Property investing in Australia has always been a numbers game, but in 2025, the spotlight is firmly on holding costs. As interest rates, council rates, and regulatory changes bite into investor margins, understanding these ongoing expenses is crucial to protecting your profits and cashflow. Whether you’re holding a Sydney apartment or a Brisbane house, ignoring these costs can quickly turn a promising investment into a cash-hungry liability.
What Are Holding Costs? Breaking Down the Expenses
Holding costs refer to the ongoing expenses incurred while owning a property, before selling or leasing it. These are the unavoidable costs that accumulate from settlement to sale, and they can erode profits if left unchecked. In 2025, key holding costs in Australia include:
- Interest on loans: With RBA rates stabilising above pre-pandemic levels, mortgage interest is still the biggest holding cost for most investors.
- Council rates & land tax: Council rates have crept higher, and land tax thresholds in NSW and Victoria have been adjusted, catching more investors in 2025.
- Insurance: Landlord and building insurance premiums have risen, reflecting increased climate risks.
- Utilities: Even vacant properties attract minimum water, electricity, and gas charges.
- Maintenance & repairs: From fixing a leaky roof to regular garden upkeep, these costs are hard to avoid.
- Property management fees: If you use an agent, expect ongoing charges—even for vacant properties.
For example, consider an investor holding a $900,000 Melbourne townhouse with a $600,000 loan. In 2025, typical annual holding costs could look like:
- Loan interest (at 6.1%): $36,600
- Council rates: $2,800
- Land tax (new thresholds): $2,500
- Insurance: $1,500
- Utilities (even vacant): $1,200
- Maintenance: $2,000
- Management fees (if leased): $2,500
Total annual holding costs: $49,100+. That’s before any unexpected repairs or interest rate movements.
2025 Policy Changes and Their Impact
This year, several state and federal updates are reshaping the holding cost landscape for property investors:
- Land tax reforms: Victoria’s “COVID Debt Levy” was replaced in 2025 by new, lower thresholds—meaning more investors are now liable for land tax.
- Interest deductibility: The ATO’s crackdown on incorrectly claimed deductions means investors must be meticulous about what holding costs are tax-deductible. Only expenses incurred while the property is genuinely available for rent are eligible.
- Insurance premium hikes: In flood- and bushfire-prone regions, insurance costs have jumped 10–20% on average, according to recent industry reports.
- Vacancy taxes: Both Victoria and NSW have expanded their vacancy taxes in 2025, penalising investors for leaving properties empty for extended periods.
These changes mean investors must budget carefully and stay informed to avoid nasty surprises.
Smart Strategies to Manage Holding Costs
With tighter yields and policy tweaks, 2025 is the year to get proactive about holding costs. Here’s how savvy investors are staying ahead:
- Keep vacancies to a minimum: Every week a property sits empty is a direct hit to your bottom line. Responsive maintenance and competitive rents can help.
- Review your loans: Many lenders are offering refinance incentives in 2025. Even a 0.5% lower rate could save thousands per year.
- Shop around for insurance: With premiums up, comparing providers and adjusting excesses can yield real savings.
- Claim only eligible deductions: The ATO’s new data-matching systems mean mistakes are costlier than ever. Use a specialist property accountant to maximise (and correctly claim) deductions.
- Plan for repairs: Budget for annual maintenance—unexpected emergencies are often more expensive and stressful.
Consider a real-world example: After a Brisbane investor reviewed her holding costs in 2025, she switched insurers, refinanced her mortgage, and found a new tenant quickly—saving over $6,000 per year compared to 2024.
Why Holding Costs Matter More Than Ever
With property prices plateauing in some capitals and rental yields under pressure, holding costs are no longer just background noise—they’re front and centre in investment decisions. Investors who ignore these expenses risk negative cashflow, forced sales, and missed opportunities. By understanding and managing holding costs, Australians can protect their portfolios and make smarter, more resilient investment choices in 2025 and beyond.
