Dual key properties are one of the clearest ways to protect your clients’ borrowing power. One property, two separate living areas, two rent streams. And when a lender assesses serviceability, that second rent stream works hard.

What is a dual key property?
A dual key is one property built as two separate, self-contained living areas under one title. Each area has its own entry, kitchen and bathroom, and each can be rented out separately. It is still a relatively new concept in Victoria, so interest among buyers and even some lenders is growing quickly.

Why serviceability tightens when rates rise?
On 29 September, the RBA raised the cash rate by 0.25 percentage points, from 4.35% to 4.60%. The reason is inflation, which has stayed above the RBA’s 2 to 3% target.

Lenders don’t test a loan at today’s rate. They test it at a higher one, typically three percentage points above. Every rate rise lowers what a client can borrow, even when their income hasn’t changed. This is exactly where dual key earns its place: it lifts the income side of the equation to offset the rate side.

How a dual key changes the numbers?
Lenders count only a portion of rental income, commonly around 80%. Because a dual key earns two rents, it adds far more counted income than a standard rental.

Here is an example from a Dual Key property in Victoria.

Sample illustration of Dual Key property rental yield

At $41,600* in counted income a year, this single property can do the serviceability work of two average rentals.

More ways dual key protects serviceability
Beyond the higher counted rent, a dual key gives your clients other advantages that keep a loan serviceable over time.

Lower vacancy risk: Two tenants mean two rents. If one tenant leaves, the other still pays, so income keeps flowing while the vacant side is re-leased.
A cash flow buffer: With both rents combined, repayments can come close to fully covered or even leave a buffer on top. That buffer gives a client more flexibility and can help them qualify for their next purchase sooner.

Where we have dual key properties?
We currently have dual key stock in these Victorian areas:

Wonthaggi
Morwell
Shepparton
Benalla
Warragul
Yarrawonga

FAQs

How does a lender treat dual key income?
Lenders count a portion of the rental income from each dwelling, commonly around 80%, the same as any investment property. Your broker can confirm the figure for a specific lender.

What should I check before recommending a dual key property?
Confirm the rent estimate and your client’s lender with a broker, so the numbers and the finance path are both locked in.

* Yields are estimated, gross and before costs. Lender policies differ, so this is for illustration purposes only.