With the rising cost and demand for housing and shrinking of land spaces for residential real estate in Australian cities, dual-key apartments are coming in handy in solving the problem.
Dual key apartments are housing units containing two separate apartments under one title. It is usually a two or three-bedroom main unit divided into two separate living quarters for dual occupancy. Sometimes, it may have a studio apartment that can work as another living quarter. The tenants typically share a front door and foyer but have separate living spaces, bedrooms, kitchens, and restrooms.
As a recent entrant into the Australian real estate market, these apartment types are becoming a more popular option for real estate developers, investors, and renters alike. But are they as good as they sound or could there be some risky downsides to them?
You might want to consider a few realities if you want to buy real estate like this. Let’s consider two sides of this relatively new concept.
Why dual key apartments may be a good idea
The following are points that may make this housing option a good idea:
Dual income advantage
Having two apartments under one title provides the opportunity to earn two rental incomes from only one property. That could be a great return on property investment for a real estate developer. An owner of a dual-key property could earn some extra income by renting out the extra apartment and occupying the other.
Moderate taxes and streamlined strata fees
As a relatively new entrant into the Australian real estate market, purchasing a dual key apartment attracts capital gains tax discounts. Strata fees, such as property management costs, body corporate fees, mortgage payments and council rates, are more streamlined when paying for dual key properties. For example, for dual-living homes in Sydney, this helps you save some money.
Restructuring advantage
Owning a dual-key apartment offers you the opportunity to be flexible with your renovation plans. Once you have Council or Strata approvals, it is possible to convert the unit back to a single-residence apartment. Ideally, the floor plan of a dual-key apartment is often that of a single apartment that is divided into two separate dwellings.
You just might need only to knock down a few walls and there, your single-residence apartment is back! Nothing stops you from changing your mind over time. It will still be easy to convert.
Affordable rent
Dual-key apartments are typically more affordable than regular apartments. This is especially true if they are located near schools with a nearby public transport system.
They are a preferable option for students and temporary visitors, such as tourists, because they are relatively affordable and provide temporary comfort during their stay.
Why dual key apartments may not be a good idea
What are the possible downsides to these apartment types? Let’s look at some of them:
Tougher lending conditions
Trying to take out a loan with a dual-key apartment could be a tougher stride since you will be required to make a higher deposit than you would on other properties. Owner-occupiers may find this condition unappealing, depending on individual income levels.
Low demand
Australian renters, to a large extent, still prefer traditional single-residence apartments. Also, dual-key apartments are relatively new arrivals in the real estate market, so the market value is not high.
Buyers who are not owner-occupiers may be reluctant to purchase dual-key apartments since they are used as combination properties. Concerns about personal privacy also discourage traditional renters, most of whom will prefer to keep their space sacred.
Property investor apathy
For many traditional property investors, the idea of having two separate rentals remains preferable to two apartments in one space. When faced with the possibility of renting or outright sale of either or both of the apartments in a dual key apartment, most traditional real estate investors will prefer two separate properties even at lower prices as long as there is a potential to develop them independently.
In addition, many investment property businesses and agents believe that dual-key apartments attract a far lesser proportion of the rental market. This is especially true in major cities and other choice locations.
Frequently Asked Questions
Are my safety and privacy guaranteed in a dual-key apartment?
Having a single foyer for access, your safety and privacy are guaranteed if you take the time to respect those of others. Maintaining a cordial relationship with your neighbor is a plus to your safety and privacy.
Is it safe to invest in a dual-key apartment?
It is relatively safe for now, but only put your money in investments you thoroughly understand. Ensure to weigh facts against fiction before throwing in your money.
Where can I find dual-key apartments?
Although a relatively new entrant, real estate agents across Australia can locate suitable ones for you. Availability may also depend on the choice of location and affordability.
