact that they've they're living in the past. You mate

Quick hits: a New Zealand CRM breach

Kasey McDonald (1:09:09) Mm-hmm. Can't you say?

Peter Schravemade (1:09:12) Buddy, I don't want to tell you how to do it, but we're in 2026 now. You might need to update that that name. 20 next minute Before the Weekend becomes a target for 2019. Okay, 2019. I'm sorry. It's like whatever. Okay, a hacker no one is only is tw

Kasey McDonald (1:09:26) Yeah. Luckily we don't have a software platform, right?

Peter Schravemade (1:09:31) That's right. Well, we kind of do on our website. He could he could mess with that. But 2019, whoever you are, it posted the breach on on the 18th of August offering names, emails, physical addresses. for sale on an underground forum. N N Z S I R. I don't know what that is, but I'm assuming that an acronym has something to do with the Security and Exchanges Commission over in New Zealand. Confirms it relates to data held within a third party software platform, a CRM. And it disputes the hacker's claim of one point six million contacts. So there's there's a bit of a dispute as to did you steal what you stole. but regardless, we will we will move on.

Quick hits: a billion-dollar agent joins Ray White

Kasey McDonald (1:10:12) Yeah, we've got I I guess a movement across the industry in terms of one of the I guess top sales agents in terms of sales annually at $1 billion, has joined the Ray White franchise group in Sydney, in the suburb of Walara. So we're definitely seeing those movements. And I think, you know, as a part of that, he's done 400 plus clients as an addition and has done a billion dollar plus in sales annually, which is just an outstanding result. Name the tech as to what was the drawcard in making the move. And that's Ray White's NurtureCloud portal and their CRM that Ray White have developed. So yeah I I think a really huge recruitment story and just showing that, you know, I guess agents are looking for platform, they're looking for you know they're kind of independence. They're looking for and and making choices over what you can offer, I think, i within those franchises as well. So yeah, b a big move for the Ray White group.

Peter Schravemade (1:11:18) Real and RE/MAX mergers completed 880 million, 180,000 agents. it's a it's a interesting one for me because I think RE/MAX has bought the bulk of the agents, but real Real operators might disagree with with me on that. And all of a sudden Real are trading on the Nasdaq, they're gonna love that. Internally, behind this story, I'm I'm I've seen the dismissals like nearly the entire RE/MAX office staff have been I I think they've been given their marching orders. I know I know a lot of these people. I'm in a commercial brokers social group over in the the US and I've seen a lot of disgruntled RE/MAX clients as as losing their support person, their c their contact support person saying that she was doing an excellent job, but is now no no longer there. It'd be interesting because like there are some still remaining there, like RE/MAX had perhaps one of the best global networks out.

Quick hits: Real completes the RE/MAX merger

Peter Schravemade (1:12:17) Out of all of the franchises that I ever worked with, you know, they had I I think a fairly sophisticated corporate structure where they had people responsible for continents and they would regularly send them out and they'd regularly visit the area. And that that's st that's still occurring. I know most of those people because we dealt with most of the continents in my former role in PropTech. and so those people are still on board, but there has been big changes at the The RE/MAX head office and it'll be interesting to see what they keep and what they get rid of.

Kasey McDonald (1:12:48) Yeah, absolutely. I think we touched briefly on that in our hits last week as well. So now this is the confirmation that it's all gone through and it's all confirmed. So but next one actually is we're going back to WA. Nice to get WA in the headlines this week. but Consumer Protection WA has find has fined Perth's short stir short stay provider. God can't get my words out today. and so so a private landlord, so not through an agency. I want to I absolutely do want to make that clear that I read that in the article, that it was a short stay provider for advertising without the mandatory registration number. So it's the first enforcement since that registration came into compulsory, compulsory party in January 2025. So basically the publications and booking platforms are also prohibited from publishing ads for unregistered properties.

Quick hits: WA short-stay fine, Sydney's lockbox ban

Kasey McDonald (1:13:43) So they're coming under that same regulation and and legislation as we do as being professionally managed or long-term, long-term property management as well. So nice to also see that, you know, the the REIs and the consumer affairs and those governing bodies behind the scenes are also looking at that private space, they're looking at short-term stays, they're looking at everything within the industry to ensure that we are remaining commodity. client. So yeah, watch this space. There could be more to come, I think. especially WA seemed to be the first off the off what I've seen in media, the first cab off the rank to publicly announce that they've fined a short term provider.

Peter Schravemade (1:14:23) Yeah, just on the back of that, Kasey, I see this week Sydney City has outlawed lockboxes. You know those little, you know those

Kasey McDonald (1:14:29) Yeah, I saw that. Yeah. Yeah. Yeah.

Peter Schravemade (1:14:31) Little lockboxes, that short term stay providers and it's largely an aesthetic thing. They're just saying they're ugly. They end up on the front of all of these buildings and we see them all the time. I mean, there's there's so many digital lock providers, it it that that that seems like a moot point to me now. It should be. but they're saying that they're gonna confiscate them. So I don't know how that works, whether there's a dude with an angle grinder running around cutting them off and they're gonna impound. Impound was the word. Sorry, sir. Your lockbox has been impounded. But can you can

Kasey McDonald (1:15:00) Is being impounded, yes.

Peter Schravemade (1:15:01) You imagine turning up to a a Airbnb or something similar or short-term rentals in Sydney and and trying to get in and the lockbox isn't where they say it is at eleven PM at night? That it's just gonna be a dead set nightmare for some people. So if you've got a short-term rental in Sydney, figure get your act together. one more topic. So one more, one more to get through. So Pitcher Partners published its submission to Treasury on the 26th of August. And this is regarding tranche two of the CGT and negative gearing legislation. Its concern isn't whether negative gearing is good or bad. It's not making judgment on that. It's it's the s the deemed sale and the reacquisition framework, which it says, gives rise to a broad range of interaction issues with existing provisions through the tax law, many of mi which remain unresolved and could increase compliance cost and uncertainty. So that they're saying they're saying that like the day it it's coming up for July twenty twenty seven. Every CGT asset held at thirty June twenty twenty seven is deemed disposed of and immediately reacquired at market value. No tax is payable at that moment, but it means a market valuation as at thirty June twenty twenty seven.

Quick hits: Pitcher Partners on the 2027 valuation cliff

Peter Schravemade (1:16:13) Becomes load bearing for every investment property in the country. And that's a very large, very defeatable piece of work heading towards valuers and agencies. And almost nobody's talking about it. We haven't. That is worth bringing up on our next show. We should get a valuer in to talk about that. And I think I know just the guy. So that that might be for us next week. But that closes out our show for Friday, the 28th of August. It's been really great to have you guys with us. and thank you, Kasey. I feel like I've seen too much of you this week. Or maybe the feelings mutual. But it's good good to have you down the other end of a camera rather than in my face telling me what I should be doing. snap. snap snap.

Sign-off

Kasey McDonald (1:16:54) N now I've got to think now I have to think of a a a good one to get you back on with that one, Pete. Of course, of course, right?

Peter Schravemade (1:17:00) I'll be in short you white.

Kasey McDonald (1:17:02) In closing in closing out Before the Weekend. Yeah. You just you you held it in all podcasts today, didn't you? You did, right? You were waiting right till the end to just go, snap I can get her now. Yeah.

Peter Schravemade (1:17:12) It just it just came to mind. It seemed to be appropriate there. But wherever you're listening to us, don't forget you can get you can subscribe. It it'd be wonderful if you did subscribe. We we we had a jump in listings last week that we can't explain. something has happened that double double the amount of people are streaming our services now, which is a good thing. How would you know that? Well, for whatever reason.

Kasey McDonald (1:17:31) Well, they don't like listening to you. They prefer to listen to me and see my face over your face, right? Yeah. I've been analysing it. I've been kind of looking at who our subscriber base is.

Peter Schravemade (1:17:42) Have you now. Have you now? Well, wherever you're listening to us, you can get it on all of the majors. And don't forget, you can go to beforetheweekend.com. It's under episodes, and this episode will be up hopefully not too far from us recording it now. We really appreciate you being on online. If you've got something you want to say to us about it, hello@beforetheweekend.com. send all your complaints to Kasey. Send the good news to me and and I'll I'll deal with that. but thank you so much for being on and wherever you are this weekend, whatever you're doing, we hope you have a a successful and prosperous weekend. And Kasey, once again, thank you for joining me this week.

Kasey McDonald (1:18:17) Thanks, Pete. happy selling, happy leasing, everyone on the weekend. Stay safe. And that's a wrap on Before the Weekend.