July 2009

Energy efficient house to cut your power bills – ceiling insulation for free

by Chris on July 29, 2009

Did you know that by installing ceiling insulation and solar hot water system, you can cut your power bill by $200 – $700 a year? That’s exactly right, and here is the best part – you won’t need to pay a dime for the insulation or the hot water system.

Many of us, and I guess there is nothing wrong with admitting it, care about our family budgets first and about environment second. Bearing that in mind, our government came up with Homeowner Insulation Program.

A lot of Aussie homes were built a while ago, when ceiling insulation wasn’t a standard and when nobody knew the term “global warming”. Simply put, if your home is hot in summer and cold in winter, ceiling insulation is the most effective and cheapest solution. It is so effective that you can save 40% on your heating and cooling bills.

From the 1st of July homeowners can have their ceilings insulated for free, courtesy of Australian government. By participating in so-called Homeowner Insulation Program, you can get assistance for up to $1600, without having to pay anything out of your pocket. An estimated average cost of insulating a house is $1200, which means that you can be reasonably sure you won’t have to pay anything.

Here is how to arrange an installation:

1. Visit this website and make sure you’re eligible.

2. Ring 1800 808 571 to find an installer(s).

3. Contact the installer to get a quote. Better yet, speak to more than just one.

4. Choose the best offer and arrange for the installation.

If the total cost doesn’t exceed $1600 – no out of pocket expenses for you. The installer will finish the work, you will sign a Work Order form and they will get paid by the government.

What if I am just renting, you say, do I miss on an opportunity to pay lower energy bills? No worries at all, there is a solution for tenants and they too can get the house insulated. The amount renters get to insulate their homes is less, a $1000 only – but if you’re lucky and the house is not too big, it might just be enough.

The process of arranging an installation for tenants is almost the same as for homeowners, except they need to get permission from their landlord. Read this page for eligibility requirements and detailed information.

And the last but not the least – if you had your house insulated already, you can still get a rebate. If your house has been insulated between 3 February 2009 and 30 June 2009, apply for reimbursement and get a $1600 back. You would be crazy not to!

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Periodic tenancy vs fixed term contract – which is best for tenants?

by Chris on July 27, 2009

When you sign a rental contract, usually it will be for a fixed term tenancy. Fixed term means that there is a period of time where you can’t move out without breaking the lease and paying the costs associated with it. In most cases people sign such contract for a year.

Imagine that your 12 months are about to end, you’re still living in that house, unit or apartment with no intention to move out, and the estate agent calls and says: “Your contract is approaching it’s termination date, why don’t you come by the office and sign a new one”. And you know what – there is one thing he forgets to mention.

You don’t have to sign a new contract. You can stay right there, continue paying your rent and not sing anything, and still be a lawful tenant because there is a thing called “periodic tenancy”.

Periodic tenancy means you are renting on month-to-month bases. In your original contract one of the clauses is about tenancy of this nature and if there is no fixed term contract signed when the original contract expired, that’s what happens. You become a periodic tenant and it’s like your contract renews itself every month.

Of course there are pros and cons to both fixed and periodic tenancy contracts.

Fixed term contract – reasons for and against

For: When you’re on fixed contract, the landlord can’t decide he wants to raise the rent next month – he has to give you a notice of 3 months and you have more time to disagree and fight that raise, if you believe it is unreasonable.

For: Should your landlord decide he wants you out, they must give you a 3 months notice, which is plenty of time to go and find another place to live.

Against: On the downside, if you decide to move out in the middle of your second year of renting, that would be breaking the lease and heavy costs are often characteristic for such cases.

Periodic tenancy contract – reasons for and against

For: If you were on month-to-month bases and want to move out, a simple notice of one month should be enough for you to not owe your landlord anything.

Against: If your landlord sells the house you live in and wants you out, he too is not required to give you more than one month’s notice. It can be very stressful for a person to suddenly find out that they need to look for another house, find one and move in a month.

I guess this comes down to your plans and choosing the kind of rental contract depends on whether you need to freedom to move out whenever you like.

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The pros and cons of non-bank lenders

by Chris on July 19, 2009

Yesterday I was thinking about this crazy surge of first home buyers, purchasing properties while the Boost and the Bonus last, and how strange it looks in this kind of economy.

I know, everyone has their reasons an life doesn’t stop just because we went into recession, but if I was buying now – I would think hard about who I want to borrow from.

If you haven’t lived in Australia for long, this thought might not cross your mind – nonetheless choosing your lender is very important step in buying your house. Here are some considerations for you to think about, when shopping for a loan.

There are many lenders, some of them are banks / credit unions and some are non-bank lenders or so-called “Mortgage Managers”. There are pros and cons to non-bank lenders, and I would say that now, in this economical climate, the cons outweigh the pros.

Pros

They will give you a loan even if you don’t have a deposit.
If you are self employed, they might ask for less than a mountain of paperwork to prove your borrowing capacity.
They are more forgiving to dodgy credit history.

Cons

Their loans are not cheaper than the bank’s loans any more.

They used to lend for less and that was their way of getting customers, but now this isn’t possible any more.

If there is interest rate cut and you’re on flexible interest loan they may or may not pass it on to you.
If RBA raises the interest rate, a non-bank lender will most definitely pass it on to you, whereas a bank might decide they will take the hit and won’t raise the interest rate to avoid putting people in mortgage stress.
Their loans often have high exit costs.

Why is this important? Assuming that there was a rate cut which they didn’t pass on to you, you have found a much cheaper loan elsewhere and want to refinance, the exit costs kill a large part of that profit.

They will repossess your home and evict you much faster than a bank, for the following reasons.

Banks are bigger and stronger, regulated better and have more ability to withstand your default and give you the chance to recover.

Non-bank lenders are smaller and take more risk allowing you some time to get your act together and come up with the money. Because if you eventually don’t, they will be forced to sell your home later, and then there might be many other repossessed homes on the market – so the prices will drop and they won’t recover the loan back.

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Tax time: 8 house-related expenses you can claim.

by Chris on July 12, 2009

As you know, in Australia the financial year ends on June 30 – which means that from July 1st on it’s time to submit your tax return.

If you have been working at home a part of the time or all the time, there are
8 house-related expenses you can claim:

1. Heating, cooling, lighting.
2. Repairs to home office, its furniture or equipment used for work purposes.
3. Depreciation of home-office furniture (you’ll need receipts for the desk, cabinets, chairs, phone, printer, fax and computers used for work).

4. Occupancy expenses – rent or interest on mortgage.
5. House insurance premiums.
6. Council rates.
7. Water rates.
8. Home office cleaning expenses.

And now a little bit about how to claim. There are basically 2 ways to do it and one is potentially more dangerous than the other.

Claim via fixed amount

The less “dangerous” and easier way is to calculate the amount of hours you spent working at your home office for the 2008-2009 financial year and to multiply that figure by 26 cents. To back up your calculation ATO advises people to keep a diary of the working hours.

So for example, if you’ve been working 5 days a week for a couple of hours from home, you’ll be able to claim 520 hours a year (2 hours per day * 5 days a week = 10 hours a week * 52 weeks a year = 520 hours).

In terms of money that will be 520 hours * 0.26 cents = $135.2

Claim via percentage of house area

The other, more “dangerous”, way is to claim your real expenses (provided you have all the bills and the receipts) based on a percentage.

Calculate what percentage of your house space your office takes by doing the following:

1. Measure the area of your entire house including your office.
2. Measure your office alone.
3. Divide your office area by your house area and you will get a percentage.

For example, your house area is 100 square meters. Your office is 9 square meters. The percentage is 9 / 100 = 9% of the house.

If you’ve worked the whole year in your home office, that means that you can claim 9% of your heating / cooling / lighting / water etc bills. And here is the catch – when you will sell your home, those 9% will affect the capital gains tax you will pay. Normally capital gains tax doesn’t apply when people sell their primary residence, but in this case, if you declared a portion of it as your office, it will.

So if you’ve claimed 9% of your home as your office, capital gains tax will apply to 9% of your capital gains – and this is valid for a period of 6 years. This is certainly something to consider before claiming as much as you can now, because it can make you pay later.

And over to you now – any tax tips you’d like to share?

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Google wants its piece of real estate

by Chris on July 7, 2009

Google Maps New Real Estate Section If I had to name the most interesting bit of real estate news this week, it would be about Google entering the real estate market (and starting their quest from New Zealand of all places). It doesn’t surprise me that they did – what took them so long is what surprises me. I mean, if you were in a position to grab a huge piece of a very yummy pie, why would you wait? Google literally rules the world of online advertising which leaves little chance of any real estate website competing with them.

According to the news, in New Zealand there is now a real estate section in Google Maps and it’s populated with listings from 2 big real estate websites in New Zealand. What more, Google invites any estate agency to upload its listings to Google for free.

That article made me so curious about what’s going on with Australia, how far did Google get here and some very interesting facts surfaced as I looked through the listings in Aussie Google maps / real estate section.

Apparently this is a brand new feature and was only added yesterday, July 6. It was announced by Andrew Foster who wrote on Google’s Official Australian blog “Today we’re adding a feature to Google Maps in Australia that we think will make Maps an even more invaluable resource to Aussies as they go about their busy lives. Increasingly, people are heading online when looking for a new house to rent or buy, and from today, we’re adding the ability to search for properties on Google Maps. We’ve worked with partners across the real estate industry to provide up-to-date listings, which you can search for directly from the Google Maps search box.”

So here is what it looks like (watch the video below):

My next question was – where did the listings come from? Apparently Google have solved the problem of populating their section with ads mostly from myhome.com.au, homehound.com.au and real-estate-australia.com.au (in Victoria). Same as in New Zealand, the most popular websites Realestate.com.au and Domain.com weren’t interested in uploading their ads into Google’s new section.

Of course Google’s interface needs a lot of work to match that of Realestate.com.au, but something tells me they will get it “just right” very quickly. It will be very interesting to see how Domain.com and Realestate.com.au handle the competition – or will it be cooperation?

What do you think of this feature, did you try it? Do you think it will work with or against the big real estate websites?

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Australia is resisting progress – any idea why?

by Chris on July 3, 2009

Don’t get me wrong – I love this country. But there are things about it that are just beyond me. Which is why I thought maybe some of you can help me make sense of it all.

Enigma # 1 – double glazed windows.

I don’t get why they didn’t become a standard thing any house can’t be imagined without. Initially I thought that only the old houses still have the regular windows because people won’t be bothered replacing them, but I’ve checked and the majority of new projects don’t have double-glazed windows included, it’s an expensive extra – when it should be the standard.

Australian climate has such extreme temperatures and the houses have such big windows that it’s doesn’t make any sense to use regular windows as all the heat escapes through them quickly in winter and in the summer it’s the opposite, they don’t protect the house from sun.

Dare I say that a good way to start would be for our government to introduce rebates, same as they did for the solar systems and insulation. If we’re talking about conservation of energy – it would save tons because we’d use less gas and electricity to heat and cool our houses.

Enigma # 2 – automated window furnishings.

I didn’t come up with this one myself, a letter I received from a reader gave me a push, but nonetheless – why aren’t motorized shutters and blinds popular? Rum Charles, the principal consultant from Indigo Training says that according to his research only 0.5% (not even one percent!) of all the shutters in Australia are motorized.

Thinking about this, it would make so much sense, especially for the external shutters – why do we need to go outside, when it’s blazing hot, and use some kind of hook to pull the thing down, why not just press a button?

Is it about the money? Rum doesn’t think so and I agree – all the other things in the house evolved and the hi-tech version costs more. Still, we now have microwaves in addition to ovens, we have dishwashers in addition to sinks, we have air conditioning in addition to fans, and the list goes on.

I understand that it might not occur to people that motorized shutters can me so much more convenient and safe – but why doesn’t it occur to the professionals, the designers, the building companies, people who make living designing and building our houses?

And now I would love to hear what you think. If you have any insight, or simply want to speak up and be heard – leave a comment on this post or email me to chris@homeiown.com. You opinion matters.

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