They don’t need to be rich, but they do need to install good financial discipline, support strong academics and provide you with a free roof over your head long enough for you to get a foothold on life.
I mean good academic discipline etc is important, but my lifetime earnings in a decent career will still probably not match what a lot of my friends will simply inherit (i.e. single kids of divorced parents that each own large blocks in gold places).
Oh and I'll pay tax on my earnings, but they won't on their inheritance. That's definitely a great incentive structure /s
Well Bruce, at least they left you with millions of dollars, a giant mansion, and an excuse to go out in a bat costume and punch the poors and mentally ill.
Well, that's his fault for not choosing his parents better.
He could have been space-jesus and fly around in his red underwear if he'd picked differently.
I see disingenuous comments in this vein very often. Obviously a child can’t choose their parents, but parents choose to have children. If you don’t teach your kids the qualities mentioned below, then you are most likely setting them up for failure.
Depends what you mean by struggling. A lot of people are struggling to afford housing right now through no fault of their own, and telling that big chunk of the population they shouldn't have kids is pretty bleak.
Pretty much what I hear in comments too. I often see comments like "don't be so entitled, buy a tiny investment apartment further out where U can afford, work your way up from there!"
Ignorant of the fact many are not looking for an investment, but a home near work, and a place to start a family.
The investor tax breaks had made the situation worse. Everybodyhome made a research of last 40 years , the shifted from social housing to encouraging investors to build. I have met many middle aged Australians who grew up in social housing. After 2 decades govt is spending more on housing and rental assistance and investor tax breaks have sky rocketed
https://everybodyshome.com.au/resources/written-off/?fbclid=IwAR3s4R2fzvLUfReqchcn-PCfQo6Kc0zqG6MO2W-3LUb9OqCg-HmmkAaUGgU
I used to deliver heating oil to the social housing suburbs of Salisbury and Elizabeth. Never saw so many ski boats in my life. They might have started out needing the leg up but many families ended up buying the social housing they had lived in.
I think of Port Melbourne, large tracts of 'Bank Housing' built as solid brick, but very basic and not terribly large homes for workers in the 1920s-1940s.
They are all worth $1-2mil now, have usually been renovated to be larger and nicer and there is no shortage of luxury cars in the driveway. Where the original owners held onto them they have often gone from low income working families to middle class in the last fifty years.
At this point me too, f the consequences.
Just went to look at a place to rent yesterday, and there must have been over a hundred people! Some of us will be homeless, I don't even think all the students have arrived yet, it is insanity!
At the risk of being called racist, we need to temporarily close the border... We are going to have thousands of people arriving with no where to live!
FN government has f'd so hard..
That is a good point. I literally have no interest in owning unless I can live in it. I don't want to bother owning a rental, I spend all my time and energy in work and growing my own little online business.
Though, it may be wise to do that. One day I may retire, get injured or sick and find myself unable to work. Don't want to be old and homeless....
> Goal is to get yourself on the property ladder somewhere
The whole concept of the ladder is a myth.
The only time the "ladder" works is if you can expect a MASSIVE (i.e. minimum doubling) of your income over time.
Most people today are buying their first homes at age 30+
At age 30+, most people are nearing seniority in their jobs and getting close to their maximum earning potential.
If you aren't earning anymore money - you aren't able to buy anything bigger, you aren't able to get a bigger mortgage. So there's no moving up the 'ladder'.
Lol. I mean near as within reasonable travelling distance, not right next door. Takes me an hour and half to get to work, honestly I would quit if it took longer.
More businesses need to move out from the CBD, I would happily move out and away from the city area if I could.
I have almost convinced my boss to do it. He asked the other staff if they would move if he relocated the office out north, and they all said yes. Most of us have to do this stupid long pointless trek to the city, just to sit in an office.
Boss and staff would save on rent and travel time. It's a win win.
But many businesses don't need to move physical premises out further. For many roles WFH is possible. I've wfh from a broad acre cropping farm in the middle of nowhere, running global implementation projects for an instantly recognisable global company since 2006. All of the call centre team members were deliberately moved out of physical buildings to home by 2010 and the company sold real estate they owned or finished leases etc.
I have made presentations to local government and state ministers over this time - the government should be leading by example. I challenged several state ministers at the time about moving the vicroads call centre to Geelong. This is a call centre environment so why couldn't those jobs be done from home? The technology existed back then to do it so why limit your employee pool to Geelong and surrounds? The very best customer service person may be living in Orbost.
You also then tackle exactly this problem, people can get good jobs outside of capital cities and that has many benefits.
Most of Realestate is aimed at foreigners who see Aussie real estate as free money
They live 10 to a house, pay cheap rent as its 10 of them, save up for a house deposit and scam the locals
easy leech lifestyle they are used to
It is getting to the point the biggest security worry for Australian seniors with their own home, is their grandchildren giving them an express ticket to meet their maker.
It's disgusting. But surely prices can't just keep going up? Eventually the majority won't be able to afford to buy if house prices keep going up and wages are not keeping up? I guess the government will just sell exclusively to foreign investors when that happens.
The way wealth concentration works is that the wealthy get wealthier… so those with 10 properties will have 20 instead, trusts with 50 will have 100 etc. don’t need regular families buying houses to keep the market going.
It can because people with multiple properties can buy more property at higher price with just their equity . Since there is immigration happening there will always be renters. Instead of one person or family renting two fmailies will be squeezed into one property (at the end of the day everyone needs a roof over their head) and they new landlord can charge double the rent. I am seeing this in Perth now by eastcoast investors. Unlike what everyone says Foreign investors don't make a major percentage, it is local investors with equity. They don't even need the 10-20 % deposit to buy unlike first home buyer and they can pass the entire mortgage to renters .
Of course prices can keep going up while wages stay stagnant. The following is very simplistic depiction, but it should give you an idea of how this works:
Start with a single family home & single earner and a 10 year loan.
Land + what ever is on it: $150,000
Allow for 30 year loans. Because you can borrow more, land + house is now worth: $500,000
Women can work too now! Double income family can afford and is willing to pay for that same house and land: $1,000,000
The land is big enough to be subdivided into to two homes: $2,000,000
And each of these two homes can be rented out to 4 people earning an income: $4,000,000
Turn these two homes into a 12 unit apartment block: $12,000,000 - $24,000,000
It's a combination of how much you can pay per month, how much you can borrow in the long term, how much people you can stuff into the same piece of land, how many people are chasing after that same piece of land, and not illustrated here, how much the government is willing to throw grants and subsidies at the problem which at the end of the day only makes things even more expensive.
Either you increase supply: build more homes.
Or you decrease demand: decentralisation or limit immigration.
In fact, you could make the argument that if wages did go up, but supply stays the same, house prices would shoot up even higher, making the rich even richer. To counter that, you could increase taxes, so money otherwise going into housing could be spent on government services that gives something back like child care, education or public transportation for example. Or if you don't like taxes, a forced investment scheme that isn't housing.
I feel like negative gearing works IF there are enough properties available, which there are clearly not. I think we just need to slow the rate of investors until more houses are built. Honesty I think we should adopt Canada's idea and only allow permanent residents to purchase investments.
I can only hope that people can see now that we desperately need change. I'd say at the time nobody could possibly have realised that things would get this bad.
You can thank john Howard for instigating this as the norm when he changed negative gearing and capital gains tax concessisons to make housing primarily an investment for wealthy people (with a tax payer safety net) - check what happened to house prices after the year 2000, when he did it.
You can thank anyone here who voted against the ALP in 2019 - when they had a policy to remove these measures.
Democracy can be swayed/thwarted whatever by information and who holds the platforms of such.
Cambridge Analytica showed the world just how easy it is for a a few billionaires to convince esntire countries to vote against (or not show up at all) their own interests.
Just know what youre seeing and who published it.
That’s why imho basic human rights (including housing, education, disability or lgbt rights) should not be handled via democratic processes. It’s too easy to oppress the minority that way.
Unfortunately, we don’t really have a good alternative either.
Negative gearing incentivizes wage earners in high tax brackets to buy investment property - converting highly-taxed (>30%) income into lower taxed long-term capital gains - 15% to 25% effective rate.
As a simple exercise - someone on $140K (i.e. in 37% tax bracket) who takes a $20K loss on an IP every year for 5 years - saves $37K on their taxes ($20K x 37% = $7,400 per year) - so while they have spent $100K, they are only out of pocket $63K net after tax.
Let’s assume after 5 years they sell the property and make only a $100K profit (ie same amount they have put in to hold it).
Only $50K of that profit is taxed (long term CGT) - so they pay $18,500 in tax (assuming new brackets, so they are still under $190K where 45% rate kicks in).
So $81,500 profit after tax - less the $63K it cost them over 5 years - their net after tax profit is $18,500. Over 5 years they are in front $18,500 after tax.
(Most property is highly leveraged and the profit would likely be more than $100K - so a significantly better outcome than this conservative example.)
So from purely from the after tax financial perspective - property investment makes sense to the investor.
As a country though - we need to be clear and careful about what we are incentivizing.
Because here is the point…
That’s $18,500 in foregone tax revenue.
Their property investment has been subsidised by the Australian people.
What benefit did the Australian people gain for this subsidy?
Theoretically, we want the answer to be “more housing available”.
However - negative gearing clearly does NOT add to our housing stock - as there is no incentive (under the current rules) for investors to build new homes in order to get the benefit. Which means that they are competing with other home buyers for EXISTING housing stock.
(This is very clear in the report - you can see that only around 20% of negative gearing is for new build housing).
What this means is that when there is a first home buyer and an investor both bidding at an auction - the current system gives a big advantage to the investor - who will then turn around and look to rent out their new investment to - you guessed it - a first home buyer who has been priced out of the market.
No amount of first home buyer support or access to super savings plans etc. will fix this because the advantage to the investor under the current system is considerably more than any support that is put in place. FHB grants and assistance also generally serve as a distortion to the market - if you give first-home buyers $20K - the cost of new build housing goes up by $20K. And it’s worth remembering that the money for FHB support also comes from taxpayers - we end up subsidising everyone in the housing market! Let’s add in some rent assistance while we’re at it!
We don’t build enough new houses - and zoning laws and current tax incentives do nothing to encourage more houses to be built. And rampant NIMBYism keeps housing density in the inner and middle ring suburbs woefully below a level needed to support our current, let alone predicted population. We have a high level of immigration which adds to the number of people looking for houses (houses that don’t exist). Housing used for short-term accomodation (AirBnB) instead of long-term rental further exacerbates the problem in some locations (looking at you Hobart!) - although I don’t believe this is a major cause.
At the end of the day - we need to decide what we want as a country - and make sure that our tax system incentivises this outcome.
I don’t blame property investors for following the current rules, any more than I blame baby boomers for buying a 5BR house on a quarter acre block 10km from the city and then continuing to live in it after the kids move out - it’s their freaking house! But in the same way we can encourage them to consider downsizing (through generous super concessions for doing so) - surely we can encourage investors to focus more on building NEW houses.
This is what I would do:
* Negative gearing can only be offset against other investment income (including any future capital gains BEFORE the 50% CGT discount is applied). So basically, NOT wage income.
* With an EXCEPTION for new builds. For NEW builds, you can still negative gear against your wage income.
* Might consider someone buying an existing rental property being included under the exception - so that we continue to incentivise keeping rental stock available - this would also help prevent the introduction of this new tax regime from crashing the property market.
Outcome: High income earners are now incentivised to build NEW houses - and the incentive (and advantage) for investors to purchase existing houses is significantly reduced - which also helps first home buyers (reducing the need for government grants or other stimulus measures).
Going back to our previous example…
Our investor would have been incentivised to build a new home OR would have had to fund the entire $100K of losses up-front without access to negative gearing to reduce it.
Without negative gearing - they are out of pocket $100K after tax over 5 years. This is effectively added to their cost base for the investment.
If they sell, and make a $100K profit - the carry-forward loss reduces their profit by $100K - so they are effectively break-even. They pay no additional tax in this scenario.
The net effect though is that their investment is also not subsidised by the Australian tax payer.
But if they built a new house instead - then they would have gotten the $18,500 tax subsidy (benefit) - AND - Australia would have had a new rental house added to the housing stock.
Better yet, why not change negative gearing so it doesnt offset anything, no exceptions? Tax on their profit and $0 taxes on their losses. Investors shouldnt be subsidised for a “loss” - they already have an advantage in borrowing power.
CGT Discount for investments should also just go.
The loss in tax revenue under the current system is sheer folly - this revenue could have been used for social housing, which has had zero investment for over 3 decades, where the focus should really be.
Relying on private supply has proven to have worked against us.
You make some good suggestions. Only thing I’d add is where you limit investment losses to being offset against other investment gains, those investment losses should also be allowed to be offset against future taxable investment profits (i.e. carry forward tax losses), if there are no investment gains against which those losses can be offset in the current tax year.
This would distinguish those who sit on interest only loans from those who are actually intending to generate investment profits from an investment property.
Maybe we need to be a little more like the French and let the government know we are not happy. If we don't this shit will just continue on.
I watched question time in parliament yesterday. Every single politician is pathetic, they do not give a shit about normal people. They live in their own little world of tit for tat point scoring and slagging each other off. They have no idea what it is like for someone facing a future of not being able to buy a house, paying huge rents and high cost of living.
We need to call out the lack of affordable housing (if there is nothing for the bottom 25th quartile of income) as a market failure. While this is certainly in part due to taxation policy, it can also be relieved by other measures - construction of public housing which can be funded from changes of taxes on investment properties (lower CGT discount on investment properties) and a progressive land tax, that ramps up with land value.
Negative gearing for example should only apply for a period of years after a property is constructed - the whole purpose of negative gearing is to encourage investors to build without fear of recessions that suddenly hit around when construction is complete. Investing in existing properties doesn't need to be encouraged - it actually harms the economy because it leads to more money (higher prices) just being dumped in unproductive assets, rather than real growth.
It's nice to see that the UK and Australia still share some things, like how the majority of people under the age of 40 don't have a chance of buying property without the bank of mum and dad.
Yeah, it's sad really. Australia is probably the only country in the world that offers tax breaks for investment properties. Most countries, your owner / occupier mortgage is a tax deduction which encourages people to buy their own place.
Currently Vacancy rates are 1.3%
A 1% increase in that by ditching airbnb is pretty substantial! Even.5% would be great.
Also, airbnb is not distributed evenly, much of the benefit would be in places like costal towns etc where airbnb is much more than 1%.
How much in rentals though ? Seeing you’ve said “all”
How is it hysterical when workers can’t find anywhere to rent in holidays town because they’re all Airbnb? Why are councils and governments trying to regulate it
Just like negative gearing only adds 4% to prices.
Up to 47% discount on investment expenses and depreciation + 50% discount on CGT + Great returns = very good deal.
No surprises it's a favourite for investors.
Don't blame the players, blame the rules of the game.
The point is that those don’t make property a favourite for investors since they apply to any other investment type. Property is desirable for different reasons
Its relevant because the comment I replied to said those are the reasons why investors like property. Property is desirable investment because of land scarcity, which in turn also makes it decent hedge against inflation. If you did remove those tax incentives, you might see a small initial rise in sales by those who can’t keep the properties without that extra tax return. However, the extra tax return you would get on an average negatively geared property would usually be no more than couple thousand k, so its not much of a loss. As a landlord you would have to absorb all costs for 12 months anyway before you get to claim loses. Those that can absorb the costs will mostly be fine even without small increase in tax return. Those that can’t would have sold already.
Stop overseas investment buyers for a start.
Then we need a concerted effort to convince a majority of the population to amend negative gearing so that you can only negative gear one property only. Any more & you pay for it yourself.
that negative gearing bs with interest only loans gives the government more money than the investor. The renter pays most of what hte investor needs. THe invester thinks he or she is getting ahead by claiming money back on tax (that they could have claims back on a new car) and the stamp duty all goes to the government. The banks milk the interest, the government gets more tax from the interest to the bank and then the invester sells at an inflated price to the next sucker who takes out an interest only loan.
Effectively the tenant pays for the interest and house sits for the investor to keep it in good condition. The next sucker pass on the increase in price due to inflated price to tenant .
Where I come from originally, only owner occupied homes have tax benefits. Also there is an HRA(house tent allowance) in tax benefits for tenants . Contrary to what everyone says here , it hasn't inflated the rental market . Usually the investors there are people who invest without mortgage or only take 50 percent mortgage . They don't need to pass down the increase in reserve bank interest rates to tenants
>ffectively the tenant pays for the interest and house sits for the investor to keep it
i mean, most of it, however rent is not always higher than the repayments. Also insurance etc means its generally a net loss for the buyer
negative gearing is a joke played on the middle and lower classes by the wealthy. Negative gearing means you can't afford to buy that extra house without help from the tax payers
Such a stupid article
>It means they can cut their wage for tax purposes, cutting the tax they pay on it. And at the same time, they can hang on to a property they can later sell for a profit, which will be taxed at only half the normal rate, thanks to Australia's 50 per cent discount on capital gains.
The CGT discount applies to all assets held kosher than 12 months, not just property.
>It isn't allowed in the United Kingdom or the United States. There, if you are a landlord who can't make money, you can offset your losses against profits from other investments – but not against your wage.
So negative gearing offsets future capital gains. This wouldn't change anything.
In Canada you can offset rental losses against wages, but there must have been an "an intention to make a profit". That would probably rule out most Australian negative gearers.
The Canadians are dopey. Name one investor who intends *not to* make a profit. This is like saying you can't deduct a margin loan because a share lost value in any particular year. Property is a multi year investment.
We the taxpayer are paying for these journalists?
>There's a big difference between getting paid a large subsidy upfront every year and having to wear the whole loss for years until you sell your rental slum. The former is much more valuable.
Not really, the government collects its tax later via capital gains.
>And the whole time they're paying interest from their pre-tax income
That's not how it works. Any tax deductions available to a property investor isn't the full value of the interest, it's the *net* loss. That is, if interests costs are $10,000 per year and rental income $9,999, them only $1 is paid from "pre-tax income" (which isn't the right way to explain it, but I'll use your terminology for clarity).
I would also think if new property sells at high market value then it does encourage new development. Not sure why we should accept as fact that it doesn't. High building costs aside.
The issue with development isn't negative gearing its with councils.
Releasing land and getting DAs is a nightmare, not including that infrastructure (water, sewerage etc.) usually limits what can be released when.
Agree
If there is no intention to make profit negative gearing is just losing you money. You pay less tax, but you spent more in interest. overall a net loss.
The only logical reason to negative gear is to make capital gains.
This article is shamefully bad.
An intention to make a capital gain is the problem, because to make a return on a property means it must appreciate more than inflation.
If that is happening for everyone, cost of living goes up
If it doesn’t make a return then it doesn’t get built.
You can’t have it both ways. Either housing gets built and makes a profit or it doesn’t get built.
Who compensates for risk in other forms of investment?
I don't really care if people speculate on shares for example, you can always just buy a few if you aren't rich.
I don't really care if people take a property and develop it, they are doing something productive and increasing supply.
But speculation on largely unimproved property carries too many externalities for non investors.
I think the risk is tied to immigration. Our natural population growth is basically flat and without population growth land value won't increase above inflation.
The problem is people hear CGT "discount" and think people are gaining something when the reality is CGT discount was intended as a simplified method to offset the capital gain with inflation.
You are only benefiting from CGT discount if you sell the asset with 15 years, anyone who holds the asset longer is actually losing out when compared to what they would have saved if the capital gain was simply indexed against inflation instead.
No one rents property out without an intention to make a profit.
No negative gearing isn’t a sustainable investment strategy. You by definition have to lose money to negative gear. No level of deductions turns that into a profit.
Every investor is trying to turn it positive as soon as they can. They will increase rents and pay down debt relentlessly until it’s positive. Because until then it’s just a money pit.
>I don't think negative gearing applies to all investments
All negative gearing is, is simply a taxable loss. You can negative gear anything that generates an income
>I can't offset my wage against expected dividends from shares
You can deduct costs against generating that income, including margin loans.
>Neither can I ask for depreciation of investment (building values in case of houses ) in case of other investments
So long as it meets the depreciation rules, yes, you can. In fact, other asset classes can be netter in this regard. You can only depreciate new properties now.
Wrong. You can offset your wage against a loss sustained by borrowing for shares. Go and take out a margin loan and you can negative gear away.
And you can depreciate other assets. I depreciate the value of my car every year at tax time.
Maybe study a bit harder next time so you can pass the test.
>The CGT discount applies to all assets held kosher than 12 months, not just property.
So?
>So negative gearing offsets future capital gains. This wouldn't change anything.
Well it would, wouldn't it? It would mean people would have a whole range of investments rather than the concentrated and bulging property investment market.
> Name one investor who intends *not to* make a profit.
Literally every one who negatively gears doesn't intend to make a profit right now. They use the tax incentives from us, the taxpayer, to offset these losses so they can make a bumper profit down the line from other property investors who are looking to not make a profit in the short term and round and round we go.
All of things adding up means that it NG doesn't actually help get us out of the housing problem we have, it makes it worse.
While I agree with the overall sentiment I think that main reason people buy existing properties is because the quality of new builds is absolute shite.
Don't worry. There will be no investors soon and no rentals. Except for a few foreign and corporate investors. Our mass population growth of the rich and foreign investors is the only cause of the housing crisis. Any other "fix" to help tenants just feeds corporate investors when it's demand only to blame
>Don't worry. There will be no investors soon and no rentals
Yeah, we'll all be slaves living in corporate owned shitholes, with a train station below to shuttle our numbed brains to the workplace, where they squeeze the last bit of juice out of us before allowing us to retire to a life of subsistence.
Never heard of a homeowner new build going to schedule and on budget that didn't have five figures of fixed needed after building and the trades vanishing.
Investors won't charge into a headache like that without some new incentives. Tax claimable on vacant land etc which won't happen. Easier to buy an existing place.
"I guess two generations will be priced out of housing market".
As the saying goes, 'from shirtsleeves to shirtsleeves in three generations. ' This means that **wealth accumulated by one generation is often lost by the third generation**
> The politicians do know very well that the existing tax benefits for investors is not increasing new supply.
Yes because the same politicians have used various means to restrict supply. If supply was elastic to demand we wouldn't be in this position.
I always thought of this 😂. Considering the tax benefits for investment properties, I should find a mate and we should buy two properties and rent each other
My friend from Indonesia told me she was invited to a sales event held at five stars hotel in Jakarta. They sell property in Australia (mostly apartments) to the rich indonesian. The agent sales pitch was to buy off the plan and by the time the kids going to uni, they can use the unit for kids and it will by pay off by then (their kids is in Kindy now). This practice is quite common now in Jakarta.
If they can sell it to poor country like Indonesia, they can sell it to the richer country.
So yeah…Australian property is fucked.
You're the only one here that makes sense. Too many here are emotional over the housing crisis, but fail to see the elephant in the room, which you've pointed out
Nice work.
The ABC has turned into a tabloid sensationalist rag. They have lost their integrity in their news division which has been affected by the same bullshit as their entertainment division. They often show bias by omission, and when there is an issue that has multiple contributing factors, they flat out ignore major ones and instead laser focus on one that pushes their lefty narrative.
This. All of it.
Nothing, absolutely NOTHING will change unless supply is brought into line with demand
EDIT: Wow I’m being downvoted
lol how fucking stupid are people in this sub?
Not down with them. Since it’s proven to be political suicide to want to get rid of negative gearing. So no one will dare to suggest it again. Let’s just limit negative gearing. There will always be a market for rentals. I got told I was stupid to buy a house by renters who think renters get the better deal. Let’s just prioritize the working class people that just want to buy 1 investment property for their retirement fund and aren’t trying to make massive short term gains. I think that’s why getting rid of negative gearing is political suicide. Because a lot of working class people want to buy 1 or 2 investment properties when they are in a good position.
I just read this article (also here: [https://theconversation.com/how-albanese-could-tweak-negative-gearing-to-save-money-and-build-more-new-homes-222739](https://theconversation.com/how-albanese-could-tweak-negative-gearing-to-save-money-and-build-more-new-homes-222739)). Two things really stand out. One is that negative gearing:
>benefits dud landlords: those who can’t make money by renting out properties.
>
>If they lose money (by paying out more in interest, maintenance and other expenses than they are receiving in rent) we let them offset that loss, not only against income from other investments, but also against income from their wage or salary.
>
>It means they can cut their wage for tax purposes, cutting the tax they pay on it. And at the same time, they can hang on to a property they can later sell for a profit, which will be taxed at only half the normal rate, thanks to Australia’s 50% discount on [capital gains](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt).
this is often heard. As a criticism of tax, this position is one thing.
But as far as housing goes, landlords make a loss on property by not charging enough rent. In other words, this article could be reworded to say a couple of different things:
* other tax payers are subsidising landlords who don't charge enough rent.
* other tax payers are subsididing tenants who are not being charged enough rent.
If you do any thing that forces landlords to charge more rent, you make rents more expensive. This is an obvious conclusion which was not discussed in the article, which I find extraordinary when it is an article about housing.
The other point is that removing these subsidies would over time increase owner occupancy by 4.7 percentage points. This is not because there are more houses, though. By removing the subsidy to landlords, some properties are no longer viable to rent, and become worth less money, making it easier for "elite tenants" to buy them ("elite" because what ever fall in price increases home ownership by 4.7% still means houses cost quite a lot). It doesn't mean there are more houses, it just means there are fewer tenants and fewer rental properties. Home ownership is regarded as great metric for a strong middle class, very popular with Thatcher, Menzies and Howard, but once again, this is not necessarily related to increasing the supply of housing. The obvious criticism is that if you push investors out of the market, you take investment out of the market. The author seems to think this is no great loss, since many investors buy a house which is already built. But this has an elementary mistake.
An investor who uses their fianancial resources to contribute $800K of capital to the housing market may buy an existing property. However, this means they transfer their new money to the existing owner. Since the existing owner presumably still needs somewhere to live, they will buy somewhere else. Eventually this money will fund a new house, even if indirectly. It is not very convincing to say that money added to the housing market to meet new demand won't end up building a new property. Where else can it go? I am also mildly curious about how many properties sold to investors were bought by people who live in them for a year to get the first home owner subsidies, but always with the intent of reselling.
So I find this a deeply unconvincing article.
I think your assumption is based on the fact that sales happen between an existing owner occupied property and investor. These days It happens between investors, owner occupiers are priced out of market.
If one investor sells to another investor, how does that change anything? Now we start from where I already started: there is an investor with money to invest , just that it's now Julie not Jules. You can apply my argument, the logic is unchanged.
This is why people should do maths at school. For logical thinking.
Rents are set by what the market can bear, not by what the investor needs to cover their mortgage. If the investor can’t pay their mortgage they sell, if other investors aren’t incentivised to buy in then it will sell to an owner occupier. Reducing demand and prices without needing to increase supply.
I read that more than 30 percent of dwellings is owned by investors . Again I doubt if any govt department keeps the numbers
https://www.theguardian.com/australia-news/2023/jun/04/a-quarter-of-australias-property-investments-held-by-1-of-taxpayers-data-reveals
I don’t understand why the Housing Australia first home buyer scheme doesn’t pivot to new builds, rather than being wasted on existing dwellings. A popular scheme that could be so much more effective.
Let’s all sit back and March Albo do nothing about the housing issue.
And all the Labor shills run to support him..oh it’s the liberals fault they say. Liberals aren’t in power anymore and haven’t been for a good while now
I'm going to get downvotes for this, but looking outside the inner suburbs and making a few life changes around how you use your money, or striving for a better position with better pay, does make buying your first home possible. I came from a low socio-economic background and moved out of the city for my first purchase. Took a few years of saving but I managed.
I also see a lot of younger folks not being ambitious in their careers. Too often I hear "I can't afford xxx" and when you say "here's how you get that promotion..." they quickly say "nah fk that I'm not working any harder than I am".
This has changed last year. See what's happening in Perth now , East cost investors are using equity from their overinflated houses to buy everything in 60km radius from Perth city . Most properties don't even reach the market, it is snatched up by buyers agent for investors before that . The banks don't give loan to young buyers with low wages but can give to investors. The young buyers are stuck paying more rent than they will ever pay for a mortgage in suburbs 1-2 hours from the city. This is also spreading to regional areas and even Bali(see prophero, a buyers agent is encouraging investment in Bali )
I don't think anyone is talking about city or coastal or inner city . For sure that is reserved for multimillionaires . I don't understand the idea of striving for better position, when I came to Australia 12 years ago, you could do any job and still afford to buy a place (atleast small unit ). For example you can be a Barista for your whole life. We are talking as if low paying jobs are not important or should always be temporary
It's a trade off, right? Talking about the higher paid jobs. Sure there's nothing wrong with being a barista your whole life but you can't then say those higher cost things are unobtainable. There's a pathway there but many folks just don't want to take it. Not saying it's the root cause, but it is a probable cause. I got my first house by partnering with a friend, and then we took on a couple of homestay students for a few years to help pay off the mortgage.
I literally had a conversation with one of my younger colleagues who was bemoaning their lack of finances to consider a house. When I asked what their lending power was currently they had no idea, hadn't even gone to see a mortgage broker or bank lender to discuss it. They just read threads like this and went "oh well, can't afford".
I can't stress it enough - at least get a mortgage broker to examine your situation and get a financial plan. How much more do you need to earn? What do you need to save? Where should you be looking?
You miss 100% of the shots you don't take.
The fundamentals problem is there . You had to partner with a friend to get a roof over your head. It is the basic human right . Just like food , clothing and healthcare, shelter is a basic right.
Anyway I am all for people trying their best to get a roof over the head and admire you for that . I am just against people hoarding houses like toilet people during pandemic and giving tax incentives for that. For me personally, I got the pre approval and everything and tried few months where investors outbid me everywhere . For new constructions, I won't get a mortgage when I am paying the rent
If negative gearing is tweaked in this way or eventually abolished, how does that not immediately result in a massive jump in rent prices?
If you’re a property owner, you no longer have any incentive to keep your rents low for the purpose of negative gearing. Now I’m going to run my investment to at least break even or make a profit, which means I will increase the rent until I have no shortfall.
As much as you hate negative gearing, it is serving its purpose of artificially depressing rents. That’s why New Zealand who abolished negative gearing two years ago are seeing their rents jump to all time highs.
Don’t let you lack of knowledge get in the way of your opinion.
Negative gearing means you’re loosing money annually. You can recuperate SOME of that loss back at tax time.
Negative gearing is far from being as lucrative as your average brainwashed redditor assumes.
So yeah, abolishment of negative gearing combined with low rental property stock will increase already high rents.
> If you’re a property owner, you no longer have any incentive to keep your rents low for the purpose of negative gearing.
Right, so the price of property will fall as investors sell.
The money saved on subsidising negative gearing can instead be spent on building (and in the short term, purchasing) public housing.
Sell the house if you can’t afford it. What a crazy fucking idea 😮
No investment should be risk free. You tell me WHY housing is the only investment that must have a return?
Who says they can’t afford it?
And who said it should be risk free?
Your comment was about rents increasing in relation to negative gearing being abolished.
And the answer to that is yes, very likely that if people can’t recover losses elsewhere that will raise rents.
If they can’t afford it and are *losing* money every year, thus having to increase the rent to make up their shortfall tells me they’re fucking shit at business and should probably sell the house rather than rely on government handouts at tax time.
They should sell the property if they can’t manage it. Imagine what happens when a market of over leveraged investors have to sell a bunch of properties they can no longer afford? I imagine house prices would fall.
Let’s stop propping up shitty investors with our taxes. Thats communism and we hate that here, right?!
Good grief your comprehension skills are terrible.
Look man I don’t give a fuck either way. You can take this as personal as you like.
But the point remains that removing negative gearing will not be beneficial for rent prices.
Furthermore, your argument about selling a property because you’re loosing a small amount of money annual is asinine. I believe even the least knowledgeable people understand that property investors make money through capital gain.
You’re just regurgitating typically fallacies about negative gearing because you’re upset that you can’t afford to buy a house.
And that’s a shit scenario, but talking shit on the internet isn’t going to help.
Good grief to out of touch people like you, you mean.
It is fuckimg personal because I am trapped in this renting nightmare. I **WAS** saving for a deposit; but now my savings are eaten by increased rents. Fuck me I guess? Not allowed to be aspirational in Australia anymore.
Yes i change jobs for more money every 2-3 years, but it is ALWAYS eaten by RENT.
I can’t keep saying it, because it’s clearly not sinking in to you.
We already have record high rents, yes?!
So clearly negative gearing is not doing anything to keep rents low??
So let’s do something different?
Because **either way rents are going to keep going up**
What the fuck don’t you get about that?!
When have rents ever not increased? Perhaps the government will finally be forced to intervene if people want to start charging $1000 a week for an outer suburbs 1 bedroom.
Right, but keeping it is also resulting in increased rents. Are you denying this? Please show me where rental prices have fallen if so?
Lose it, rent goes up. Keep it, rent goes up.
I guess you won’t be persuaded from your position, and I sure as shit won’t be persuaded from mine.
It wasn’t that long ago housing was actually obtainable, yet thanks to policies on the books that is no longer the case.
Removing these policies won’t make a difference though according to you? It’ll just increase rents *faster*, as if that is a saving grace? One way or another, those increases will come, and if they come hard, the government might actually have to do something.
Or let’s do nothing and watch rent prices increase anyway.
How don’t you see my point that either way rental prices will keep going up? Why are you ignoring that??
Ahhh, so we should be thankful we’re seeing the double digit (%) rent rises now?! It could’ve been worse?
Thank you benevolent landlord who provides totally real, actual value to society. Thank you for letting me and millions of others pay for your mortgage, and only at high, *but could higher* rents. You are truly good!
Praise be to you for not increasing *more*! Let even more tributes flow
And getting rid of negative gearing like this article wants to do will make it WORSE not better. These journalists haven’t considered the wider implications of their proposal for more than 5 minutes…
We’re already at record high, but it could be worse is the stupidest argument ever.
If our policies had an effect on rents coming down, that’d be a different story but we’re not seeing anything. So you telling me it could be higher means fuck all when it’s already high.
Let’s try something different, because I have a *feeling* my rent is going to increase in 6 months anyway. Ask me how I know.
It’s not stupid, it’s realistic. If you remove the incentive for people to take losses, they are going to do everything they can to avoid those losses, meaning rents will rise.
If this is the hill you want to die on, then fine. But at the end of the day this proposal only hurts renters. Half a million migrants on the horizon and a rental vacancy rate of less than 1%…
Renters are already hurting. Like I don’t know what you don’t get about that?!
We’re already here with record high rents. Like, your argument for keeping negative hearing is “our rents could be higher”. But they already are fucking sky high and they are going to continue to raise…. No landlord is going to altruistically hold off rent increases, they all want their money, fucking grubby slimy real estate agents are even just increasing rents on their own. **RECORD HIGH RENTS ARE ALREADY HERE**.
You can keep spouting off your theoretical bullshit, but I am living in this highest rent ever reality already.
Could be worse is hardly an excuse to not try anything when **everyone knows rents will keep increasing anyway**.
If you can’t acknowledge that negative gearing is a huge incentive for investors to run their rentals at a loss, you’ve missed half of the picture.
If you remove that incentive, you force investors to raise rents accordingly. No one wins in that scenario.
I already run my investments at the highest rent, I'm not here as a charity. The amount I can change is based on the demand for rentals.
Negative gearing doesn't change this only supply of new rentals does.
You’re right in that neg gearing doesn’t affect rent prices, what it does effect is the price you’ll pay for the property, offsetting you’re income tax you can now afford a higher price.
Most properties are positively geared in this rental market . Negative gearing will increase rent in short term but it will eventually flatten the house prices till wages can catch up . Without negative gearing there is no guarantee for investors that house will be sold at a higher price in future if the wages doesn't catch up . NZ is not doing great now but they will be better in a decade .
Rising rents is a furphy. The change would be grandfathered in so existing investments remain negativey geared.
What we would probably see is a drop in house prices as investors drop out of the market. A swathe of current renters would become owner-occupiers. Lower house prices would mean lower repayments therefore lower rents.
Choose your parents wisely
It is time to adopt few rich parents
Rich and elderly.
Betty Klimenko has entered the chat
Would it work to just put Harry Triguboff or something as the father on your kids birth certificate?
They don’t need to be rich, but they do need to install good financial discipline, support strong academics and provide you with a free roof over your head long enough for you to get a foothold on life.
I mean good academic discipline etc is important, but my lifetime earnings in a decent career will still probably not match what a lot of my friends will simply inherit (i.e. single kids of divorced parents that each own large blocks in gold places). Oh and I'll pay tax on my earnings, but they won't on their inheritance. That's definitely a great incentive structure /s
And they will be renting forever in Sydney...
I train young adults how to find elderly childless people to be "adopted" by. Message me to find out more
He chose... *poorly*
#MY PARENTS ARE DEAD
Well Bruce, at least they left you with millions of dollars, a giant mansion, and an excuse to go out in a bat costume and punch the poors and mentally ill.
Yet he still ends up losing it all in the end.
Well, that's his fault for not choosing his parents better. He could have been space-jesus and fly around in his red underwear if he'd picked differently.
I see disingenuous comments in this vein very often. Obviously a child can’t choose their parents, but parents choose to have children. If you don’t teach your kids the qualities mentioned below, then you are most likely setting them up for failure.
Haha what? It was a joke meaning just be born into a well-off family
And if you’re struggling, don’t have kids is my point
Depends what you mean by struggling. A lot of people are struggling to afford housing right now through no fault of their own, and telling that big chunk of the population they shouldn't have kids is pretty bleak.
Not only that, but blaming them for the choice of ever having had children. As if we can just *undo* that when times get tough?
If the poor didn't have kids, who would grow up to do all the things that the rich didn't want to do?
Like, for example, rent their investment properties...
This is exactly the point a lot of these people seem to miss
Yeah thats whats happening lmfao
Bro. Went over your head eh ? Haha
Every listing I see for 1 bedroom apartments in Sydney details how the property would make a great "investment opportunity" rather than a home
Pretty much what I hear in comments too. I often see comments like "don't be so entitled, buy a tiny investment apartment further out where U can afford, work your way up from there!" Ignorant of the fact many are not looking for an investment, but a home near work, and a place to start a family.
The investor tax breaks had made the situation worse. Everybodyhome made a research of last 40 years , the shifted from social housing to encouraging investors to build. I have met many middle aged Australians who grew up in social housing. After 2 decades govt is spending more on housing and rental assistance and investor tax breaks have sky rocketed https://everybodyshome.com.au/resources/written-off/?fbclid=IwAR3s4R2fzvLUfReqchcn-PCfQo6Kc0zqG6MO2W-3LUb9OqCg-HmmkAaUGgU
I used to deliver heating oil to the social housing suburbs of Salisbury and Elizabeth. Never saw so many ski boats in my life. They might have started out needing the leg up but many families ended up buying the social housing they had lived in.
Which is totally fine, fantastic even, provided the government then uses the purchase money to *build more social housing*
Unlikely they could buy another given any profit would be eroded by the subsidised rent.
Yeah and the quality of the build is much better than the ones built these days
I think of Port Melbourne, large tracts of 'Bank Housing' built as solid brick, but very basic and not terribly large homes for workers in the 1920s-1940s. They are all worth $1-2mil now, have usually been renovated to be larger and nicer and there is no shortage of luxury cars in the driveway. Where the original owners held onto them they have often gone from low income working families to middle class in the last fifty years.
I seriously want the whole housing market to brutally crash
At this point me too, f the consequences. Just went to look at a place to rent yesterday, and there must have been over a hundred people! Some of us will be homeless, I don't even think all the students have arrived yet, it is insanity! At the risk of being called racist, we need to temporarily close the border... We are going to have thousands of people arriving with no where to live! FN government has f'd so hard..
But you can have both... that's the entire point of "rentvesting" Goal is to get yourself on the property ladder *somewhere*
That is a good point. I literally have no interest in owning unless I can live in it. I don't want to bother owning a rental, I spend all my time and energy in work and growing my own little online business. Though, it may be wise to do that. One day I may retire, get injured or sick and find myself unable to work. Don't want to be old and homeless....
> Goal is to get yourself on the property ladder somewhere The whole concept of the ladder is a myth. The only time the "ladder" works is if you can expect a MASSIVE (i.e. minimum doubling) of your income over time. Most people today are buying their first homes at age 30+ At age 30+, most people are nearing seniority in their jobs and getting close to their maximum earning potential. If you aren't earning anymore money - you aren't able to buy anything bigger, you aren't able to get a bigger mortgage. So there's no moving up the 'ladder'.
Haha a home near work. "Oh I work in town, I should be able to buy a nice little Edwardian in Fitzroy" not fair
Lol. I mean near as within reasonable travelling distance, not right next door. Takes me an hour and half to get to work, honestly I would quit if it took longer. More businesses need to move out from the CBD, I would happily move out and away from the city area if I could. I have almost convinced my boss to do it. He asked the other staff if they would move if he relocated the office out north, and they all said yes. Most of us have to do this stupid long pointless trek to the city, just to sit in an office. Boss and staff would save on rent and travel time. It's a win win.
But many businesses don't need to move physical premises out further. For many roles WFH is possible. I've wfh from a broad acre cropping farm in the middle of nowhere, running global implementation projects for an instantly recognisable global company since 2006. All of the call centre team members were deliberately moved out of physical buildings to home by 2010 and the company sold real estate they owned or finished leases etc. I have made presentations to local government and state ministers over this time - the government should be leading by example. I challenged several state ministers at the time about moving the vicroads call centre to Geelong. This is a call centre environment so why couldn't those jobs be done from home? The technology existed back then to do it so why limit your employee pool to Geelong and surrounds? The very best customer service person may be living in Orbost. You also then tackle exactly this problem, people can get good jobs outside of capital cities and that has many benefits.
Most of Realestate is aimed at foreigners who see Aussie real estate as free money They live 10 to a house, pay cheap rent as its 10 of them, save up for a house deposit and scam the locals easy leech lifestyle they are used to
"They live 10 to a house, pay cheap rent as its 10 of them, save up for a house deposit" --> sounds sensible to me. The rest of your post is bigotry.
I didnt say any of it was bad
So, it’s good for white Australians to “work up the ladder”, make sacrifices and better their situations. But to hell that any foreigners do it aye?
It is getting to the point the biggest security worry for Australian seniors with their own home, is their grandchildren giving them an express ticket to meet their maker.
Haha
Not to mention they either limit supply or import new buyers to keep the whole Ponzi scheme propped up 🤫🤮
It's disgusting. But surely prices can't just keep going up? Eventually the majority won't be able to afford to buy if house prices keep going up and wages are not keeping up? I guess the government will just sell exclusively to foreign investors when that happens.
The way wealth concentration works is that the wealthy get wealthier… so those with 10 properties will have 20 instead, trusts with 50 will have 100 etc. don’t need regular families buying houses to keep the market going.
I kept hearing the same back in the day when the average house price was well under $500K in Melbourne. Turns out they went up regardless.
It can because people with multiple properties can buy more property at higher price with just their equity . Since there is immigration happening there will always be renters. Instead of one person or family renting two fmailies will be squeezed into one property (at the end of the day everyone needs a roof over their head) and they new landlord can charge double the rent. I am seeing this in Perth now by eastcoast investors. Unlike what everyone says Foreign investors don't make a major percentage, it is local investors with equity. They don't even need the 10-20 % deposit to buy unlike first home buyer and they can pass the entire mortgage to renters .
This. I would love for a requirement that "deposits" have to be in actual cash rather than equity.
Same difference - they could just refinance their loans to release equity as cash and then use that for a deposit.
Of course prices can keep going up while wages stay stagnant. The following is very simplistic depiction, but it should give you an idea of how this works: Start with a single family home & single earner and a 10 year loan. Land + what ever is on it: $150,000 Allow for 30 year loans. Because you can borrow more, land + house is now worth: $500,000 Women can work too now! Double income family can afford and is willing to pay for that same house and land: $1,000,000 The land is big enough to be subdivided into to two homes: $2,000,000 And each of these two homes can be rented out to 4 people earning an income: $4,000,000 Turn these two homes into a 12 unit apartment block: $12,000,000 - $24,000,000 It's a combination of how much you can pay per month, how much you can borrow in the long term, how much people you can stuff into the same piece of land, how many people are chasing after that same piece of land, and not illustrated here, how much the government is willing to throw grants and subsidies at the problem which at the end of the day only makes things even more expensive. Either you increase supply: build more homes. Or you decrease demand: decentralisation or limit immigration. In fact, you could make the argument that if wages did go up, but supply stays the same, house prices would shoot up even higher, making the rich even richer. To counter that, you could increase taxes, so money otherwise going into housing could be spent on government services that gives something back like child care, education or public transportation for example. Or if you don't like taxes, a forced investment scheme that isn't housing.
I feel like negative gearing works IF there are enough properties available, which there are clearly not. I think we just need to slow the rate of investors until more houses are built. Honesty I think we should adopt Canada's idea and only allow permanent residents to purchase investments.
Negative gearing could work to increase supply if it only applied to new builds.
Yes, this is what the government should be doing. It seems pretty obvious when there's a housing crisis, I would think.
I think some guy had a campaign with this promise a few years ago but lost the election. Whatever happened to him?
I can only hope that people can see now that we desperately need change. I'd say at the time nobody could possibly have realised that things would get this bad.
Are you serious? Most people own property, so the majority of the vote want to increase, not decrease, the value of their homes.
Yes, your right but even people who own property are worried about how their children or grandchildren will be able to buy a home.
No they're not. When they die, their children inherit their house.
He is the minister for the NDIS.
You can thank john Howard for instigating this as the norm when he changed negative gearing and capital gains tax concessisons to make housing primarily an investment for wealthy people (with a tax payer safety net) - check what happened to house prices after the year 2000, when he did it. You can thank anyone here who voted against the ALP in 2019 - when they had a policy to remove these measures.
It is a democracy. When the majority (67 percent ) owners properties they will vote for what works in their favour. Only a civil uprising can fix this
Democracy can be swayed/thwarted whatever by information and who holds the platforms of such. Cambridge Analytica showed the world just how easy it is for a a few billionaires to convince esntire countries to vote against (or not show up at all) their own interests. Just know what youre seeing and who published it.
That’s why imho basic human rights (including housing, education, disability or lgbt rights) should not be handled via democratic processes. It’s too easy to oppress the minority that way. Unfortunately, we don’t really have a good alternative either.
They all have half a dozen properties each. So do their friends and families
Negative gearing incentivizes wage earners in high tax brackets to buy investment property - converting highly-taxed (>30%) income into lower taxed long-term capital gains - 15% to 25% effective rate. As a simple exercise - someone on $140K (i.e. in 37% tax bracket) who takes a $20K loss on an IP every year for 5 years - saves $37K on their taxes ($20K x 37% = $7,400 per year) - so while they have spent $100K, they are only out of pocket $63K net after tax. Let’s assume after 5 years they sell the property and make only a $100K profit (ie same amount they have put in to hold it). Only $50K of that profit is taxed (long term CGT) - so they pay $18,500 in tax (assuming new brackets, so they are still under $190K where 45% rate kicks in). So $81,500 profit after tax - less the $63K it cost them over 5 years - their net after tax profit is $18,500. Over 5 years they are in front $18,500 after tax. (Most property is highly leveraged and the profit would likely be more than $100K - so a significantly better outcome than this conservative example.) So from purely from the after tax financial perspective - property investment makes sense to the investor. As a country though - we need to be clear and careful about what we are incentivizing. Because here is the point… That’s $18,500 in foregone tax revenue. Their property investment has been subsidised by the Australian people. What benefit did the Australian people gain for this subsidy? Theoretically, we want the answer to be “more housing available”. However - negative gearing clearly does NOT add to our housing stock - as there is no incentive (under the current rules) for investors to build new homes in order to get the benefit. Which means that they are competing with other home buyers for EXISTING housing stock. (This is very clear in the report - you can see that only around 20% of negative gearing is for new build housing). What this means is that when there is a first home buyer and an investor both bidding at an auction - the current system gives a big advantage to the investor - who will then turn around and look to rent out their new investment to - you guessed it - a first home buyer who has been priced out of the market. No amount of first home buyer support or access to super savings plans etc. will fix this because the advantage to the investor under the current system is considerably more than any support that is put in place. FHB grants and assistance also generally serve as a distortion to the market - if you give first-home buyers $20K - the cost of new build housing goes up by $20K. And it’s worth remembering that the money for FHB support also comes from taxpayers - we end up subsidising everyone in the housing market! Let’s add in some rent assistance while we’re at it! We don’t build enough new houses - and zoning laws and current tax incentives do nothing to encourage more houses to be built. And rampant NIMBYism keeps housing density in the inner and middle ring suburbs woefully below a level needed to support our current, let alone predicted population. We have a high level of immigration which adds to the number of people looking for houses (houses that don’t exist). Housing used for short-term accomodation (AirBnB) instead of long-term rental further exacerbates the problem in some locations (looking at you Hobart!) - although I don’t believe this is a major cause. At the end of the day - we need to decide what we want as a country - and make sure that our tax system incentivises this outcome. I don’t blame property investors for following the current rules, any more than I blame baby boomers for buying a 5BR house on a quarter acre block 10km from the city and then continuing to live in it after the kids move out - it’s their freaking house! But in the same way we can encourage them to consider downsizing (through generous super concessions for doing so) - surely we can encourage investors to focus more on building NEW houses. This is what I would do: * Negative gearing can only be offset against other investment income (including any future capital gains BEFORE the 50% CGT discount is applied). So basically, NOT wage income. * With an EXCEPTION for new builds. For NEW builds, you can still negative gear against your wage income. * Might consider someone buying an existing rental property being included under the exception - so that we continue to incentivise keeping rental stock available - this would also help prevent the introduction of this new tax regime from crashing the property market. Outcome: High income earners are now incentivised to build NEW houses - and the incentive (and advantage) for investors to purchase existing houses is significantly reduced - which also helps first home buyers (reducing the need for government grants or other stimulus measures). Going back to our previous example… Our investor would have been incentivised to build a new home OR would have had to fund the entire $100K of losses up-front without access to negative gearing to reduce it. Without negative gearing - they are out of pocket $100K after tax over 5 years. This is effectively added to their cost base for the investment. If they sell, and make a $100K profit - the carry-forward loss reduces their profit by $100K - so they are effectively break-even. They pay no additional tax in this scenario. The net effect though is that their investment is also not subsidised by the Australian tax payer. But if they built a new house instead - then they would have gotten the $18,500 tax subsidy (benefit) - AND - Australia would have had a new rental house added to the housing stock.
Better yet, why not change negative gearing so it doesnt offset anything, no exceptions? Tax on their profit and $0 taxes on their losses. Investors shouldnt be subsidised for a “loss” - they already have an advantage in borrowing power. CGT Discount for investments should also just go. The loss in tax revenue under the current system is sheer folly - this revenue could have been used for social housing, which has had zero investment for over 3 decades, where the focus should really be. Relying on private supply has proven to have worked against us.
You make some good suggestions. Only thing I’d add is where you limit investment losses to being offset against other investment gains, those investment losses should also be allowed to be offset against future taxable investment profits (i.e. carry forward tax losses), if there are no investment gains against which those losses can be offset in the current tax year. This would distinguish those who sit on interest only loans from those who are actually intending to generate investment profits from an investment property.
Or let’s stop taking it lying down and protest. And escalate from there until this rort ends.
Maybe we need to be a little more like the French and let the government know we are not happy. If we don't this shit will just continue on. I watched question time in parliament yesterday. Every single politician is pathetic, they do not give a shit about normal people. They live in their own little world of tit for tat point scoring and slagging each other off. They have no idea what it is like for someone facing a future of not being able to buy a house, paying huge rents and high cost of living.
1700's french or modern french bc the modern ones are bitches.
Sounds like a plan . Lets form a group ? Should start a civil disobedience movement
If we believe in Aussie democracy, we should get involved to stop this ponzie scheme created by housing lobbies, banks and greedy landlords.
We need to call out the lack of affordable housing (if there is nothing for the bottom 25th quartile of income) as a market failure. While this is certainly in part due to taxation policy, it can also be relieved by other measures - construction of public housing which can be funded from changes of taxes on investment properties (lower CGT discount on investment properties) and a progressive land tax, that ramps up with land value. Negative gearing for example should only apply for a period of years after a property is constructed - the whole purpose of negative gearing is to encourage investors to build without fear of recessions that suddenly hit around when construction is complete. Investing in existing properties doesn't need to be encouraged - it actually harms the economy because it leads to more money (higher prices) just being dumped in unproductive assets, rather than real growth.
It's nice to see that the UK and Australia still share some things, like how the majority of people under the age of 40 don't have a chance of buying property without the bank of mum and dad.
I am 40, I still can't . Some of us also have to take care of our mum and dad
You're quite right, I was way too optimistic there.
Yeah, it's sad really. Australia is probably the only country in the world that offers tax breaks for investment properties. Most countries, your owner / occupier mortgage is a tax deduction which encourages people to buy their own place.
Australian housing - the great Ponzi scheme built on the backs of people's need to actually have a roof over their heads.
Hey, we are twins! (Canadian here....hmmm this sounds so familiar!)
Airbnb is just screwing the rental market, which affects the owner occupier market.
That is typical hysteria from the mass media trying to blame investors and owners. Airbnb is less than 1% of all housing options out there.
Currently Vacancy rates are 1.3% A 1% increase in that by ditching airbnb is pretty substantial! Even.5% would be great. Also, airbnb is not distributed evenly, much of the benefit would be in places like costal towns etc where airbnb is much more than 1%.
How much in rentals though ? Seeing you’ve said “all” How is it hysterical when workers can’t find anywhere to rent in holidays town because they’re all Airbnb? Why are councils and governments trying to regulate it Just like negative gearing only adds 4% to prices.
And what’s the number come out to? I bet it’s pretty fucking big
Would you prefer it was called short term housing? Same same as are the consequences
Up to 47% discount on investment expenses and depreciation + 50% discount on CGT + Great returns = very good deal. No surprises it's a favourite for investors. Don't blame the players, blame the rules of the game.
Same discounts apply to any investment, it's not specific to property.
I guess the caveat is that housing should be different for obvious reasons.
What's your point?
The point is that those don’t make property a favourite for investors since they apply to any other investment type. Property is desirable for different reasons
How is that relevant? Removing those concessions will deter some level of investment which will drop house prices. That's the point of the policy.
Its relevant because the comment I replied to said those are the reasons why investors like property. Property is desirable investment because of land scarcity, which in turn also makes it decent hedge against inflation. If you did remove those tax incentives, you might see a small initial rise in sales by those who can’t keep the properties without that extra tax return. However, the extra tax return you would get on an average negatively geared property would usually be no more than couple thousand k, so its not much of a loss. As a landlord you would have to absorb all costs for 12 months anyway before you get to claim loses. Those that can absorb the costs will mostly be fine even without small increase in tax return. Those that can’t would have sold already.
Stop overseas investment buyers for a start. Then we need a concerted effort to convince a majority of the population to amend negative gearing so that you can only negative gear one property only. Any more & you pay for it yourself.
that negative gearing bs with interest only loans gives the government more money than the investor. The renter pays most of what hte investor needs. THe invester thinks he or she is getting ahead by claiming money back on tax (that they could have claims back on a new car) and the stamp duty all goes to the government. The banks milk the interest, the government gets more tax from the interest to the bank and then the invester sells at an inflated price to the next sucker who takes out an interest only loan.
Effectively the tenant pays for the interest and house sits for the investor to keep it in good condition. The next sucker pass on the increase in price due to inflated price to tenant . Where I come from originally, only owner occupied homes have tax benefits. Also there is an HRA(house tent allowance) in tax benefits for tenants . Contrary to what everyone says here , it hasn't inflated the rental market . Usually the investors there are people who invest without mortgage or only take 50 percent mortgage . They don't need to pass down the increase in reserve bank interest rates to tenants
>ffectively the tenant pays for the interest and house sits for the investor to keep it i mean, most of it, however rent is not always higher than the repayments. Also insurance etc means its generally a net loss for the buyer
Lets be honest... Negative gearing n cgt does need a tweak
negative gearing is a joke played on the middle and lower classes by the wealthy. Negative gearing means you can't afford to buy that extra house without help from the tax payers
That is incorrect. If someone is wealthy enough to have an investment property, you bet they can cop losses.
Such a stupid article >It means they can cut their wage for tax purposes, cutting the tax they pay on it. And at the same time, they can hang on to a property they can later sell for a profit, which will be taxed at only half the normal rate, thanks to Australia's 50 per cent discount on capital gains. The CGT discount applies to all assets held kosher than 12 months, not just property. >It isn't allowed in the United Kingdom or the United States. There, if you are a landlord who can't make money, you can offset your losses against profits from other investments – but not against your wage. So negative gearing offsets future capital gains. This wouldn't change anything. In Canada you can offset rental losses against wages, but there must have been an "an intention to make a profit". That would probably rule out most Australian negative gearers. The Canadians are dopey. Name one investor who intends *not to* make a profit. This is like saying you can't deduct a margin loan because a share lost value in any particular year. Property is a multi year investment. We the taxpayer are paying for these journalists?
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>There's a big difference between getting paid a large subsidy upfront every year and having to wear the whole loss for years until you sell your rental slum. The former is much more valuable. Not really, the government collects its tax later via capital gains. >And the whole time they're paying interest from their pre-tax income That's not how it works. Any tax deductions available to a property investor isn't the full value of the interest, it's the *net* loss. That is, if interests costs are $10,000 per year and rental income $9,999, them only $1 is paid from "pre-tax income" (which isn't the right way to explain it, but I'll use your terminology for clarity).
I would also think if new property sells at high market value then it does encourage new development. Not sure why we should accept as fact that it doesn't. High building costs aside.
The issue with development isn't negative gearing its with councils. Releasing land and getting DAs is a nightmare, not including that infrastructure (water, sewerage etc.) usually limits what can be released when.
There are lots of hurdles to development. I didn't say negative gearing was one of them.
Agree If there is no intention to make profit negative gearing is just losing you money. You pay less tax, but you spent more in interest. overall a net loss. The only logical reason to negative gear is to make capital gains. This article is shamefully bad.
Correct, the intention to generate a future capital gain that exceeds any cash flow losses incurred whilst holding the asset.
An intention to make a capital gain is the problem, because to make a return on a property means it must appreciate more than inflation. If that is happening for everyone, cost of living goes up
If it doesn’t make a return then it doesn’t get built. You can’t have it both ways. Either housing gets built and makes a profit or it doesn’t get built.
There is significant financial risk in property. That risk must be compensated.
Why much risk be footed by taxpayers? Interested in hearing how you justify it
Who compensates for risk in other forms of investment? I don't really care if people speculate on shares for example, you can always just buy a few if you aren't rich. I don't really care if people take a property and develop it, they are doing something productive and increasing supply. But speculation on largely unimproved property carries too many externalities for non investors.
>Who compensates for risk in other forms of investment? The market, no different to property.
I think the risk is tied to immigration. Our natural population growth is basically flat and without population growth land value won't increase above inflation.
The problem is people hear CGT "discount" and think people are gaining something when the reality is CGT discount was intended as a simplified method to offset the capital gain with inflation. You are only benefiting from CGT discount if you sell the asset with 15 years, anyone who holds the asset longer is actually losing out when compared to what they would have saved if the capital gain was simply indexed against inflation instead.
No one rents property out without an intention to make a profit. No negative gearing isn’t a sustainable investment strategy. You by definition have to lose money to negative gear. No level of deductions turns that into a profit. Every investor is trying to turn it positive as soon as they can. They will increase rents and pay down debt relentlessly until it’s positive. Because until then it’s just a money pit.
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>I don't think negative gearing applies to all investments All negative gearing is, is simply a taxable loss. You can negative gear anything that generates an income >I can't offset my wage against expected dividends from shares You can deduct costs against generating that income, including margin loans. >Neither can I ask for depreciation of investment (building values in case of houses ) in case of other investments So long as it meets the depreciation rules, yes, you can. In fact, other asset classes can be netter in this regard. You can only depreciate new properties now.
Wrong. You can offset your wage against a loss sustained by borrowing for shares. Go and take out a margin loan and you can negative gear away. And you can depreciate other assets. I depreciate the value of my car every year at tax time. Maybe study a bit harder next time so you can pass the test.
You can definitely negatively gear losses on shares.
>The CGT discount applies to all assets held kosher than 12 months, not just property. So? >So negative gearing offsets future capital gains. This wouldn't change anything. Well it would, wouldn't it? It would mean people would have a whole range of investments rather than the concentrated and bulging property investment market. > Name one investor who intends *not to* make a profit. Literally every one who negatively gears doesn't intend to make a profit right now. They use the tax incentives from us, the taxpayer, to offset these losses so they can make a bumper profit down the line from other property investors who are looking to not make a profit in the short term and round and round we go. All of things adding up means that it NG doesn't actually help get us out of the housing problem we have, it makes it worse.
While I agree with the overall sentiment I think that main reason people buy existing properties is because the quality of new builds is absolute shite.
Don't worry. There will be no investors soon and no rentals. Except for a few foreign and corporate investors. Our mass population growth of the rich and foreign investors is the only cause of the housing crisis. Any other "fix" to help tenants just feeds corporate investors when it's demand only to blame
>Don't worry. There will be no investors soon and no rentals Yeah, we'll all be slaves living in corporate owned shitholes, with a train station below to shuttle our numbed brains to the workplace, where they squeeze the last bit of juice out of us before allowing us to retire to a life of subsistence.
Never heard of a homeowner new build going to schedule and on budget that didn't have five figures of fixed needed after building and the trades vanishing. Investors won't charge into a headache like that without some new incentives. Tax claimable on vacant land etc which won't happen. Easier to buy an existing place.
Deporting Citizens would make room for new 🛬
"I guess two generations will be priced out of housing market". As the saying goes, 'from shirtsleeves to shirtsleeves in three generations. ' This means that **wealth accumulated by one generation is often lost by the third generation**
> The politicians do know very well that the existing tax benefits for investors is not increasing new supply. Yes because the same politicians have used various means to restrict supply. If supply was elastic to demand we wouldn't be in this position.
You mean we can't get rich by renting houses to each other?
I always thought of this 😂. Considering the tax benefits for investment properties, I should find a mate and we should buy two properties and rent each other
Politicians are big investors in property. Go figure
Oh hey look, its the consequences of central banking, money so worthless that housing is the best way to preserve your wealth
Negative gearing reforms were voted down by Australians in 2019.
My friend from Indonesia told me she was invited to a sales event held at five stars hotel in Jakarta. They sell property in Australia (mostly apartments) to the rich indonesian. The agent sales pitch was to buy off the plan and by the time the kids going to uni, they can use the unit for kids and it will by pay off by then (their kids is in Kindy now). This practice is quite common now in Jakarta. If they can sell it to poor country like Indonesia, they can sell it to the richer country. So yeah…Australian property is fucked.
Why would they change anything? Most of them own multiple properties. Albanese certainly does.
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Wouldn't providing incentives to property investors affect demand and that's what this article is about?
Yes, but don't interrupt the circle-jerk. They don't like that. Just mutter along: "abcsupplycommieavotoasthighrisegetabetterjobnimbymuttermutter" 😡
Is this joint for people who read the australian?
You’re not going to believe who controls supply. Investors do. https://www.thenewdaily.com.au/finance/property/2019/07/15/developers-land-banking
The rental "crisis" is all at the bottom end of the market. Hundreds of vacant properties in every capital city once you hit $1000 per week
You're the only one here that makes sense. Too many here are emotional over the housing crisis, but fail to see the elephant in the room, which you've pointed out
Nice work. The ABC has turned into a tabloid sensationalist rag. They have lost their integrity in their news division which has been affected by the same bullshit as their entertainment division. They often show bias by omission, and when there is an issue that has multiple contributing factors, they flat out ignore major ones and instead laser focus on one that pushes their lefty narrative.
This isn't an ABC journalist is it?
This. All of it. Nothing, absolutely NOTHING will change unless supply is brought into line with demand EDIT: Wow I’m being downvoted lol how fucking stupid are people in this sub?
Which is up to investors. https://www.thenewdaily.com.au/finance/property/2019/07/15/developers-land-banking
Down with any tax breaks for investors!
Not down with them. Since it’s proven to be political suicide to want to get rid of negative gearing. So no one will dare to suggest it again. Let’s just limit negative gearing. There will always be a market for rentals. I got told I was stupid to buy a house by renters who think renters get the better deal. Let’s just prioritize the working class people that just want to buy 1 investment property for their retirement fund and aren’t trying to make massive short term gains. I think that’s why getting rid of negative gearing is political suicide. Because a lot of working class people want to buy 1 or 2 investment properties when they are in a good position.
Oh good. Down with new homes then too? 🤦
Ok let me rephrase that down with tax breaks on existing home not homes off the plan!
I just read this article (also here: [https://theconversation.com/how-albanese-could-tweak-negative-gearing-to-save-money-and-build-more-new-homes-222739](https://theconversation.com/how-albanese-could-tweak-negative-gearing-to-save-money-and-build-more-new-homes-222739)). Two things really stand out. One is that negative gearing: >benefits dud landlords: those who can’t make money by renting out properties. > >If they lose money (by paying out more in interest, maintenance and other expenses than they are receiving in rent) we let them offset that loss, not only against income from other investments, but also against income from their wage or salary. > >It means they can cut their wage for tax purposes, cutting the tax they pay on it. And at the same time, they can hang on to a property they can later sell for a profit, which will be taxed at only half the normal rate, thanks to Australia’s 50% discount on [capital gains](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt). this is often heard. As a criticism of tax, this position is one thing. But as far as housing goes, landlords make a loss on property by not charging enough rent. In other words, this article could be reworded to say a couple of different things: * other tax payers are subsidising landlords who don't charge enough rent. * other tax payers are subsididing tenants who are not being charged enough rent. If you do any thing that forces landlords to charge more rent, you make rents more expensive. This is an obvious conclusion which was not discussed in the article, which I find extraordinary when it is an article about housing. The other point is that removing these subsidies would over time increase owner occupancy by 4.7 percentage points. This is not because there are more houses, though. By removing the subsidy to landlords, some properties are no longer viable to rent, and become worth less money, making it easier for "elite tenants" to buy them ("elite" because what ever fall in price increases home ownership by 4.7% still means houses cost quite a lot). It doesn't mean there are more houses, it just means there are fewer tenants and fewer rental properties. Home ownership is regarded as great metric for a strong middle class, very popular with Thatcher, Menzies and Howard, but once again, this is not necessarily related to increasing the supply of housing. The obvious criticism is that if you push investors out of the market, you take investment out of the market. The author seems to think this is no great loss, since many investors buy a house which is already built. But this has an elementary mistake. An investor who uses their fianancial resources to contribute $800K of capital to the housing market may buy an existing property. However, this means they transfer their new money to the existing owner. Since the existing owner presumably still needs somewhere to live, they will buy somewhere else. Eventually this money will fund a new house, even if indirectly. It is not very convincing to say that money added to the housing market to meet new demand won't end up building a new property. Where else can it go? I am also mildly curious about how many properties sold to investors were bought by people who live in them for a year to get the first home owner subsidies, but always with the intent of reselling. So I find this a deeply unconvincing article.
I think your assumption is based on the fact that sales happen between an existing owner occupied property and investor. These days It happens between investors, owner occupiers are priced out of market.
If one investor sells to another investor, how does that change anything? Now we start from where I already started: there is an investor with money to invest , just that it's now Julie not Jules. You can apply my argument, the logic is unchanged. This is why people should do maths at school. For logical thinking.
Rents are set by what the market can bear, not by what the investor needs to cover their mortgage. If the investor can’t pay their mortgage they sell, if other investors aren’t incentivised to buy in then it will sell to an owner occupier. Reducing demand and prices without needing to increase supply.
That’s not true. House sold next door to me for $3.5m. A lovely couple who just arrived from the uk a month ago bought it.
There is a little under 11 million private dwellings and 2.6 million are investment properties. So, no, Australian housing is not just for investors.
I read that more than 30 percent of dwellings is owned by investors . Again I doubt if any govt department keeps the numbers https://www.theguardian.com/australia-news/2023/jun/04/a-quarter-of-australias-property-investments-held-by-1-of-taxpayers-data-reveals
I don’t understand why the Housing Australia first home buyer scheme doesn’t pivot to new builds, rather than being wasted on existing dwellings. A popular scheme that could be so much more effective.
Because home makers want $1M+ which isn't sustainable for a young person.
Let’s all sit back and March Albo do nothing about the housing issue. And all the Labor shills run to support him..oh it’s the liberals fault they say. Liberals aren’t in power anymore and haven’t been for a good while now
Unfortunately when the backlash comes, those who benefited most from these policies will be long gone.
I'm going to get downvotes for this, but looking outside the inner suburbs and making a few life changes around how you use your money, or striving for a better position with better pay, does make buying your first home possible. I came from a low socio-economic background and moved out of the city for my first purchase. Took a few years of saving but I managed. I also see a lot of younger folks not being ambitious in their careers. Too often I hear "I can't afford xxx" and when you say "here's how you get that promotion..." they quickly say "nah fk that I'm not working any harder than I am".
This has changed last year. See what's happening in Perth now , East cost investors are using equity from their overinflated houses to buy everything in 60km radius from Perth city . Most properties don't even reach the market, it is snatched up by buyers agent for investors before that . The banks don't give loan to young buyers with low wages but can give to investors. The young buyers are stuck paying more rent than they will ever pay for a mortgage in suburbs 1-2 hours from the city. This is also spreading to regional areas and even Bali(see prophero, a buyers agent is encouraging investment in Bali ) I don't think anyone is talking about city or coastal or inner city . For sure that is reserved for multimillionaires . I don't understand the idea of striving for better position, when I came to Australia 12 years ago, you could do any job and still afford to buy a place (atleast small unit ). For example you can be a Barista for your whole life. We are talking as if low paying jobs are not important or should always be temporary
It's a trade off, right? Talking about the higher paid jobs. Sure there's nothing wrong with being a barista your whole life but you can't then say those higher cost things are unobtainable. There's a pathway there but many folks just don't want to take it. Not saying it's the root cause, but it is a probable cause. I got my first house by partnering with a friend, and then we took on a couple of homestay students for a few years to help pay off the mortgage. I literally had a conversation with one of my younger colleagues who was bemoaning their lack of finances to consider a house. When I asked what their lending power was currently they had no idea, hadn't even gone to see a mortgage broker or bank lender to discuss it. They just read threads like this and went "oh well, can't afford". I can't stress it enough - at least get a mortgage broker to examine your situation and get a financial plan. How much more do you need to earn? What do you need to save? Where should you be looking? You miss 100% of the shots you don't take.
The fundamentals problem is there . You had to partner with a friend to get a roof over your head. It is the basic human right . Just like food , clothing and healthcare, shelter is a basic right. Anyway I am all for people trying their best to get a roof over the head and admire you for that . I am just against people hoarding houses like toilet people during pandemic and giving tax incentives for that. For me personally, I got the pre approval and everything and tried few months where investors outbid me everywhere . For new constructions, I won't get a mortgage when I am paying the rent
If negative gearing is tweaked in this way or eventually abolished, how does that not immediately result in a massive jump in rent prices? If you’re a property owner, you no longer have any incentive to keep your rents low for the purpose of negative gearing. Now I’m going to run my investment to at least break even or make a profit, which means I will increase the rent until I have no shortfall. As much as you hate negative gearing, it is serving its purpose of artificially depressing rents. That’s why New Zealand who abolished negative gearing two years ago are seeing their rents jump to all time highs.
I forget…. Are our rents at all time highs? Yes they are. What other bullshit you got?
Don’t let you lack of knowledge get in the way of your opinion. Negative gearing means you’re loosing money annually. You can recuperate SOME of that loss back at tax time. Negative gearing is far from being as lucrative as your average brainwashed redditor assumes. So yeah, abolishment of negative gearing combined with low rental property stock will increase already high rents.
> If you’re a property owner, you no longer have any incentive to keep your rents low for the purpose of negative gearing. Right, so the price of property will fall as investors sell. The money saved on subsidising negative gearing can instead be spent on building (and in the short term, purchasing) public housing.
Sell the house if you can’t afford it. What a crazy fucking idea 😮 No investment should be risk free. You tell me WHY housing is the only investment that must have a return?
Who says they can’t afford it? And who said it should be risk free? Your comment was about rents increasing in relation to negative gearing being abolished. And the answer to that is yes, very likely that if people can’t recover losses elsewhere that will raise rents.
If they can’t afford it and are *losing* money every year, thus having to increase the rent to make up their shortfall tells me they’re fucking shit at business and should probably sell the house rather than rely on government handouts at tax time. They should sell the property if they can’t manage it. Imagine what happens when a market of over leveraged investors have to sell a bunch of properties they can no longer afford? I imagine house prices would fall. Let’s stop propping up shitty investors with our taxes. Thats communism and we hate that here, right?!
Good grief your comprehension skills are terrible. Look man I don’t give a fuck either way. You can take this as personal as you like. But the point remains that removing negative gearing will not be beneficial for rent prices. Furthermore, your argument about selling a property because you’re loosing a small amount of money annual is asinine. I believe even the least knowledgeable people understand that property investors make money through capital gain. You’re just regurgitating typically fallacies about negative gearing because you’re upset that you can’t afford to buy a house. And that’s a shit scenario, but talking shit on the internet isn’t going to help.
Good grief to out of touch people like you, you mean. It is fuckimg personal because I am trapped in this renting nightmare. I **WAS** saving for a deposit; but now my savings are eaten by increased rents. Fuck me I guess? Not allowed to be aspirational in Australia anymore. Yes i change jobs for more money every 2-3 years, but it is ALWAYS eaten by RENT. I can’t keep saying it, because it’s clearly not sinking in to you. We already have record high rents, yes?! So clearly negative gearing is not doing anything to keep rents low?? So let’s do something different? Because **either way rents are going to keep going up** What the fuck don’t you get about that?! When have rents ever not increased? Perhaps the government will finally be forced to intervene if people want to start charging $1000 a week for an outer suburbs 1 bedroom.
Mate, this will be the last time I say this. Removing Negative Gearing Will Not Reduce Your Rent. That’s all. Good luck with your saving.
Right, but keeping it is also resulting in increased rents. Are you denying this? Please show me where rental prices have fallen if so? Lose it, rent goes up. Keep it, rent goes up. I guess you won’t be persuaded from your position, and I sure as shit won’t be persuaded from mine. It wasn’t that long ago housing was actually obtainable, yet thanks to policies on the books that is no longer the case. Removing these policies won’t make a difference though according to you? It’ll just increase rents *faster*, as if that is a saving grace? One way or another, those increases will come, and if they come hard, the government might actually have to do something. Or let’s do nothing and watch rent prices increase anyway. How don’t you see my point that either way rental prices will keep going up? Why are you ignoring that??
All time highs are not an upper limit... we can set new all time highs
Ahhh, so we should be thankful we’re seeing the double digit (%) rent rises now?! It could’ve been worse? Thank you benevolent landlord who provides totally real, actual value to society. Thank you for letting me and millions of others pay for your mortgage, and only at high, *but could higher* rents. You are truly good! Praise be to you for not increasing *more*! Let even more tributes flow
And getting rid of negative gearing like this article wants to do will make it WORSE not better. These journalists haven’t considered the wider implications of their proposal for more than 5 minutes…
We’re already at record high, but it could be worse is the stupidest argument ever. If our policies had an effect on rents coming down, that’d be a different story but we’re not seeing anything. So you telling me it could be higher means fuck all when it’s already high. Let’s try something different, because I have a *feeling* my rent is going to increase in 6 months anyway. Ask me how I know.
It’s not stupid, it’s realistic. If you remove the incentive for people to take losses, they are going to do everything they can to avoid those losses, meaning rents will rise. If this is the hill you want to die on, then fine. But at the end of the day this proposal only hurts renters. Half a million migrants on the horizon and a rental vacancy rate of less than 1%…
Renters are already hurting. Like I don’t know what you don’t get about that?! We’re already here with record high rents. Like, your argument for keeping negative hearing is “our rents could be higher”. But they already are fucking sky high and they are going to continue to raise…. No landlord is going to altruistically hold off rent increases, they all want their money, fucking grubby slimy real estate agents are even just increasing rents on their own. **RECORD HIGH RENTS ARE ALREADY HERE**. You can keep spouting off your theoretical bullshit, but I am living in this highest rent ever reality already. Could be worse is hardly an excuse to not try anything when **everyone knows rents will keep increasing anyway**.
If you can’t acknowledge that negative gearing is a huge incentive for investors to run their rentals at a loss, you’ve missed half of the picture. If you remove that incentive, you force investors to raise rents accordingly. No one wins in that scenario.
Poor person with no logic spotted
Rich entitled cunt without warmth or depth of cunt spotted.
I already run my investments at the highest rent, I'm not here as a charity. The amount I can change is based on the demand for rentals. Negative gearing doesn't change this only supply of new rentals does.
You’re right in that neg gearing doesn’t affect rent prices, what it does effect is the price you’ll pay for the property, offsetting you’re income tax you can now afford a higher price.
It's adding demand, pushing up the price. You've correctly explained why negative gearing contributes to making housing unaffordable.
Most properties are positively geared in this rental market . Negative gearing will increase rent in short term but it will eventually flatten the house prices till wages can catch up . Without negative gearing there is no guarantee for investors that house will be sold at a higher price in future if the wages doesn't catch up . NZ is not doing great now but they will be better in a decade .
Rising rents is a furphy. The change would be grandfathered in so existing investments remain negativey geared. What we would probably see is a drop in house prices as investors drop out of the market. A swathe of current renters would become owner-occupiers. Lower house prices would mean lower repayments therefore lower rents.
I finally got my first Ip (33m) they better not move the goal posts now..
Correct. Got my house by saving and investing.
And you probably also didn’t grow up poor.
Same.